ITAT approves hold on paying tax demand to make builder pay its workers.

A construction company, which planned to take care of its workers, support staff and employees during the Covid-19 pandemic and was unable to do so because of the pending Income Tax (I-T) claim for Rs 2.91 crore, frozen bank accounts and the attachment of its debtors, received a favourable order from the Income Tax Appellate Tribunal (ITAT).

The ITAT’s Mumbai Bench intervened by considering the issue as urgent, as government advisories had called on employers during the pandemic to take care of their workforce. It also acknowledged that the builder had paid their tax dues for the financial year 2009-10 and the amount of Rs 2.91 crore related to interest and penalty outstanding.

However, Pandhes Infracon’s business activities, the construction firm, also had come to a standstill and it could not meet its obligations towards its employees.

The ITAT bench granted a stay of tax dues and suspension of the garnishee orders imposed by the I-T authorities on the company’s bankers and debtors in its first hearing, through video conferencing.

However, this favourable judgment given on April 24 by ITAT president PP Bhatt and vice president Pramod Kumar comes with conditions attached.

The funds received from a stay of the I-T claim, the unfreezing of bank accounts and the removal of garnishee orders on debtors are first to be used to pay their labourers and employees the unpaid and current wages and salaries.

The builder also pointed out that the company has to make a partly constructed building accessible to Covid-19 patients to provide quarantine services, as per the Collector’s order.

The ITAT bench claimed that to construct the quarantine facilities, the amount available after payment of wages and salaries should be used. The remainder will be used for the benefit of its construction business after fulfilling all of those obligations.

For the 25 years, Pandhes Infracon has been active in the construction business and received many contracts from government departments under the affordable housing scheme of the Prime Minister.