This article provides a comprehensive overview of the proceedings and final judgment of the Income Tax Appellate Tribunal (ITAT) Delhi in the case of ITA No. 1859/DEL/2020, involving Ashirbad Infrastructure Services & Facilities Management Pvt Ltd and DCIT Circle-3(2), New Delhi, for the assessment year 2019-20.
Ashirbad Infrastructure Services & Facilities Management Pvt Ltd filed an appeal with the ITAT Delhi against the order dated 31.08.2020 by the Commissioner of Income Tax (Appeals)-I, New Delhi, which pertained to the assessment year 2019-20. The appeal was filed on November 16, 2020, challenging the disallowance of PF and ESI contributions.
The case was heard by the Delhi ‘SMC-1’ Bench of the Income Tax Appellate Tribunal, with Sh. Anil Chaturvedi, Accountant Member, presiding. The proceedings were conducted through video conferencing.
The appeal was filed against the intimation order issued by the CPC, Bangalore, under section 143(1) of the Income Tax Act, 1961. The CPC made an addition of Rs. 29,74,447/- to the returned income of the assessee, citing delayed payment of employee contributions to PF and ESI.
Shri Tilak Talwar, Adv., representing the assessee, argued that although there was a delay in depositing the employee contributions to PF and ESI, all contributions were made before the due date of filing the income tax return. He cited the decision in the case of Azamgarh Steel & Power vs CPC (ITA No. 1626/Del/2020) and CIT vs. AIMIL Ltd. (2010) 188 Taxman 265 (Delhi) to support his claim that no disallowance should be made as the payments were made before the return filing date.
Ms. Sangeeta Yadav, Sr. D.R., representing the Revenue, supported the order of the lower authorities and relied on the decision in the case of Vedvan Consultants Pvt. Ltd. vs DCIT (ITA No. 1312/Del/2020). She also argued that the amendment brought by the Finance Act 2021 should apply, which clarifies that provisions of Section 43B do not apply to employee contributions to PF and ESI.
Sh. Anil Chaturvedi, AM, observed that the contributions to PF and ESI, though delayed, were made before the due date of filing the return. He noted that various benches of the Tribunal, including the Hon’ble Delhi High Court in AIMIL Ltd., have held that such delayed deposits are allowable if made before the return filing date.
Regarding the amendment by the Finance Act 2021, he pointed out that it applies from April 1, 2021, affecting assessment years 2021-22 and onwards, and thus does not apply to the current case.
The Tribunal decided in favor of the assessee, directing the AO to delete the disallowance. Consequently, the first ground of appeal regarding the adjustment under section 143(1) was rendered academic and dismissed.
The ITAT Delhi ruled in favor of Ashirbad Infrastructure Services & Facilities Management Pvt Ltd, allowing the appeal for the assessment year 2019-20. The order was pronounced in the open court on November 11, 2021.
Order pronounced in the open court on November 11, 2021.
Signed by:
Sh. Anil Chaturvedi, Accountant Member
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