ADIT, CPC, Bengaluru V. M/s. S.N.Sharma, Angul

MA 15/CTK/2022

AI Insights

The case revolves around the disallowance of employee's contributions to PF and ESI under sections 36(1)(va) and 2(24)(x) of the Income Tax Act, respectively. The revenue sought to recall a previous tribunal order, citing a Supreme Court decision in Checkmate Services Pvt Ltd vs CIT, which held that contributions not paid within the prescribed time under the relevant PF Act are not allowable under section 43B, even if paid before the due date of filing the return under the Income Tax Act. The tribunal, referencing a similar case (Nirakar Security & Consultancy Services Pvt Ltd vs ITO), restored the issue to the Assessing Officer for further examination.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 300231 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-12-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-12-2022
• Assessment Year: 2019-2020
• Appeal Filed On: 02-11-2022
• Other Referred Cases: Checkmate Services Pvt Ltd vs CIT, Nirakar Security & Consultancy Services Pvt Ltd vs ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER ACIT, Circle 1(1), Bhubaneswar PAN/GIR No (Appellant Per Bench By way of th Act, the revenue Tribunal in ITA No. 2019-20. 2. Shri Binod Agarwal Shri S.C.Mohanty 3. Ld S.R. is disallowance of employee’s contribution to PF and ESI u/s.36(1)(va) r.w.s 2(24)(x) of the Act. It was his submission IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER M.A.No.15/CTK/2022 (in ITA No.125/CTK/2021) Assessment year: 2019-2010 T, Circle 1(1), Bhubaneswar Vs. M/s. S.N.Sharma, Panchamahala, Karadagadia, Angul PAN/GIR No.ACGFS 0722 B (Appellant) .. ( Respondent Assessee by : Shri Binod Agarwal Revenue by : Shri S.C.Mohanty, Sr Date of Hearing : 30/12 Date of Pronouncement : 30/12 O R D E R By way of this miscellaneous application u/s Act, the revenue seeks to recall the order dated 6.4.20 Tribunal in ITA No. 125/CTK/2021 for the assessment year Shri Binod Agarwal, ld AR appeared for the assessee and Shri S.C.Mohanty, ld Sr. DR appeared for the revenue. Ld S.R.DR submitted that the issue involved in this appeal is disallowance of employee’s contribution to PF and ESI u/s.36(1)(va) r.w.s 2(24)(x) of the Act. It was his submission Page1 | 4 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER 21) 2010 M/s. S.N.Sharma, Panchamahala, Karadagadia, Angul Respondent) Binod Agarwal, AR , Sr DR 12/2022 12/2022 miscellaneous application u/s.254(2) of the seeks to recall the order dated 6.4.2022 of the for the assessment year appeared for the assessee and DR appeared for the revenue. submitted that the issue involved in this appeal is disallowance of employee’s contribution to PF and ESI u/s.36(1)(va) r.w.s 2(24)(x) of the Act. It was his submission M.A.No.15/CTK/2022 (in ITA No.125/CTK/2021) Assessment year: 2019-2010 Page2 | 4 that the issue is not settled by the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT in Civil Appeal No.2833 of 2016 order dated 12.10.2022. He, therefore, prayed that the order of the Tribunal dated 6.4.2022 be recalled for fresh hearing. 4. We have considered the rival submissions. It is noticed that the issue is in respect of delay payment of employees contribution to PF and ESI paid beyond the due date under the respective Act but before the due date of filing of return is squarely covered by the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT in Civil Appeal No.2833 of 2016 dated 12.10.2022, wherein, the Hon’ble Supreme Court has categorically held that if the employees contribution to PF and ESI has been paid beyond the time prescribed under the relevant PF Act, then same is not allowable under section 43B even after the payment has been made before the due date of filing of return under the Income tax Act. 5. The law laid down by the Hon’ble Supreme Court is the law of the land as it is to be understood from the incorporation of the provisions. Consequently, there is a mistake apparent from the order of the Tribunal dated 6.4.2022. This being so, the order of the Tribunal dated 6.4.2022 is recalled and the M.A. filed by the revenue stand allowed. M.A.No.15/CTK/2022 (in ITA No.125/CTK/2021) Assessment year: 2019-2010 Page3 | 4 6. It is further noticed that the issue is now squarely covered by the decision of the Co-ordinate bench of this Tribunal in the case of Nirakar Security & Consultancy Services Pvt Ltd vs ITO in ITA No.98/CTK/2022 for Assessment Year 2016-17, order dated 17.10.2022, wherein, the Co-ordinate Bench of this Tribunal has restored the issue to the file of the Assessing officer with the following directions: “6. Liberty is granted to the ld AR to make all submissions in respect of allowability of disallowed contribution of the employees to PF and ESI under other relevant provisions in the interest of justice. This direction is being given because ld AR has submitted that as the amount is not allowable under section 36(1)(va) of the Act and same is also not covered under section 43B of the Act, the amount of delayed contribution to PF and ESI in respect of employees contribution would be treated as income in the hands of the assessee u/.s.2(24)(x) and on subsequent payment of the same, it would be a business expenditure, which can be claimed u/s.37(1) of the Act. We are not expressing any opinion in regard to his arguments as it has not been examined by the lower authorities. Liberty is also granted to the assessee to raise all arguments as are found necessary by him before the lower authorities.” 7. As the issue in the present appeal is also identical to the issue in the case of Nirakar Security & Consultancy Services Pvt Ltd.,(supra), on identical findings the issue in this appeal is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard. M.A.No.15/CTK/2022 (in ITA No.125/CTK/2021) Assessment year: 2019-2010 Page4 | 4 8. In the result, M.A. filed by the revenue stands allowed and the appeal of the assessee is partly allowed for statistical purposes. Order dictated and pronounced in the open court on 30/12/2022. Sd/- sd/- (George Mathan) (Arun Khodpia) JUDICIAL MEMBER ACCOUNTANT MEMBER Cuttack; Dated 30/12/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Assessee : M/s. S.N.Sharma, Panchamahala, Karadagadia, Angul 2. The revenue: ACIT, Circle-1(1), Cuttack 3. The CIT(A)-NFAC, Delhi 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//