DCIT, CC-1, NEW DELHI V. AJAY ENTERPRISES PVT. LTD., NEW DELHI

MA 139/DEL/2023

AI Insights

The case revolves around a Miscellaneous Application filed by the Revenue seeking to recall an earlier Tribunal order that had provided relief to Ajay Enterprises Pvt. Ltd. regarding a disallowance made under section 36(1)(va) of the Income-tax Act, 1961 for non-deposit of employees' contributions to PF/ESIC within the prescribed due dates. The initial relief was based on precedents that were later overturned by a Supreme Court decision, which the Revenue argued necessitated a recall of the Tribunal's order. However, the Tribunal found that the change in judicial interpretation does not qualify as a 'mistake apparent from the record' under section 254(2) of the Act, leading to the dismissal of the Revenue's application.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23755 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: Checkmate Services P. Ltd. vs. CIT, CIT vs. AIMIL Ltd., PCIT vs. Pro Interactive Service (India) Pvt. Ltd., CIT vs. M/s Vegetable Products Ltd., CIT vs. Reliance Telecom Ltd., ACIT vs. Saurashtra Kutch Stock Exchange Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REUBEN MATHEW JACOB
• Assessee Lawyers: R.K. KAPOOR
• Section: 192; 254(2); 56(2); 43B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : A : NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER Miscellaneous Application No.139/Del/2023 (ITA No.1563/Del/2021) Assessment Year: 2019-20 DCIT, CC-1, New Delhi. Vs Ajay Enterprises Pvt. Ltd., 8th Floor, Eros Corporate Tower, Nehru Place, New Delhi – 110 019. PAN : AAACA1967D (Applicant) (Respondent) Assessee by : Shri R.K. Kapoor, Advocate Revenue by : Shri Reuben Mathew Jacob, Sr. DR Date of Hearing : 13.12.2024 Date of Pronouncement : 01.01.2025 ORDER PER ANUBHAV SHARMA, JM: This Miscellaneous Application is filed by the Revenue in regard to the order dated 27.09.2022 and the ld. DR, arguing on the merits of the application has submitted that in the light of the judgement of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. vs. CIT, 143 Taxmann.com 178, on the issue of allowability of deduction u/s 36(1)(va) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), the order dated 27.09.2022 is required to MA No.139/Del/2023 2 be recalled and the issue should be decided afresh considering the submissions of both the sides. 2. The background of the present application is that CPC, Bangalore had made a disallowance of Rs.1,37,994/- u/s 36(1)(va) of the Act on account of non-deposit of employees contribution of PF/ESIC before the prescribed due dates which was sustained by the ld.CIT(A). However, the coordinate Bench, by order dated 27.09.2022 had given relief to the assessee by following the judgement of the Hon’ble Delhi High Court in CIT vs. AIMIL Ltd., 321 ITR 508 and PCIT vs. Pro Interactive Service (India) Pvt. Ltd., ITA No.983/2018, order dated 10.09.2018, holding that the amendment in section 36(1)(va) and section 43B of the Act effected by the Finance Act, 2021 are applicable prospectively and not retrospectively. Subsequently, the Hon’ble Supreme Court by order dated 12.10.2022 in the case of Checkmate Services Pvt. Ltd. (supra) has held that the employees contribution of ESI and PF have to be deposited before the due date under the respective statutes and otherwise are liable to be disallowed. 3. The ld. AR has relied the decision of the Mumbai Tribunal in the case of DCIT vs. ANI Integrated Services Ltd., MA No.167/Mum/2023, order dated 29.05.2024, to contend that Mumbai Bench has taken a view on this contentious aspect holding that the scope of section 56(2) is limited and review of an order is not possible. MA No.139/Del/2023 3 4. We have given thoughtful consideration to the matter on record and on facts of the present case. It is the settled proposition of law that in fiscal litigation, each assessment year is separate and independent. It has been affirmed by the Hon’ble Delhi Court in Goslino Mario Case (2000) 242 ITR 312 that a cardinal principle of the Tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. In Reliance Jute and Industries Ltd. V CIT (1981) 2 SCC 585 also this proposition law is recognized. 5. We can observe that the coordinate Bench while passing the order has taken into consideration the judgments in favour of assessee. Hon’ble Supreme Court in the case of CIT vs. M/s Vegetable Products Ltd., 88 ITR 192 has held for that if two reasonable constructions of a taxing provision are possible, the construction which favours the assessee must be adopted. The coordinate Bench has, thus, given the assessee the benefit of the view of various Hon’ble High Courts favouring the assessee. Thus, where assessee is benefited due to one favorable view then, due to subsequent judgment reversing that view, cannot be said to be a mistake apparent from record, requiring exercise of powers u/s 254(2) of the Act. 6. Even otherwise, after the judgement of the Hon’ble Supreme Court in the case of CIT vs. Reliance Telecom Ltd. (2022) 440 ITR 1 (SC), the powers u/s 254(2) being recognized as akin to power of Review under order XLVII, Rule 1 CPC, the same restricts the scope of review as it is only mistake apparent from MA No.139/Del/2023 4 record which can be rectified and, according to the requirement of the nature of rectification, the order may be recalled or re-heard. The Explanation attached to the order XLVII Rule 1 CPC specifically provides that merely because of reversal or modification of a judgment of a court which has been relied in a decision, that alone will not be a ground for review of the judgment. Thus for the reason that assessee was given benefit by following the law, as stood then, as laid by Hon’ble High Court, the same cannot be termed as “mistake apparent from record”. 7. The judgment relied by the Revenue of the Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227/173 Taxman 322 is not applicable, as that was not a case where one of the possible views in favour of the assessee was accepted by the Bench but in that case the attention of the Bench was not drawn to certain decisions in favour of the assessee which then existed and, subsequently, when the assessee came to know about the judgement an application u/s 254(2) of the Act was filed bringing it to the notice of the Tribunal. 8. Consequently the application has no merit and is dismissed. Order pronounced in the open court on 01.01.2025. Sd/- Sd/- (M. BALAGANESH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 01st January, 2025. MA No.139/Del/2023 5 dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "