ACIT CIR 6(1) (2), MUMBAI V. ATLAS CASTALLOY LTD, MUMBAI

MA 434/MUM/2022

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The case involves a Miscellaneous Application by the Revenue seeking rectification of a previous Tribunal order that allowed the deduction of delayed deposits of Employees' Contribution to Provident Fund and Employees' State Insurance. The original Tribunal decision was based on the deposits being made before the due date of filing the return under Section 139(1) of the Income Tax Act. However, a subsequent Supreme Court decision in Checkmate Services Private Ltd. v. CIT-1 clarified that such contributions must be deposited within the due dates specified by the respective statutes to be eligible for deduction under Section 36(1)(va) of the Act. This led to the rectification of the Tribunal's earlier order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113428 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-05-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 27-12-2022
• 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
• Section: 154; 43B; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI SHRI B.R. BASKARAN, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER MA No. 434/MUM/2022 (Arising out of ITA No. 1505/Mum/2021) (Assessment Year: 2017-18) The Assistant Commissioner of Income Tax Circle-6(1)(2), Mumbai, Room No. 506, 5 th Floor, Aayakar Bhavan, Mumbai M/s Atlas Castalloy Ltd., 7-C Udyog Mandir Compound, Bhagoji Kheer Marg, Mahim, Mumbai - 400016 ............... Vs ................ Appellant Respondent [PAN: AABCA0742K) Appearance For the Appellant/Department For the Respondent/Assessee : : Ms. Mahita Nair Shri Sanjeev Joshi Date Conclusion of hearing Pronouncement of order : : 24.02.2023 23.05.2023 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 25/05/2022, passed by the Tribunal in ITA No. 1505/Mum/2021, pertaining to the Assessment Year 2017-18. 2. Vide order, dated 25/05/2022, passed in ITA No. 1505/Mum/2021, Ground No. 2 to 2.2 raised in appeal by the Assessee was allowed. The addition of INR 2,35,060/- made by the Assessing Officer, vide MA No. 434/Mum/2022 Assessment Year : 2017-18 2 order, dated 01/05/2019, passed under Section 154 of the Act on account deposits of Employees’ Contribution to Provident Fund and Employees’ State Insurance after lapse of time prescribed in the applicable statute was deleted since the aforesaid deposit, though delayed, was 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. Explanation 2 inserted by way of Finance Act, 2021 (with effect from 01/04/2021) providing that the provisions of Section 43B of the Act shall be deemed never to have been applied for the purpose of determining the ‘due date’ under Section 36(1)(va) of the Act is now stands aligned with the position of law as declared by the Hon’ble Supreme Court. 4. The 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 MA No. 434/Mum/2022 Assessment Year : 2017-18 3 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). 5. The view taken by the Tribunal vide order dated, 25/05/2022, 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 25/05/2022 is recalled for the limited purpose of adjudication of Ground No. 2 to 2.2 raised in the appeal. The registry is directed to list the appeal for hearing for the same before the regular bench in due course after notice to the parties. 6. In result, the Miscellaneous Application is allowed. Order pronounced on 23.05.2023. Sd/- Sd/- (B.R. Baskaran) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 23.05.2023 Alindra, PS MA No. 434/Mum/2022 Assessment Year : 2017-18 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