ACIT-1(1)(1), MUMBAI V. GRAVIS HOSPITALITY LTD, MUMBAI

MA 199/MUM/2023

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The case involves the Assistant Commissioner of Income Tax, Mumbai, as the appellant, and M/s Graviss Hospitality Limited as the respondent. The core issue revolves around the rectification of a previous tribunal order concerning the disallowance of deductions for delayed deposits of Employees' Contribution to Provident Fund and Employees' State Insurance. Initially, the tribunal had allowed the deductions, but following a Supreme Court decision in Checkmate Services Private Ltd. v. CIT-1, which held that such contributions must be deposited within the statutory due dates to be deductible, the Revenue filed a Miscellaneous Application for rectification of the tribunal's earlier order. The tribunal acknowledged the retrospective application of the Supreme Court's decision and allowed the rectification application, recalling the previous order for re-adjudication.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113491 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-08-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-05-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 23-02-2023
• Other Referred Cases: Checkmate Services Private Ltd. v. CIT-1, Assistant Commissioner of Income Tax, Rajkot Vs. Saurashtra Kutch Stock Exchange Ltd., Kailashnath Malhotra Vs. Joint Commissioner of Income-tax, Special Range 56, Mumbai, Assistant Commissioner of Income-tax Vs. Hughes Services (FE) Pte. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Rectification of order
• Section: 43B; 143(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER MA No. 199/MUM/2023 (Arising out of ITA No. 2075/Mum/2021) (Assessment Year: 2018-19) Assistant Commissioner of Income Tax, 1(1)(1), Mumbai, Room No. 533, 5 th Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 ................ Appellant M/s Graviss Hospitality Limited, 135-B, International Marine Drive, Netaji Subhash Marg, Marine Drive, Mumbai - 400020 [PAN: AAACT0048E] Vs ................ Respondent Appearance For the Appellant/Department For the Respondent/Assessee : : Shri V.K. Chaturvedi Shri Ravikanth Pathak Date Conclusion of hearing Pronouncement of order : : 26.05.2023 24.08.2023 O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present Miscellaneous Application has been filed by the Revenue for rectification of order, dated 28/07/2022, passed by the Tribunal in ITA No. 2075/Mum/2021, pertaining to the Assessment Year 2018-19. 2. Vide order, dated 28/07/2022, passed in ITA No. 2075/Mum/2021, Ground No. 1(a) to 1(c) raised in appeal by the Assessee were allowed. The addition of INR 19,57,906/- made by the Assessing Officer, vide order/intimation, dated 16/11/2019, issued under MA No. 199/Mum/2023 Assessment Year: 2018-19 2 Section 143(1) of the Act on account deposits of Employees’ Contribution to Provident Fund and Employees’ State Insurance Corporation after lapse of time prescribed in the applicable statute was deleted since the aforesaid deposit, though delayed, were made before the due date of filing return specified under Section 139(1) of the Act. 3. Subsequently, in the case of Checkmate Services Private Ltd. v. CIT- 1:[2022] 448 ITR 518 (SC)[12-10-2022], the Hon’ble Supreme Court has held that where an assessee failed to deposit Employees' Contribution towards Provident Fund and Employees’ State Insurance within due date prescribed in respective statutes, deduction under Section 36(1)(va) of the Act was not allowable. The non-obstante clause contained in Section 43B of the Act would not apply in the case of employees’ contribution deducted from the salary of employees and held in trust by assessee-employer. Therefore, such assessee- employer would not be absolve from the liability to deposit employees’ contribution on or before the due date specified in the respective statutes as a pre-condition for claiming deduction under Section 36(1)(va) of the Act. In view of the above judgment of the Hon’ble Supreme Court in the case of Saurashtra Kutch Stock Exchange Ltd (supra), the law laid down by the Hon’ble Supreme Court in the case of Checkmate Services Private Ltd. (supra) shall apply retrospectively. The consequence of such retrospective application would be that the disclosure made by the tax auditor in audit report in Form 3CD about the ‘Details of contributions received from employees for various funds as referred to in section 36(1)(va)’ would now become indicative of a disallowance as the mere fact that Employees’ Contribution to ESI/PF has been deposited after the expiry of due date as specified in the applicable statute would trigger MA No. 199/Mum/2023 Assessment Year: 2018-19 3 disallowance under Section 36(1)(va) read with Section 2(24)(x) of the Act for the reason that subsequent to judgment of the Hon’ble Supreme Court in the case of Checkmate Services Private Ltd. (supra), there remains no scope for any other interpretation. 4. A subsequent decision of the Hon’ble Supreme Court can validly form the basis for rectification under Section 254 of the Act in view of the judgment of the Hon’ble Supreme Court in the case of Assistant Commissioner of Income Tax, Rajkot Vs. Saurashtra Kutch Stock Exchange Ltd.: 2008] 305 ITR 227 (SC) and the decisions of the Tribunal in the case of Kailashnath Malhotra Vs. Joint Commissioner of Income-tax, Special Range 56, Mumbai [2009] 34 SOT 541 (Mum.) (TM), and Assistant Commissioner of Income-tax Vs. Hughes Services (FE) Pte. Ltd.: [2009] [2005] 93 ITD 77 (Delhi)(TM). The view taken by the Tribunal vide order dated, 28/07/2022, being contrary to view taken by the Hon’ble Supreme Court in the case of Checkmate Services Private Ltd. (supra) constitutes a mistake apparent on record. Accordingly, we allow the rectification application preferred by the Revenue. Accordingly, order dated 28/07/2022, is recalled for adjudication of Ground No. 1(a) to 1(c) raised in the appeal. The registry is directed to list the appeal for hearing before the regular bench in due course after notice to both the parties. 5. In result, the Miscellaneous Application is allowed. Order pronounced on 24.08.2023. Sd/- Sd/- (Amarjit Singh) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 24.08.2023 Alindra, PS MA No. 199/Mum/2023 Assessment Year: 2018-19 4 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai