Income Tax Appeal Case: ITA 1121/DEL/2022
Kalinga Cables & Conduit Co., New Delhi vs. ACIT, Circle-44(1), New Delhi
Assessment Year: 2019-20
Result: Allowed
Summary of Judgment
The Income Tax Appellate Tribunal (ITAT) Delhi bench adjudicated the appeal filed by Kalinga Cables & Conduit Co. against the Assistant Commissioner of Income Tax (ACIT), Circle-44(1), New Delhi for the Assessment Year 2019-20. The core issue revolved around the disallowance made under Section 36(1)(va) of the Income Tax Act, 1961 concerning the delayed deposit of employees’ contribution to ESI and PF.
The appellant contended that the contributions towards ESI and PF were made before the due date of filing the income tax return and hence should be allowed. The respondents supported the disallowance, invoking the amendments brought in by the Finance Act, 2021, which were clarified to be clarificatory in nature and applicable retrospectively.
However, drawing upon various precedence and judicial pronouncements, including the significant ruling of the jurisdictional High Court in CIT Vs. AIMIL Ltd. and the landmark judgment by the Supreme Court in M.M. Aqua Technologies Ltd. vs. CIT, the Tribunal decided in favor of the assessee. It was held that amendments made by the Finance Act, 2021, to Sections 36(1)(va) and 43B of the Act don’t apply retrospectively in altering the law as it stood before the amendment. Moreover, payments towards employees’ ESI and PF contributions made before the due date for filing of return of income are to be allowed, and any disallowance in this regard was directed to be deleted.
The case stands as a notable judgment reinforcing the stance on timely compliance of statutory dues in respect to employees’ welfare contributions and the scope of their deductibility under the Income Tax Act.
