Case Number: ITA 1540/DEL/2020
Appellant: Maksat Technologies (P) Ltd, New Delhi
Respondent: DCIT Circle-16(1), New Delhi
Assessment Year: 2017-18
Result: 2017-18
Case Filed On: 2020-09-03
Order Type: Final Tribunal Order
Date of Order: 2021-06-30
Pronounced On: 2021-06-30
The case of Maksat Technologies vs DCIT Circle-16(1), New Delhi revolves around the disallowance of belated payments of employee contributions towards Employee Provident Fund (EPF) and Employee State Insurance (ESI) for the assessment year (AY) 2017-18. The appeal was filed by Maksat Technologies against the order of the Commissioner of Income Tax (Appeals), which upheld the disallowance made by the Assessing Officer (AO).
Maksat Technologies Pvt Ltd, filed its return of income on 28.10.2017, declaring a total income of Rs. 6,39,64,480/-. During the processing of the return, the Centralized Processing Centre (CPC) identified two errors: an incorrect claim related to profit on sale of fixed assets and the disallowance of employee contributions to EPF and ESI that were not deposited within the due dates prescribed under the respective laws. The AO added Rs. 7,75,519/- as profit on sale of fixed assets and disallowed Rs. 51,11,745/- for delayed employee contributions to EPF and ESI.
The assessee raised the following grounds of appeal:
The Tribunal examined whether the disallowance of employee contributions to EPF and ESI was justified when the payments were made before the due date of filing the return under Section 139(1). The assessee’s counsel cited several judicial precedents, including the decisions in CIT vs. Alom Extrusions Ltd. and CIT vs. Aimil Ltd., where it was held that contributions made before the due date of filing the return should not be disallowed.
The Revenue relied on the decision in CIT vs. Bharat Hotels Ltd., arguing that the contributions should be disallowed if not made within the due dates specified under the respective laws.
The Tribunal noted that the jurisdictional High Court had consistently held that employee contributions to EPF and ESI made before the due date of filing the return should not be disallowed. Therefore, the Tribunal concluded that the claim of the assessee was supported by judicial precedents and could not be considered an incorrect claim.
The Tribunal also addressed the issue of the addition of Rs. 7,75,519/- as profit on sale of fixed assets. The assessee argued that this amount was incorrectly grouped but did not affect the computation of taxable income. The Tribunal found that this adjustment was an error of grouping and should not result in an addition to the total income.
The Tribunal concluded that both adjustments made by the CPC were incorrect:
In conclusion, the Tribunal reversed the orders of the lower authorities and directed the AO to delete both adjustments made in the intimation under Section 143(1) of the Income Tax Act.
Order pronounced in the open court on 30th June, 2021.
Sd/-
(K. N. CHARY)
JUDICIAL MEMBER
Sd/-
(PRASHANT MAHARISHI)
ACCOUNTANT MEMBER
Dated: 30th June, 2021
Copy forwarded to:
ASSISTANT REGISTRAR
ITAT, New Delhi
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