Case Number: ITA 1710/DEL/2021
Appellant: A S Infotech E-Solution Private Limited, New Delhi
Respondent: Circle-1(1), New Delhi
Assessment Year: 2019-20
Case Filed on: 2021-11-22
Order Type: Final Tribunal Order
Date of Order: 2022-03-02
Pronounced on: 2022-03-02
This article explores the tribunal’s decision regarding A S Infotech E-Solution Pvt Ltd’s challenge against the disallowance of delayed deposits of Provident Fund (PF) and Employee State Insurance (ESI) for the assessment year 2019-20.
A S Infotech E-Solution Pvt Ltd, facing an adjustment for the delay in depositing employees’ contributions to PF and ESI, contended that such adjustments were beyond the jurisdiction and scope of provisions under section 143(1) of the Income Tax Act, 1961. The Central Processing Centre in Bangalore had made the initial adjustment, which was later upheld by the CIT(A), National Faceless Appeal Centre.
The main legal issue revolved around whether the delay in depositing PF and ESI contributions justifies the disallowance of such deposits under the Act. The Tribunal, led by Shri Kul Bharat, referred to the judgement of the Delhi High Court in PCIT vs. Pro Interactive Service (India) Pvt. Ltd., which has established that such disallowances are not justified if the payments are made within the fiscal year, aligning with legislative intentions that payments should be allowed as expenditures only when actually made.
Following this precedent, the Tribunal directed the Assessing Officer to delete the disallowance, thereby allowing the grounds raised by the assessee.
This decision underscores the importance of adhering to procedural timelines for depositing employee contributions to PF and ESI. It highlights the judiciary’s stance on ensuring fair practices in tax assessments and the recognition of genuine delays in administrative processes. This ruling serves as a critical reference for other companies in similar situations, providing them with a basis to contest unjust disallowances related to employee contributions.
The case sheds light on the broader implications of tax administration and compliance, emphasizing the need for clarity and consistency in the application of tax laws, especially concerning employee benefits and their timely deposit.
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