DCIT,Central Circle-2, Bhubaneswar V. D.D.Builders Limited, Kalahandi

MA 3/CTK/2023

AI Insights

The case involves a dispute over the disallowance of employee's contributions to Provident Fund (PF) and Employees' State Insurance (ESI) under sections 36(1)(va) read with section 2(24)(x) of the Income Tax Act. The revenue filed a miscellaneous petition against the ITAT's earlier order, citing a Supreme Court decision in Checkmate Services Pvt Ltd vs CIT, which clarified that contributions paid beyond the due date under the respective Acts, even if paid before the due date of filing the return, are not allowable under section 43B of the Act. The ITAT, referencing a similar case, restored the issue to the Assessing Officer for re-examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300272 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-03-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 11-01-2023
• 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
• Assessee Lawyers: KAMAL AGARWAL
• Keywords: Business expenditure
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER Deputy Commissioner of Income Tax, 2, Bhubaneswar. PAN/GIR No. (Appellant Per Bench This is an miscellaneous petition order of the ITAT assessment year 2018 2. Shri S.C.Mohanty, Sr Kumar Agarwal, 3. Ld Sr 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.03/CTK/2023 ( in ITA No.13/CTK/2021 Assessment Year : 2018-19 Commissioner of Income Tax, Central Circle- , Bhubaneswar. Vs. M./s. D.D. Ladugaon, Kalahandi, Odisha PAN/GIR No.AABCD 1433 E (Appellant) .. ( Respondent Assessee by : Shri Kamal Agarwal Revenue by : Shri S.C.Mohanty, Sr Date of Hearing : 03/0 Date of Pronouncement : 03 /0 O R D E R This is an miscellaneous petition filed by the revenue against the order of the ITAT dated 25.8.2022 in ITA No.13/CTK/2021 for the assessment year 2018-19 for recalling the order. Shri S.C.Mohanty, Sr DR appeared for the revenue and Shri Kumar Agarwal, ld AR appeared for the assessee. DR submitted that the issue involved in t 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 M./s. D.D. Builders Limited, Ladugaon, Kalahandi, Respondent) Kamal Agarwal, AR S.C.Mohanty, Sr DR 03/2023 /03/2023 filed by the revenue against the 13/CTK/2021 for the DR appeared for the revenue and Shri Kamal 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 M.A.No.03/CTK/2023 ( in ITA No.13/CTK/2021 Assessment Year : 2018-19 Page2 | 4 that the issue is now 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 25.8.2022 be recalled for fresh hearing. 4. We have heard the rival submissions. It is noticed that the issue in respect of delay payment of employee’s 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 25.8.2022. This being so, the order of the Tribunal dated 25.8.2022 is recalled and the M.A. filed by the revenue stand allowed. M.A.No.03/CTK/2023 ( in ITA No.13/CTK/2021 Assessment Year : 2018-19 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.03/CTK/2023 ( in ITA No.13/CTK/2021 Assessment Year : 2018-19 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 03/03/2023. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 03/03/2023 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : DCIT, Central Circle-2, Bhubaneswar 2. The Respondent:/Assessee- D.D.Builders 3. The CIT(A)-, 4. Pr.CIT-, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//