DY COMMISSIONER OF INCOME TAX -26(1), MUMBAI V. S.J.METAL INDUSTRIES, MUMBAI

MA 333/MUM/2022

AI Insights

The case involves M/s. S.J. Metal Industries, which sought recall of an ITAT order that had previously allowed their appeal against an addition made by the Assessing Officer for delayed deposit of employees' contributions to PF/ESI. The Tribunal's earlier decision was based on the interpretation that the amendment to section 36(1)(va) of the Income Tax Act, which was not in effect during the relevant assessment year, should not apply retrospectively. However, following the Supreme Court's decision in Checkmate Services Pvt Ltd vs CIT, which established that such contributions must be deposited by the due date to qualify for deduction, the Tribunal recalled its earlier order, acknowledging it as a mistake apparent from the record.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123871 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 17-11-2022
• Other Referred Cases: Checkmate Services Pvt Ltd v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 333/MUM/2022 [ARISING OUT OF ITA NO. 2013/MUM/2021 (A.Y: 2018-19)] DCIT – 26(1) Room No. 623, 6 th Floor, G-Block Kautilya Bhavan, Bandra Kurla Complex Bandra(E), Mumbai - 400051 v. M/s. S.J. Metal Industries Ground Floor, Jain Estate Jakaria Road, Malad (W) Mumbai - 400064 PAN: AATFS6124J (Appellant) (Respondent) Assessee Represented by : Shri Bhupendra Shah Department Represented by : Shri Manoj Kumar Singh Date of Hearing : 20.01.2023 Date of Pronouncement : 03.02.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application assessee is seeking for recall of the order passed by the Tribunal in ITA.No. 2013/Mum/2021 dated 13.05.2022 for the A.Y. 2018-19. 2 MA.No. 333/MUM/2022 M/s. S.J. Metal Industries 2. In the Miscellaneous Application, assessee submitted as under: - “In this case the assessee filed return of income on 30.10-2018 declaring its total income of Rs. 8,77.176/-. The assessee was engaged in the business of manufacturing and sale of terminal ends (LUGS) of different sizes mainly used in industries. The Deputy/Assistant CIT, CPC, Benguluru has completed order u/s 143(1) of the Act dated 22.8.2019. The AO has disallowed deduction claimed u/s 36(1)(va) of the Act of Rs.4,26,998/- and added back to the total income of the assessee at Rs.13.04.174/-. 2. Therefore, the assessee filed an appeal before the Hon'ble I.T.AT, Mumbai for A.Y.2018-19 against the order of the National Faceless Appeal Centre(NFAC), Delhi dated 08.09.2021. The Hon'ble I.T.A.T. Bench "SMC", Mumbai vide order dated 13.05.2022 has passed the order for A.Y.2018-19. 3. The Hon'ble ITAT "SMC" Bench has referred several judicial decision and stated that the amendment was brought in Finance Act, 2021 w.e.f. 01.04.2021. The law was not framed /amended in the relevant Assessment Year and any legal proposition which cast additional/liability on the assessee cannot be implemented retrospective. The Hon'ble ITAT has further stated that after considering the overall facts, circumstances, judicial decisions, the Hon'ble ITAT are of the reasoned view that the amendment to section 36(1)(va) of the Act will not be applicable to Assessment Year 2018-19. The assessee has deposited the employees contribution of provident fund before the due date of filing return u/s 139(1) of the Act. Accordingly, the Hon'ble ITAT has set-aside the order of the Ld. CIT(A) (NFAC) and allowed the appeal of the assessee. 4. In view of recent judgment of the Hon'ble Supreme Court in the case of M/s. Checkmate Services Pvt. Ltd. in Civil Appeal No. 2833 of 2016 passed on 12.10.2022, I am filing Miscellaneous Application against the order of ITAT MUMBAI BENCH "SMC" contained in ITA No. 2013/Mum/2021 dated 13.05.2022 for A.Y.2018-19, on the following ground: "The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits 3 MA.No. 333/MUM/2022 M/s. S.J. Metal Industries are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction." 5. Therefore, in the light of the above, the Hon'ble ITAT is requested to recall / rectify its order in the instant case and consider the appeal on merit.” 3. At the time of hearing, Ld. DR submitted that in this appeal, the Tribunal has deleted the addition made by the Assessing Officer on account of delayed deposit of employees’ contribution to PF/Employees’ State Insurance (ESI). He further submitted that in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT dated 12.10.2022, no deduction is allowable for delayed deposit of employees’ contribution to PF/ESI u/s. 36(1)(va) of the Act. Since the Hon’ble Supreme Court has interpreted the provisions which were in existence from the date, the same have been introduced by the 4 MA.No. 333/MUM/2022 M/s. S.J. Metal Industries Parliament and, therefore, allowing the said deduction for late deposit of PF/ESI is a mistake apparent from record in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. CIT (supra). Accordingly, he submitted that order of the Tribunal need to be recalled. 4. The Ld. AR of the assessee objected for admission of the Miscellaneous Application. He submitted that the Miscellaneous Application is barred by limitation. 5. Considered the rival submissions and material placed on record, we find that the impugned order was passed by the Tribunal on 13.05.2022 and period of six months from the end of the month in which order was passed expired on 30 th November, 2022. Since the Miscellaneous Application has been filed on 18.11.2022, therefore, being well within the prescribed limit, we hereby reject the objection of the Ld.Counsel of the assessee. In view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT(supra), the finding of the Tribunal amounts to mistake apparent from record and, therefore, the order of the Tribunal on this appeal is recalled. 5 MA.No. 333/MUM/2022 M/s. S.J. Metal Industries Accordingly, we direct the registry to fix the appeal for hearing in due course and inform the parties accordingly. 6. In the result, Miscellaneous Application filed by the revenue is allowed. Order pronounced in the open court on 03 rd February, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 03/02/2023 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum