Analysis of ITA No. 1547/DEL/2021 concerning COLD FORGE, Faridabad versus the Assistant Director of Income Tax, CPC, Bangalore regarding delayed contributions to PF and ESI for the assessment year 2019-20.
The appellant, COLD FORGE, faced challenges with the Income Tax Department over additions made due to the delayed deposit of employees’ contributions to PF and ESI. The main contention revolved around the timeliness of these contributions in relation to the statutory due dates and the tax return filing deadline.
The tribunal examined whether these delayed payments, made before the income tax return was filed, should result in disallowances under section 36(1)(va) of the Income Tax Act. This case was adjudicated in the context of recent amendments by the Finance Act, 2021, clarifying the non-applicability of Section 43B to such contributions.
The ruling referenced various precedents, notably from the Delhi High Court, which have historically favored the taxpayer in similar disputes. The decision highlighted the judiciary’s stance that the legislative intent is not to penalize taxpayers for delays in such contributions if they are completed before the tax filing deadline.
This tribunal’s decision in favor of COLD FORGE underscores a lenient interpretation aimed at aiding compliance without harsh penalties for procedural delays. It also delineates the impact of legislative changes on ongoing and future assessments concerning employee contributions to welfare funds.
COLD FORGE vs ASSTT Director of Income Tax on Delayed PF and ESI Contributions: ITA 1547/DEL/2021
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