The case of Surya Design and Display versus ITO, Ward-50(4), Delhi, presented before the tribunal pertained to the disallowance of employee contributions to Provident Fund and Employee State Insurance that were delayed but deposited before the statutory deadline of income tax return filing for the assessment year 2018-19. The tribunal reviewed the amendments made to the Income Tax Act through the Finance Act, 2021, regarding the timing of such contributions.
The appeal was lodged by Surya Design and Display following a decision by the Income Tax Officer to disallow contributions to PF and ESI citing delays in deposit as per the rules prescribed under relevant acts. This was challenged on the basis that although the deposits were delayed, they were made before the due date for filing the income tax return, aligning with past judicial precedents favoring the assessee under similar circumstances.
The tribunal noted that similar cases had been consistently decided in favor of the assessee by various courts, including the jurisdictional High Court. The critical precedent referenced was the Delhi High Court’s decision in Pro Interactive Service (India) Pvt. Ltd., which underscored that delayed payments, if completed before the income tax return filing deadline, should not result in disallowance. The tribunal, therefore, decided in favor of Surya Design and Display, allowing the appeal and directing the lower authorities to reverse the disallowance.
This case highlights the importance of understanding the legislative changes and their effective dates as the tribunal emphasized that the amendments brought by the Finance Act, 2021 are applicable prospectively and do not affect assessments for the year under consideration. This decision reinforces the stance that employers can rectify delayed payments of PF and ESI without facing penalties, provided they meet the deadlines for income tax return filing.
The outcome of this case serves as a valuable precedent for similar future disputes, offering clarity on the handling of delayed employee contributions towards statutory funds within the allowed time frames. It also exemplifies the tribunal’s role in interpreting legislative changes while considering the intent behind such amendments, ensuring fair treatment of taxpayers.
Delhi Tribunal 2021 Decision: Surya Design and Display vs ITO, Ward-50(4), Delhi for AY 2018-19
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