The case between Advance Lamp Component and Table Wares Pvt. Ltd. and the AO, Circle 1(2), Delhi, centers around the contentious penalties imposed for the late deposit of PF and ESI contributions for the assessment year 2019-2020.
The company filed its income tax return declaring an income of Rs. 59,97,310 for the year. Following a reassessment by the CPC, an additional Rs. 2,25,292 was added, triggering a dispute on the timely deposit of PF and ESI contributions under Section 36(1)(va) of the Income Tax Act.
Before the ITAT, arguments centered on the statutory interpretations and amendments introduced by the Finance Act 2021 regarding the penalties for late contributions. The tribunal, referring to prior high court judgments, sided with the taxpayer, ruling that contributions made before filing the income tax return should not attract penalties.
This case highlights the continuing debate over the legislative interpretations of PF and ESI deposit timelines and their implications on taxpayers’ liabilities. The tribunal’s decision reinforced the stance that amendments made by the Finance Act 2021, which specify the non-applicability of certain penalties retrospectively, should be interpreted as applying only from the assessment year 2021-22 onwards.
The ruling in favor of Advance Lamp Component and Table Wares Pvt. Ltd. provides clarity on the application of legislative amendments and their temporal scope, offering significant relief to businesses grappling with similar issues.
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