In the Income Tax Appellate Tribunal’s Delhi Bench ‘G’, the dispute in ITA No. 1928/DEL/2022 revolved around G K Fashion P.Ltd, a New Delhi based company, challenging the decision by DCIT, Circle-10(1), New Delhi. The contention centered on the disallowance of deductions for Provident Fund (PF) and Employee’s State Insurance (ESI) contributions that were not deposited by the prescribed due dates for the assessment year 2019-20.
The bench, presided by Shri Chandra Mohan Garg, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member, deliberated on whether the late deposition of PF and ESI contributions should result in a permanent disallowance of deductions. The tribunal reviewed prior case law and statutory amendments, notably the changes brought by the Finance Act of 2021, which clarified the timelines within which such contributions must be made to qualify for deductions under the Income Tax Act.
The tribunal’s ruling acknowledged the appellant’s argument that despite the delay, all contributions were eventually deposited before the income tax return filing deadline, and thus should not attract penalties or disallowance. The decision emphasized the importance of actual payment dates in relation to the filing deadline, aligning with previous judgments that have allowed such deductions under similar circumstances.
This case highlights the complexities involved in the timing of employee benefit contributions and the implications for corporate tax liabilities. It serves as a crucial reference for businesses and tax professionals dealing with similar issues, providing insights into the interpretation of tax laws regarding employee contributions to welfare funds.
Case Analysis of ITA No. 1928/DEL/2022: G K Fashion P.Ltd vs DCIT on Delayed PF/ESI Contributions
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