ITA No.792/Del/2022: United Coffee House vs ITO, Ward-52(4), Delhi – A Detailed Judgment Overview

Case Background

This case involves an appeal by M/s. United Coffee House, a renowned establishment based in E-15, Connaught Place, Delhi, against the Income Tax Officer, Ward-52(4), Delhi pertaining to the assessment year 2019-20. The core of the dispute revolves around the disallowance of deduction claimed of Rs.35,18,904/- representing delayed payment of employees’ contribution to Provident Fund (PF) and Employees State Insurance (ESI).

Proceedings and Decision

The case was heard ex-parte qua the assessee by the Income Tax Appellate Tribunal, Delhi Bench ‘SMC’, under the provision of Shri Saktijit Dey, Judicial Member. Despite the absence of representation from the assessee, the appeal proceeded based on the materials on record and arguments from the learned Departmental Representative.

Upon careful consideration of the legislative amendments, judgments from various High Courts, and specific precedents cited in correlation with the laws pertaining to provident fund contributions, it was deduced that if employees’ contribution is deposited before the due date of filing of the Income Tax Return, such delayed deposit does not warrant disallowance. This interpretation aligns with the amendments and clarifications introduced in the Finance Act, 2021, ensuring that the employer’s delay in depositing the provident fund does not unjustly enrich the employer at the expense of the employee.

Final Judgment

Adhering to the precedents and the rationale laid out in numerous judgments alongside the legislative amendments pertinent to the case, the Tribunal allowed the appeal by United Coffee House. Consequently, the disallowance of Rs.35,18,910/- was deleted, ruling in favor of the appellant. This decision underscores the judicial recognition of legislative intent aimed at safeguarding employees’ contributions to welfare funds.

Conclusion

The judgment rendered in ITA No.792/Del/2022 represents a significant interpretation of the laws governing the timely deposit of employees’ contributions to welfare funds. By allowing the appeal and setting aside the disallowance imposed by the ITO, Ward-52(4), Delhi, the Tribunal affirms the principles of fairness and equity in the administration of tax laws, particularly in relation to employee welfare contributions.

Date of Order: 8th June, 2022

Judicial Member: Saktijit Dey

ITA No.792/Del/2022 Judgment Summary: United Coffee House vs ITO, Ward-52(4), Delhi