Case Number: ITA 1402/DEL/2021
Assessment Year: 2019-20
Date of Order: 2022-04-26
Kepler Canon International Pvt. Ltd., a Gurgaon-based company, filed an appeal against the Income Tax Department’s (CPC, Bengaluru) decision regarding the disallowance of Provident Fund (PF) and Employee State Insurance (ESI) contributions claimed as deductions. The main contention was the alleged delay in depositing these contributions as per statutory requirements.
The tribunal reviewed the case alongside other similar cases involving delayed PF/ESI contributions. The primary legal question was whether the late deposit of employee contributions could justify a disallowance of these deductions under tax laws, specifically in light of amendments made by the Finance Act, 2021.
The appellant argued that all contributions were deposited before filing the tax return, although the deposits were made after the statutory due date due to unavoidable delays. Legal precedents and amendments to the Income Tax Act were discussed, with particular emphasis on whether these should apply retrospectively or prospectively.
The tribunal, citing various precedents including the ruling in CIT vs. AIMIL Ltd., decided in favor of the assessee. It was held that the legislative intent of the amendments was not to penalize genuine delays that were rectified before tax filing. Thus, the appeal was allowed, and the previous disallowance by the CPC was overturned.
This decision underscores the importance of understanding the specific provisions of tax laws regarding employee contributions to PF and ESI. It highlights the judiciary’s role in interpreting legislative changes and ensuring that tax administration remains fair and equitable.
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