DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 7(1)(1), MUMBAI V. MAHINDRA AND MAHINDRA FINANCIAL SERVICES LIMITED, MUMBAI

MA 420/MUM/2022

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The case revolves around the recall of a Tribunal order that had previously allowed the assessee's appeal, which directed the deletion of disallowances on account of delayed payments of PF and ESI contributions. The revenue filed a Miscellaneous Application seeking recall of this order, citing a Supreme Court decision in Checkmate Services Pvt Ltd vs CIT, which held that no deduction is allowable for delayed deposit of employees' contribution to PF/ESI under section 36(1)(va) of the Income Tax Act. The Tribunal, upon considering the Supreme Court's decision, found that the earlier order contained a mistake apparent from the record and thus recalled it.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123393 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-02-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 19-12-2022
• Other Referred Cases: Shri Satish Kumar Sinha vs ITO, Checkmate Services Pvt Ltd vs CIT
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 43B; 250; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D”, MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 420/MUM/2022 [ARISING OUT OF ITA NO. 1928/MUM/2021 (A.Y: 2019-20)] DCIT – 7(1)(1) Room No. 126, 1 st Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 v. M/s. Mahindra and Mahindra Financial Services Ltd., 2 nd Floor, Sadhana House 570, P.B. Marg, Worli Mumbai - 400018 PAN: AAACM2931R (Appellant) (Respondent) Assessee Represented by : Shri Viral Shah Department Represented by : Shri Abhishek Kumar Date of Hearing : 17.02.2023 Date of Pronouncement : 23.02.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application revenue is seeking for recall of the order passed by the Tribunal in ITA.No. 1928/Mum/2021 dated 12.05.2022 for the A.Y.2019-20. We observe from the record that the order was pronounced on 12.05.2022. However, we noticed that the order was dispatched to the parties only on 23.06.2022. As per our 2 MA.No. 420/MUM/2022 M/s. Mahindra and Mahindra Financial Services Ltd., view the provision of section 254(2) & (3) of the Act has to be read together. Therefore, the Miscellaneous Application filed by the revenue is within the limitation period. 2. In the Miscellaneous Application, Revenue submitted as under: - “1. The above said appeal was filed by the assessee for AY 2019-20. The appeal filed against the order of Ld CIT(A), National Faceless Appeal Centre order dated 13.09.2021 passed u/s 250 of the Income Tax Act 1961. 2. Hon'ble ITAT has been pleased to allow the assessee's appeal and directed the assessing officer to delete the impugned disallowances on account of delayed payments of PF and ESI contribution. The tribunal has observed as under: "........relied on the case of Shri Satish Kumar Sinha vs ITO in ITA No 293/Hyd/2021, AY 2019-20 order dated 23.08.2021 and held that the amendment was brought in Finance Act, 2021 wef 01.04.2021. The law was not framed/amended in the relevant Assessment year and any legal proposition which cast additional burden on the assessee cannot be implemented retrospectively. Accordingly the appeal of the assessee was allowed and directed the AO to delete the disallowance........ 3. It is prayed that the above mentioned order may be rectified as on the ground above of appeal by the assessee is not factually correct. The same needs to be rectified for the following reasons: a) The Hon'ble ITAT has erred to allow disallowance of Rs 3,07,01,091/- u/s 36(1)(va) r.w. s. 2(24) of the Act without appreciating the facts that the non obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date is correct and justified. b) The necessary amendments incorporated by the legislature in section 36(1)(va) and 43B, vide Finance Act, 2021 are clarificatory. It is reiterated that IT Act differentiated between employees' contribution and 3 MA.No. 420/MUM/2022 M/s. Mahindra and Mahindra Financial Services Ltd., employers' contribution. With respect to employers' contribution section 43B was applicable. However, with respect to employees' contribution, section 36(1)(va) was applicable, as it was specific and pointed to the kind of contribution and when it could be made to qualify as a deductible expense. Both the provisions i.c. Section 43B and section 36(1)(va) operated in different fields, with respect to different contributions Consequently, section 43B was inapplicable and could not override Section 36(1)(va). c) The aforesaid provisions are substantiated by Hon'ble Supreme Court, in a recent ruling in case of M/s. Checkmate Services Pvt Ltd ('the taxpayer') vs Commissioner of Income tax in Civil Appeal No 2833 of 2016 observed that "to pass, muster payments were a necessary pre-condition for allowing the expenditure. 4. The case may be heard on the merits.” 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 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 4 MA.No. 420/MUM/2022 M/s. Mahindra and Mahindra Financial Services Ltd., (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. 5. Considered the rival submissions and material placed on record. In view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd v. 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. 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 23 rd February, 2023. Sd/- Sd/- (PAVAN KUMAR GADALE) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 23/02/2023 Giridhar, Sr.PS 5 MA.No. 420/MUM/2022 M/s. Mahindra and Mahindra Financial Services Ltd., 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