This article delves into the ITA Nos. 1675 & 1676/Del/2021 for the assessment years 2018-19 and 2019-20, where M/s. VHS Enterprises of A-89, Malviya Nagar, South Delhi, contested disallowances made by the National Faceless Appeal Centre (NFAC) regarding delayed contributions to Provident Fund (PF) and Employee State Insurance (ESI).
The case was brought before the ITAT, Delhi Bench ‘F’, presided over by Shri Saktijit Dey, Judicial Member, and Shri N.K. Billaiya, Accountant Member, following disallowance by NFAC of deductions claimed of Rs.63,99,800 for AY 2018-19 and Rs.14,29,600 for AY 2019-20. Representations were made by Sh. Sandeep Kumar, CA for the appellant and Sh. Atiq Ahmed, Sr.DR for the respondent.
The primary issue was the timing of the contributions to employees’ PF and ESI funds. The tribunal noted that the contributions were made before the due date of filing the income tax return under section 139(1) of the Act, though not within the time prescribed by the relevant statutes. Drawing on various legal precedents and amendments, including the Finance Act 2021, the tribunal aligned with previous decisions that allowed such deductions if the contributions were made before the due date of filing the income tax returns.
The decision highlighted the tribunal’s stance on adhering to the precedent set by co-ordinate benches and various high court rulings, thereby allowing the deductions for the appellant. The tribunal’s detailed examination of legislative changes and judicial precedents provided a comprehensive overview of the complexities involved in the timing of employee contributions to welfare funds.
The tribunal’s decision in favor of VHS Enterprises underscored the importance of timing in the deposit of employee contributions to PF and ESI, reaffirming the legal stance that allows such deductions under specified conditions. This case serves as a critical reference for similar disputes regarding the timing of employee contributions to welfare funds.
Order pronounced in the open court on 28th March, 2022.
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