Case Number: ITA 1398/DEL/2021
Appellant: N J Security Services, located at 404-B, Hakikat Nagar, near Jeevan Ram School, Janta Colony, Rohtak-124001
Respondent: Income-tax Officer, Ward-3, Rohtak.
Assessment Year: 2019-20
Order Date: 2022-05-12
The core issue in this appeal was the disallowance of Rs. 387,560 made by the Income-tax Officer under Section 36(1)(va) of the Income Tax Act, 1961, due to the late deposit of employees’ contributions to Provident Fund (PF) and Employee State Insurance (ESI).
The appellant, N J Security Services, argued that the contributions were deposited before the due date for filing the income tax return under Section 139(1), hence should not attract disallowance. The tribunal examined precedents including decisions by the Supreme Court and various High Courts which have addressed similar issues, showing a tendency to allow such contributions if made before the tax filing deadline.
The tribunal noted the legislative changes introduced by the Finance Act, 2021, which clarified the non-applicability of Section 43B to the scenario at hand, thereby supporting the appellant’s case. Ultimately, the tribunal ruled in favor of the appellant, allowing the appeal and reversing the disallowance initially made by the ITO.
This ruling underscores the importance of understanding both statutory provisions and judicial precedents when dealing with compliance issues related to employee contributions to welfare funds. It highlights that timely corrective action, taken before filing the tax return, can mitigate potential negative tax implications.
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