The Income Tax Appellate Tribunal (ITAT) Delhi’s decision in the case of Varahamurti Flexirub Industries Pvt. Ltd. vs. DCIT, CPC, Bengaluru, delves into the complexities surrounding the disallowance of delayed Provident Fund (PF) and Employee State Insurance (ESI) contributions under ITA 1431/DEL/2021 for the assessment year 2019-20.
Varahamurti Flexirub Industries Pvt. Ltd., challenged disallowances made by the CPC, Bangalore regarding delayed deposits of PF and ESI contributions. The case highlights significant procedural and interpretative issues relating to the Income Tax Act’s sections 36(1)(va) and 43B, particularly after amendments introduced by the Finance Act, 2021.
The tribunal examined whether contributions to PF and ESI deposited by the assessee before the filing of the income tax return but after the statutory due date should still be disallowed. Precedents from the Delhi High Court and other jurisdictions were considered, which generally favored the assessee in similar circumstances.
Discussion in the tribunal also touched upon the implications of the Finance Act, 2021, which clarified the non-applicability of certain sections to delayed contributions. The tribunal noted that these amendments are prospective and did not apply to the year under review, thus not affecting the case’s outcome.
The tribunal’s decision to allow the appeal underscores the need for clarity in tax law enforcement and the importance of adhering to legislative intent. This case serves as a crucial reference for understanding how delayed PF and ESI contributions are treated under evolving tax law.
Order Date: 2022-05-17
Judges: Shri Kul Bharat, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member
Legal Insight: Varahamurti Flexirub vs. DCIT on Delayed PF and ESI Contributions – ITA 1431/DEL/2021
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