The case ITA No. 1804/DEL/2020 reviews a dispute between ATC Precision Components Pvt Ltd and the ACIT concerning the addition of Rs.1,79,407 due to delayed deposit of employee contributions to Provident Fund and ESI for the fiscal year 2019-20.
The appellant contested the addition based on the argument that all dues were cleared before the filing of the tax return, thus no disallowance under Section 36(1)(va) of the Income Tax Act should apply. The case highlights the ongoing debate over the timing of such deposits and their impact on tax liabilities.
The tribunal, referencing the Supreme Court’s ruling in Checkmate Services Pvt. Ltd. vs. CIT, upheld the lower authorities’ decision, emphasizing that employee contributions must be deposited within the dates stipulated by respective Acts to avoid tax penalties.
This ruling reiterates the strict interpretation of tax laws regarding employee contributions and underscores the need for timely compliance by companies to avoid additional tax liabilities. The decision serves as a crucial reference for other companies in similar fiscal engagements.
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