This appeal involves Girdhari Yadav, the appellant, against the Additional Director of Income Tax (ADIT), Central Processing Center (CPC), Bengaluru. The issue pertains to the disallowance related to late deposits of Provident Fund (PF) and Employee State Insurance (ESI) contributions for the assessment year 2019-20.
The case was presented before the Delhi ITAT Bench ‘G’, with Sh. Anil Chaturvedi and Sh. Kul Bharat presiding. The appellant challenged the previous orders that upheld the disallowances made by the assessing officer regarding the late deposit of employee contributions towards PF and ESI.
The tribunal noted that similar cases had previously established precedents favoring the appellant under similar circumstances. The crux of the argument was whether the late payment of these contributions should result in disallowances when such payments were made before the filing of the return. The tribunal followed earlier High Court decisions, particularly referencing the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd., to rule in favor of the appellant, thereby setting aside the disallowance.
This ruling underscores the tribunal’s stance on the timing of contributions towards employee welfare funds and its implications on tax liabilities. It highlights the legislative intent to treat such payments as expenditures only when they are actually made, even if delayed, provided they are completed before the tax filing deadline.
The appeal by Girdhari Yadav was allowed, reinforcing the principle that compliance with the due dates for depositing employee contributions can mitigate potential tax penalties, albeit the contributions must still be made before filing the income tax returns. This decision provides significant relief to taxpayers facing similar issues and clarifies the application of related income tax laws.
Order pronounced in the open court on April 25, 2022.
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