Income Tax Appeal Case: Mira Exim Ltd vs ACIT, Circle-16(2), New Delhi – ITA No. 1245/DEL/2022
In an insightful judgment dated June 20, 2022, the Income Tax Appellate Tribunal, Delhi Bench ‘G’, presided by Shri C.N. Prasad, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member, rendered a decision that has been widely anticipated by tax professionals and businesses alike. The crux of the appeal revolved around the contentious issue of the disallowance of employees’ contribution to PF/ ESIC under the provisions of sections 2(24)(x) and 36(1)(va) of the Income Tax Act, 1961.
Background of the Case
Mira Exim Ltd, a company based in New Delhi, found itself embroiled in a dispute with the Assistant Commissioner of Income Tax (ACIT), Circle-16(2), New Delhi, for the assessment year 2017-18. The bone of contention was the disallowance made by the tax authorities regarding the employees’ contribution to Provident Fund (PF) and Employees’ State Insurance (ESI), which the company had admittedly deposited after the due dates prescribed under the respective acts but before the due date of filing the return of income under section 139(1) of the Income Tax Act.
Arguments Presented
The appellant argued that despite the delay in depositing the employees’ contributions to PF and ESI, it had complied with the requirement of depositing such contributions before the due date for filing the return of income under section 139(1). This, according to the appellant, should absolve them from the disallowances made by the assessing officer (AO).
In contrast, the Revenue contended that the failure to deposit the contributions within the prescribed timelines under the respective acts amounted to a violation, warranting disallowances.
Decision of the Tribunal
After examining the submissions made by both parties and considering the legislative amendments and judicial precedents on the matter, the Tribunal noted that the issue was no longer res-integra. It referenced numerous judic…(this section is summarized due to space constraints)…
Implications of the Judgment
This judgment sets a precedent for similar cases, providing a sigh of relief to businesses troubled by the stringent timelines of depositing employees’ contributions to PF and ESI. It underscores the Tribunal’s stance on prioritizing actual payment over adherence to procedural timelines, thus emphasizing the legislative intent behind such provisions.
