Dayal Industries Pvt. Ltd. Vs DCIT (ITAT Delhi)
In a consolidated ruling, the Income Tax Appellate Tribunal (ITAT) Delhi Bench has sided with taxpayers in multiple appeals, including the lead case of Dayal Industries Pvt. Ltd., by deleting additions made by the Central Processing Centre (CPC), Bangalore, on account of delayed deposits of employee contributions to Provident Fund (PF) and Employees’ State Insurance (ESI) schemes. The Tribunal’s decision, pronounced on May 17, 2022, emphasizes that such contributions, if deposited before the due date for filing the return of income, are allowable deductions.
The appeals primarily challenged adjustments made under Section 143(1) of the Income Tax Act, 1961, particularly disallowances under Section 36(1)(va) for belated payments of ESI and EPF. The assessees argued that while there might have been a delay in remittance to the authorities, all contributions were deposited before their respective income tax returns were filed.
Assessee’s Arguments: The assessees’ counsel contended that, despite delays, the timely deposit before the filing of the income tax return should prevent disallowance. They relied on several judicial precedents, including Azamgarh Steel & Power vs. CPC (ITA No.1626/Del/2020) and the Delhi High Court’s ruling in CIT vs. AIMIL Ltd. [2010] 188 Taxman 265. Furthermore, it was argued that such disallowances, being debatable issues, should not be made through summary adjustments under Section 143(1) of the Act, which has limited powers for making such adjustments.
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