This analysis covers the appeal of Bhagwati Security Services against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), for the assessment year 2017-18. The case addresses disallowances made due to late deposits of PF and ESI contributions, despite legislative amendments not being applicable retrospectively.
Bhagwati Security Services, based in Saharanpur, appealed against the computation of disallowances by the CPC, Bengaluru, which significantly raised the assessed income from the declared amount. The primary contention revolves around the delayed deposit of employee contributions to PF and ESI.
The tribunal’s decision hinged on interpreting the timing of these contributions relative to amendments in the Finance Act, 2021. It was determined that the amendments specified for AY 2021-22 onwards do not apply retrospectively to AY 2017-18.
The case underscores the complexities of legislative changes in tax law and their implications on past assessment years. The tribunal’s reliance on precedent and statutory interpretation provided relief to the assessee, emphasizing the principle that laws affecting substantive rights should not apply retrospectively unless explicitly stated.
The appeal was allowed, setting a significant precedent on the non-retrospective application of tax law amendments. This case serves as a crucial reference for tax professionals and businesses grappling with similar issues.
Case Analysis: Bhagwati Security Services vs. ITO, Ward-3(3)(3), Saharanpur for AY 2017-18
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