Introduction:
The Income Tax Appellate Tribunal, Delhi Bench, recently ruled on the matter of Reloy Shield Private Limited (the appellant) against the Deputy Commissioner of Income Tax, Circle 19 (1), New Delhi (the respondent). The appeal, registered as I.T.A. No. 972/Del/2023, pertains to the assessment year 2020-21 and challenges the order of the Commissioner of Income Tax (Appeals) dated 18.01.2023. The appellant contested an adjustment and addition made by the Assessing Officer under section 143(1)(a)(iv) of the Income Tax Act.
Grounds of Appeal: The appellant raised several substantive grounds of appeal, including objections to the adjustment of Rs.26,04,546 under section 143(1)(a)(iv), an addition of the same amount for employees’ contribution under PF and ESI Act, and the applicability of amendments introduced by the Finance Act 2021. The appellant argued that the adjustment and addition were not justified, citing legal and factual errors.
Appellant’s Arguments: The appellant, represented by Shri Anshul Rana, Chartered Accountant, emphasized that the Assessing Officer’s addition was based on the alleged non-deposit of employees’ contribution to PF before the due date. The appellant contested this, asserting that all dues were deposited before filing the income tax return. The legal counsel relied on relevant case laws, including CIT Vs. AIMIL Ltd. and DCIT, New Delhi Vs. M/s. Pro Interactive Services Pvt. Ltd., to support the contention that deductions could be claimed if payments were made before the due date of filing the return.
Legal Framework and Amendments: The appellant drew attention to the amendments introduced by the Finance Act 2021, specifically explaining that these changes were prospective in nature, applicable only from Assessment Year 2021-22 onwards. The amendments included an explanation to section 36(1)(va) and section 43B to clarify the treatment of employees’ contributions and the due dates for deposits.
Tribunal’s Decision: The Tribunal, after considering the appellant’s arguments and relevant legal precedents, upheld the order of the Commissioner of Income Tax (Appeals). The Tribunal referenced the decision of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. Vs. CIT, where it was ruled that employees’ contributions remitted beyond the due dates specified under PF/ESI Act were not allowable as deductions under section 36(1)(va) of the Income Tax Act. The Tribunal rejected the appellant’s claim that the amendments were prospective and affirmed the Commissioner’s well-reasoned order.
Conclusion: In conclusion, the Income Tax Appellate Tribunal dismissed the appeal, affirming the decision of the Commissioner of Income Tax (Appeals) and providing clarity on the treatment of employees’ contributions to PF/ESI in the context of income tax deductions. The judgment reiterates the significance of timely deposits and the retrospective application of relevant amendments, emphasizing compliance with statutory due dates for claiming deductions.
