This case addresses the disallowance of expenditure towards employee contributions to ESIC and PF under Section 36(1)(va) of the Income Tax Act, 1961, for the Assessment Year 2020-21.
Laurels (India) Impex Pvt. Ltd. faced additions to their taxable income due to the late deposit of employee contributions to PF and ESI as identified by the AO, CPC during return processing for AY 2020-21.
The company appealed against the initial decision at the CIT(A) which upheld the disallowance based on the Supreme Court’s ruling in a similar case. Disputing the timeline and methodology of the deposit of employee contributions, the company argued for a reconsideration of the dates from which penalties for late deposits should apply.
The case reached the ITAT, where the tribunal decided to remit the matter back to the AO to verify the actual deposit dates of the employee contributions. The tribunal’s decision was influenced by similar cases and aimed to ensure a fair assessment process.
This case highlights the complexities involved in the compliance of employee contributions to social security schemes under the Income Tax Act and the judicial scrutiny associated with it. The tribunal’s decision to re-evaluate the case underscores the importance of accurate record-keeping and compliance to statutory timelines.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform