ITA No. 734/DEL/2022 – Stelatoes Shoe Bazar vs. Circle-53(1), Delhi

Judgment Summary – ITA No. 734/DEL/2022

Case Details:
Appellant: Stelatoes Shoe Bazar, New Delhi
Respondent: Circle-53(1), Delhi
Assessment Year: 2018-19
Case Number: ITA 734/DEL/2022
Result: Allowed

Introduction

This document presents a comprehensive analysis of the Income Tax Appellate Tribunal’s (ITAT), Delhi Bench ‘G’, decision on the ITA 734/DEL/2022 case. The appeal involves Stelatoes Shoe Bazar and Circle-53(1), Delhi, focusing on the assessment year 2018-19. The core issue revolves around the disallowance of employee’s contributions to PF/ESI due to late deposits as per respective acts and its implications under various sections of the Income Tax Act, 1961.

Background

The appellant, Stelatoes Shoe Bazar, contested the decision of the lower income tax authority regarding the disallowance of certain deductions related to late deposits of employee contributions towards Provident Fund (PF) and Employee’s State Insurance (ESI). According to the appellant, these amounts, although deposited late as per the statutory due dates, were made before the due date of filing the income tax return under section 139(1). Thus, they sought relief based on various judicial precedents that allow such deductions if the deposits are made within the aforesaid timeline.

Judgment Details

The Bench, comprising Judicial Member, Shri Kul Bharat, and Accountant Member, Shri Pradip Kumar Kedia, delivered the judgment. After thorough examination, the ITAT allowed the appeal, favoring the appellant. It was held that for the purpose of deductions under sections 36(1)(va) and 43B of the Income Tax Act, the legislative intent was to permit deductions for payments made actually, without the intention to treat belated payments of employee contributions as deemed income under Section 2(24)(x).

The Tribunal followed various judicial precedents, highlighting the decision in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd and others, to emphasize that amendments effected from the Finance Act, 2021, applicable from AY 2021-22 onwards, do not impact assessments for earlier years.

Conclusion

Stelatoes Shoe Bazar’s appeal was allowed, emphasizing the principle that deductions for employee contributions to PF and ESI, if deposited before the due date of filing of income tax returns, are permissible. This judgment aligns with the practice of providing relief to assessees for unintentional delays, promoting compliance without penal consequences for actions corrected within the specified timeframe.

This detailed analysis indicates a positive step towards understanding the complexities involved in tax assessments and the judicial interpretations that aim to balance statutory compliance with practical challenges faced by taxpayers.