DY.COMM OF INCOME TAX-17(1) , Mumbai V. M/S. MAHARASHTRA STATE SECURITY CORPORATION, MUMBAI

MA 217/MUM/2023

AI Insights

The case involves the Deputy Commissioner of Income Tax -17(1), Mumbai, as the applicant, and M/s. Maharashtra State Security Corporation, as the respondent. The core issue was the Tribunal's earlier decision allowing deductions for employee contributions towards PF and ESI made after the due date, which was contested by the Revenue following a Supreme Court judgment in Checkmate Services India (Pvt.) Ltd. vs. CIT. The Tribunal initially allowed the deductions based on the law as it stood at the time of the decision, which was later clarified by the Supreme Court, stating such contributions are not deductible if made after the due date. The Revenue filed Miscellaneous Applications under section 254(2) of the Income Tax Act for recalling the Tribunal's order, which was granted.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136047 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 15-06-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 28-02-2023
• Other Referred Cases: Checkmate Services India (Pvt.) Ltd. vs. CIT, Tamil Nadu Magnesite Ltd. vs CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 143(1)

Judgement Text

म ु ंबई ठ “एच ”, म ु ंबई ब . ब , ेख एवं व व ! , " # े म$ IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “ H ”, MUMBAI BEFORE SHRI B.R.BASKARAN , ACCOUNTANT MEMBER & SHRI VIKAS AWASTHY, JUDICIAL MEMBER M.A NO.217/MUM/2023 [ Arising out of ITA NO.1836/MUM/2022 (A.Y.2018-19)] M.A NO.218/MUM/2023 [ Arising out of ITA NO.1837/MUM/2022 (A.Y.2019-20)] Dy. Commissionr of Income Tax -17(1), Mumbai Room No.117, 1 st Floor, G.Block, Kautilya Bhavan, Bandra Kurla Complex, Bandra (East) Mumbai – 400 051 ...... % !& /Applicant बन म Vs. M/s. Maharashtra State Security Corporation, Centre 1, World Trade Centre, 32 nd Floor, Cuffe Parade, Mumbai – 400 005 PAN:AAALM-1261-B ..... %#)व /Respondent % !& *व / Applicant by : Ms. Mahita Nair, Sr.AR %#)व *व /Respondent by : Shri Naresh Jain ु नव ई + #) !/ Date of hearing : 16/06/2023 ,-. + #) !/ Date of pronouncement : 19/07/2023 आदेश/ ORDER PER VIKAS AWASTHY, JM: The Miscellaneous Applications have been filed by the Revenue u/s. 254(2) of the Income Tax Act, 1961 [in short ‘the Act’] for recalling Tribunal order dated 10/08/2022 vide which the claim of assessee in respect of 2 M.A NO.217/MUM/2023 [ Arising out of ITA NO.1836/MUM/2022 (A.Y.2018-19)] M.A NO.218/MUM/2023 [ Arising out of ITA NO.1837/MUM/2022 (A.Y.2019-20)] Employee’s share of Contribution towards PF and ESI made by assessee after ‘due date’ has specified under the relevant laws was allowed as deduction u/s. 36(1)(va) of the Act. 2. Ms. Mahita Nair representing the Department submitted that the Tribunal order dated 10/08/2022 requires rectification in the light of judgment passed by Hon'ble Supreme Court in the case of Checkmate Services India (Pvt.) Ltd. vs. CIT, 448 ITR 518(SC). 3. Per contra, Shri Naresh Jain appearing on behalf of the assessee opposed the Miscellaneous Application field by the Department and submitted that the order of the Tribunal is in line with the law expounded by the Hon’ble High Court as was applicable at the time of passing of the order. The ld. Authorized Representative of the assessee further submits that after passing of the assessment order u/s. 143(1) of the Act, the case of the assessee was selected for scrutiny assessment. The Assessing Officer completed the assessment u/s. 143(3) of the Act. Once the assessment has been made u/s. 143(3) of the Act, the intimation u/s. 143(1) of the Act gets merged with the assessment order u/s. 143(3) of the Act . There could be no rectification of an order that has been merged with another order. To support this contention the ld. Authorized Representative of the assessee placed reliance on the decision in the case of Tamil Nadu Magnesite Ltd. vs CIT in W.P.No.17819 of 2001 decided on 19/08/2010. 4. Both sides heard. The assessee has objected to rectification of the Tribunal order dated 10/08/2022 on the ground that the order passed u/s. 143(1) of the Act vide which disallowance u/s. 36(1)(va) of the Act was made is merged with the assessment order passed u/s.143(3) of the Act. The present 3 M.A NO.217/MUM/2023 [ Arising out of ITA NO.1836/MUM/2022 (A.Y.2018-19)] M.A NO.218/MUM/2023 [ Arising out of ITA NO.1837/MUM/2022 (A.Y.2019-20)] appeal by the assessee emanates from the addition made in proceedings u/s. 143(1) of the Act. Initially, the ground raised by the assessee in appeal was allowed and later on the Hon'ble Apex Court in the case of Checkmate Services India (Pvt) Ltd.(supra) explained the provisions of law with respect to allowability of deduction u/s. 36(1)(va) of the Act qua Employee’s Share of Contribution towards PF and ESI. In light of the aforesaid decision the order passed by the Tribunal dated 10/08/2022 requires rectification to make it in line with the law explained by Hon'ble Apex Court. The fact that the Assessing Officer has subsequently selected the case of assessee for assessment year 2019-20 for scrutiny assessment was not brought to the notice of the Bench at the time of deciding the appeal. The assessee cannot be allowed to take advantage of the situation by disclosing the facts according to its own convenience. Be that as it may, the issue raised in appeal is only confined to the addition made in proceedings u/s. 143(1) of the Act, hence, the events subsequent to the order impugned in appeal would not have any impact on the rectification proceeding of an order passed in appeal as at the time of deciding the appeal, the Tribunal was not apprised of such events. The decision rendered in the case of Tamil Nadu Magnesite Ltd. vs CIT (supra) is distinguishable on facts, hence, the said decision would not support the case of assessee. Thus, the objection raised by the ld. Authorized Representative of the assessee is rejected. 5. The issue regarding allowability of Employees share of contribution towards PF and ESI after the “due date” as specified under the respective laws has been laid to rest by Hon'ble Apex Court in the case of Checkmate Services India (Pvt.) Ltd. vs. CIT (supra). The Hon'ble Apex Court in an unambiguous manner has explained that the law has always been that Employees share of 4 M.A NO.217/MUM/2023 [ Arising out of ITA NO.1836/MUM/2022 (A.Y.2018-19)] M.A NO.218/MUM/2023 [ Arising out of ITA NO.1837/MUM/2022 (A.Y.2019-20)] contribution towards PF and ESI has to be deposited before the “due date” as explained under the respective laws. The said contribution made after due date under the respective laws is not an allowable deduction u/s. 36(1)(va) of the Act. Thus, in view of the settled legal position we find that an error has crept in the order of Tribunal dated 10/08/2022. Accordingly, the same is recalled and the appeal is restored to is original number. The Registry is directed to fix the appeal for hearing in due course after notice to both sides. 5. In the result, Miscellaneous Applications filed by the Revenue are allowed. Order pronounced in the open Court on Wednesday the 19 th day of July,2023. Sd/- Sd/- (B.R. BASKARAN) (VIKAS AWASTHY) ेख /ACCOUNTANT MEMBER " # /JUDICIAL MEMBER म ु ंबई/ Mumbai, / न ं /Dated 19/07/2023 Vm, Sr. PS(O/S) े Copy of the Order forwarded to : 1. !&/The Appellant , 2. %#)व / The Respondent. 3. ु 0) PCIT 4. व1 2 %#)#न , . . ., म ु बंई/DR, ITAT, Mumbai 5. 2 34 5 6 /Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai