Case Summary of ITA No. 1094/DEL/2022: Karan Luthra vs. ITO – Appeal Allowed

Introduction

This document provides a detailed analysis of the Income Tax Appellate Tribunal Delhi’s judgment in the case of Karan Luthra vs. Income Tax Officer, Circle-62(1), New Delhi, bearing case number ITA No. 1094/DEL/2022. The case pertains to the assessment year 2018-19 and concluded with the ruling in favor of the appellant, thereby allowing the appeal.

Background

The appellant, Karan Luthra, challenged the disallowance under Section 36(1)(va) of the Income Tax Act, 1961 concerning the delayed deposit of employees’ contributions to ESI and PF. The primary contention revolved around whether these contributions, deposited after the due date defined under their respective Acts but before the deadline for filing the return of income under Section 139(1) of the Income Tax Act, should allow for a deduction.

Legal Proceedings and Arguments

The hearing witnessed submissions from both sides. The appellant argued for the acceptance of contributions based on precedents that permitted such deductions if the deposits were made before filing the return of income. The department, represented by Senior DR Abhishek Kumar, highlighted amendments in the Finance Act 2021, emphasizing a prospective effect that did not favor the appellant’s deductions for belated contributions.

Judgement Analysis

The Tribunal, after considering various precedents and the legislative intent behind the relevant sections of the Income Tax Act and amendments thereof, ruled in favor of the appellant. It emphasized that the contributions towards employees’ ESI and PF deposited before the due date of filing the return of income are allowable deductions.

Conclusion and Impact

The verdict allowed the appeal, providing relief to the appellant and setting a notable precedent on the handling of employees’ contributions to ESI and PF within the specified time frame. This case may influence future cases with similar disputes, highlighting the importance of adhering to the prescribed timelines for depositing such contributions.

Case Summary of ITA No. 1094/DEL/2022: Karan Luthra vs. ITO – Appeal Allowed