LMG Consulting Services India Private Limited (Formerly known as Splash Fashions India Private Limited), Bangalore V. Assistant Director Of Income Tax, CPC, Bangalore

MA 133/BANG/2022

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The case involves M/s. LMG Consulting Services India P. Ltd., which filed a miscellaneous application concerning an earlier Tribunal order that inadvertently omitted to adjudicate a specific ground related to disallowance under section 37 of the Income Tax Act. The Tribunal acknowledged the oversight and remanded the issue back to the CIT(A) for a detailed examination. Furthermore, the Tribunal corrected its previous stance on the disallowance of delayed payments of Employee PF Contributions, following the Supreme Court's decision which differentiated the treatment of employee's and employer's contributions regarding the due dates for tax deductions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115308 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 05-01-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 28-11-2022
• Other Referred Cases: CHECKMATE SERVICES PVT LTD VS CIT-1, CIT Vs. Saurashtra Kutch Stock Exchange, Honda SielPower Products Ltd. v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 37; 139(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU “A” BENCH, BENGALURU Before Shri Chandra Poojari, Accountant Member and Smt. Beena Pillai, Judicial Member MPNo. 133/Bang/2022 (Arising out of ITA No. 449/Bang/2022 (Assessment Year: 2019-20) M/s. LMG Consulting Services India P. Ltd. 4th Floor, Building No. 3 77 Town Centre, Off HAL Airport Road, Yemlur Bangalore 560037 PAN – AARCS5369N vs Assistant Director of Income Tax CPC, Bangalore (Applicant) (Respondent) Applicant by:Shri Ankur Pai, Advocate Respondent by:Shri K. Sankar Ganesh, JCIT-DR Date of hearing: 06.01.2023 Date of pronouncement: 13.01.2023 O R D E R Per: Beena Pillai, J.M. The present miscellaneous application has been filed by the assessee in order dated 21.07.2022 passed by this Tribunal in ITA No. 449/Bang/2022. 2.It is submitted by the learned A.R. that Ground No.2 raised by the assessee has not been adjudicated. On verification of records and logbook noting it is found that said ground was argued. However, inadvertently the same was not adjudicated. Accordingly Ground No. 2 raised by the assessee is adjudicated as under: - MP No. 133/Bang/2022 M/s. LMG Consulting Services India P. Ltd. 2 “2. Disallowance under section 37 of the Act on account of inconsistency in addition made under section 37 of the Act in ROI vis-à-vis disclosure made in Tax Audit Report ["TAR"] 2.1 The Learned CIT(A) grossly erred in not adjudicating on the grounds of appeal raised by the Appellant against adjustment of INR 1,82,71,882 made by the Learned ADIT, CPC towards inconsistency in disallowance in ROI vis-a-vis disclosure in TAR. The Learned CIT(A) ought to have appreciated the submissions made by the Appellant substantiating the inconsistency. 2.2 The Learned ADIT, CPC and the Learned CIT(A) ought to have appreciated that the amount disclosed in clause 21(a) of TAR was entirely disallowed by the Appellant in the ROI and further adjustment would result in a double disallowance.” It is submitted by the Ld.AR that the said ground has not been adjudicated by the Ld.CIT(A) and accordingly the same deserves to be remanded. The Ld.AR submitted that all the details in respect of the claim in this ground has been part of record before the Ld.CIT(A). The Ld.AR did not object for remanding this issue back to the Ld.CIT(A). Considering the submissions we remand this issue to the Ld.CIT(A) with a direction to decide the claim raised in the said ground on merits having regard to the submissions/ evidences/documents filed by the assessee. Accordingly this ground raised by the assessee stands allowed for statistical purposes. In the result, the MP filed by the assessee is partly allowed. A perusal of the order dated 27.07.2022 passed by this Tribunal we note that the issue considered was in respect of remittance of PF & ESI that was disallowed by the learned AO under Section 36(1)(va) of the Act. This Tribunal had allowed the said ground following the decision of the Hon'ble Jurisdictional High Court that was applicable at the relevant period. MP No. 133/Bang/2022 M/s. LMG Consulting Services India P. Ltd. 3 However, considering the fact that Hon’ble Supreme Court rendered in the case of CHECKMATE SERVICES PVT LTD VS CIT-1 in CIVIL APPEAL 2833/2016 vide its judgment dated 12/10/2022 decided the issue on allowability/treatment of ‘delayed’ Employee PF Contribution payment in hands of assessee under provisions of Income Tax Act. Accordingly, we suo moto rectify this mistake which is apparent by observing as under: - In the aforesaid order dated 20.09.2022, the Tribunal held that the Revenue authorities were not justified in making a disallowance on delayed payment of employee’s contribution to ESI and PF of Rs.45,34,701/- made by the assessee beyond the due date by invoking the provisions of section 36(1)(va) of the Act, but within the due date for filing return of income u/s.139(1) of the Act. As per the decision of the Hon’ble Supreme Court rendered in the case of CHECKMATE SERVICES PVT LTD VS CIT-1 (supra) held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of the Act. The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va) of the Act. On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B of the Act and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified. We note that the issue raised by the assessee in this ground has been decided by the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra). Further the Hon'ble Supreme Court in the case of CIT Vs. Saurashtra Kutch Stock Exchange case 219 CTR (SC) 90 has held that non- consideration of the decision of the jurisdictional high court/Supreme Court constitutes mistake apparent from record and is rectifiable within the meaning of section 254(2) of the Act. In Honda SielPower Products Ltd. v. CIT 295 ITR 466, the Hon’ble Supreme Court explained the scope of rectification powers u/s/254(2) of the Act, as follows: MP No. 133/Bang/2022 M/s. LMG Consulting Services India P. Ltd. 4 “Scope of the Power of Rectification: 12. As stated above, in this case we are concerned with the application under section 254(2) of the 1961 Act. As stated above, the expression "rectification of mistake from the record" occurs in section 154. It also finds place in section 254(2). The purpose behind enactment of section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal. In the present case, the Tribunal in its Order dated 10.9.2003 allowing the Rectification Application has given a finding that Samtel Color Ltd. (supra) was cited before it by the assessee but through oversight it had missed out the said judgment while dismissing the appeal filed by the assessee on the question of admissibility/allowability of the claim of the assessee for enhanced depreciation under section 43A. One of the important reasons for giving the power of rectification to the Tribunal is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record. 13. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income-tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the coordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record. The Tribunal has acknowledged its mistake, it has accordingly rectified its order. In our view, the High Court was not justified in interfering with the said order. We are not going by the doctrine or concept of inherent power. We are simply proceeding on the basis that if prejudice had resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case.” MP No. 133/Bang/2022 M/s. LMG Consulting Services India P. Ltd. 5 Accordingly ground No. 1 raised by the assessee stands dismissed. Order pronounced in the open Court on 13 th January, 2023. Sd/- Sd/- (Chandra Poojari) (Beena Pillai) Accountant Member Judicial Member Bengaluru, Dated: 13 th January, 2023 Copy to: 1.The Appellant 2.The Respondent 3.The CIT(A) - 4.The CIT - 5.The DR, ITAT, Bengaluru 6.Guard File By Order //True Copy// Assistant Registrar ITAT, Bengaluru n.p.