Case Number: ITA 1168/DEL/2020
Appellant: Vatika Hotels Pvt. Ltd., New Delhi
Respondent: ACIT Central Circle-8, New Delhi
Assessment Year: 2016-17
Result: Appeal allowed regarding the late deposit of ESI & PF
Case Filed On: 2020-06-12
Order Type: Final Tribunal Order
Date of Order: 2022-10-12
Pronounced On: 2022-10-12
The case involves an appeal filed by Vatika Hotels Pvt. Ltd., New Delhi, against the Assistant Commissioner of Income Tax (ACIT) Central Circle-8, New Delhi, for the assessment year 2016-17. The appeal challenges the decision of the Commissioner of Income-tax (Appeals) [CIT(A)]-24, New Delhi, dated 13.02.2020, regarding the late deposit of Employees’ State Insurance (ESI) and Provident Fund (PF).
Vatika Hotels Pvt. Ltd. filed an appeal against the order passed by the CIT(A) concerning the disallowance of expenses due to the late deposit of ESI and PF contributions. The appellant contended that the disallowance was not justified and should be reversed.
The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘H’, New Delhi, on 11.10.2022. The bench comprised Dr. B. R. R. Kumar, Accountant Member, and Sh. Yogesh Kumar US, Judicial Member. The appellant was represented by Sh. C. S. Aggarwal, Sr. Adv., while the respondent was represented by Sh. Vivek Vardhan, Sr. DR.
The ITAT reviewed the case and noted that the issue of late deposit of ESI & PF stands covered by the order of the Tribunal in ITA Nos. 1265, 1266, 1267, 1383, 1384 & 1392/Del/2021 & Others, dated 28.02.2022. In these cases, the Tribunal had ruled in favor of the assessees on similar grounds, stating that the disallowance for late deposit of ESI and PF was not justified if the payments were made before the due date of filing the return of income under Section 139(1) of the Income Tax Act, 1961.
Based on this precedent, the ITAT allowed the appeal filed by Vatika Hotels Pvt. Ltd. The Tribunal concluded that the grounds of the appellant regarding the late deposit of ESI & PF were valid and deserved to be upheld.
The ITAT’s decision to allow the appeal of Vatika Hotels Pvt. Ltd. is a significant ruling that reinforces the principle that disallowance for late deposit of ESI and PF is not warranted if the contributions are made before the due date of filing the return of income. This ruling provides clarity and relief to taxpayers facing similar disallowances and ensures that the contributions towards employee welfare are considered timely if deposited within the extended period allowed by law.
This case highlights the importance of adhering to judicial precedents and ensuring that disallowances are made only in accordance with established legal principles. The ITAT’s decision reinforces the need for a fair and consistent application of tax laws, providing taxpayers with a clear understanding of their obligations and rights.
The dismissal of the disallowance for late deposit of ESI and PF contributions serves as a reminder to tax authorities to consider the broader context of compliance with statutory obligations. The ruling underscores the necessity of interpreting tax provisions in a manner that aligns with the intent of the law and supports taxpayer compliance. This decision will likely influence future cases involving similar issues, promoting a consistent and equitable approach to tax assessments.
Vatika Hotels Pvt. Ltd. vs. ACIT Central Circle-8 – ITA 1168/DEL/2020: Assessment Year 2016-17
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