MARKOLINES INFRA PRIVATE LIMITED,MUMBAI V. ACIT/DCIT CIRCLE 15(1)(1), MUMBAI

MA 240/MUM/2024

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Markolines Infra Private Limited filed a Miscellaneous Application under section 254(2) of the Income Tax Act, 1961, seeking rectification of an earlier Tribunal order which had dismissed their appeal regarding disallowance under section 36(1)(va) of the Act for delayed payment of Employees' Contribution towards ESIC/PF. The Tribunal's earlier decision was based on the Supreme Court's ruling in Checkmate Services Pvt. Ltd. vs. CIT, which distinguished between the employer's and employees' contributions towards ESIC/PF. The Tribunal, after reviewing the application and the relevant legal precedents, including decisions from the Bombay High Court, concluded that the grounds for rectification were already addressed in the previous order and thus dismissed the application.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397051 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2019-2020
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. CIT, Rohan Korgaonkar vs. DCIT, M/s. P.R. Packaging Service vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: USHA GAIKWAD
• Assessee Lawyers: PRADIPKAPASI
• Keywords: Business expenditure
• Section: 143(3); 43B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORESHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER MA No.240/MUM/2024 (Arising out of ITA No.366/MUM/2023) (Assessment Year :2019-20) Markolines Infra Private Limited, 502, A – Wing Shri Nand Dham Sector No.11, CBD Belapur, Navi Mumbai – 400614 PAN: AAECM1763H ............... Appellant v/s ACIT –15(1)(1), Room No.451, 1st Floor, Aayakar Bhawan, M.K. Road, Mumbai - 400020 ……………… Respondent Assessee by : Shri Pradip Kapasi Revenue by : Smt. Usha Gaikwad, Sr.DR Date of Hearing – 07/03/2025 Date of Order - 30/05/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present Miscellaneous Application under section 254(2) of the Income Tax Act, 1961 (\"the Act\") seeking rectification of the order dated 08/05/2024 passed by the coordinate bench of the Tribunal in assessee’s appeal being ITA No. 366/Mum./2023, for the assessment year 2019-20. 2. The primary contention of the assessee for seeking rectification of the order dated 08/05/2024 passed by the coordinate bench of the Tribunal is that MA No. 240/Mum/2024 (A.Y. 2019-20) 2 the coordinate bench has not adjudicated grounds no. 2 to 4 raised by the assessee in its appealfor the assessment year 2019-20. 3. For completeness, the grounds raised by the assessee in its appeal for the assessment year 2019-20 are reproduced as follows: – “1. The learned CIT(A)-National Faceless Appeal Centre (NFAC), Delhi erred in law and on facts in confirming the addition of Rs. 3,07,92,004/- on account of delay in depositing Employee’s Contribution to PF /ESI Act made by the Asst. Director of Income Tax, CPC Bangalore although the assesse had deposited the same before the due date of filing the return u/s.139(1) of the ITA. 2. The IT Authorities ought to have appreciated that amendment to Section 43B r.w.s 36(1)(va) r.w.s 143(1)(a)(iv) by Finance Act 2021 is prospective i.e. effective from April 01, 2021 and thus not applicable in the instant case. 3. The IT Authorities ought to have appreciated that the Employee Contribution to PF/ ESI is allowable as deduction u/ 43B of the ITA 1961 although disallowable u/s. 36(1)(va) of the ITA 1961 4. Non Adjudication of Ground no.4 & 5 raised before CIT-A The Ld. CIT-A has erred in not adjudicating the grounds raised by the appellant before the CIT-A_ being ground no. 4 & 5 and thus erred in not adjudicating the grounds filed by the appellant. 5. Invalid Adjustment u/s. 143(1) a. The Id. CIT(A) had erred in law and on facts in failing to appreciate and hold that the intimation u/s. 143(1) was not sustainable in law and was bad in law in as much as that no adjustments by AO (CPC) to the returned income was possible at all in respect of the claim of deduction from business expenditure in respect of employee’s contribution towards PF/ESIC of Rs. 3,07,92,004/in issuing intimation u/s. 143(1) for the reason the issue of deduction was debatable and was in any case decided in favour of the assessees by various High Courts as on the date of issue of intimation. b. The Ld. CIT (A) erred in not appreciating that no adjustment to the returned income, with or without notice, was possible at all in respect of the claim fordeduction of the employee’s contribution towards PF/ESIC while issuing intimation dt. 18-05-2020. Without Prejudice, the appellant submits that even after the decision of the Supreme Court dt. 12.10.2022 in Checkmate’s case, 448 ITR 518, such an adjustment to the returned income while issuing intimation was not possible in respect of a debatable issue as has been held by the Hon’ble ITAT in case of P. R. Packaging Services, ITA No.2376/Mum/2022 dated 07.12.2022.” MA No. 240/Mum/2024 (A.Y. 2019-20) 3 4. While adjudicating the aforesaid grounds raised by the assessee, the coordinate bench of the Tribunal vide its order dated 08/05/2024 observed as follows: – “28. The only grievance of the assessee in the present appeal is against the disallowance u/s 36(1)(va) of the Act on account of delayed payment of Employees’ Contribution towards ESIC/PF vide intimation issued u/s 143(1) of the Act. In this appeal, the assessee has not raised any jurisdictional issue. Since a similar issue has already been decided in Revenue’s appeal for the assessment year 2018-19, therefore, our findings/conclusions rendered therein shall apply mutatis mutandis to the present appeal. As a result, we do not find any infirmity in the impugned order passed by the learned CIT(A), whereby the disallowance made u/s 36(1)(va) of the Act on account of delayed deposit of Employees’ Contribution towards ESIC/PF by following the decision of Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. (supra) was upheld. Accordingly, the grounds raised by the assessee in the present appeal are dismissed.” 5. Therefore, from the aforesaid findings, it is evident that the coordinate bench,following its findings/conclusions as rendered in Revenue’s appeal for the assessment year 2018-19,affirmed the findings of the learned CIT(A) upholding the disallowance made under section 36(1)(va) of the Act by placing reliance upon the decision of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. vs. CIT, reported in [2022] 448 ITR 518 (SC). From the perusal of the decision in Checkmate Services Pvt. Ltd. (supra), we find that Hon’ble Supreme Court also considered the difference in the payment made by the employer towards ESIC/PF, which is allowable under section 43B, and the payment made by the employer of employees’ contribution towards ESIC/PF covered under section 36(1)(va) of the Act, and observed as follows:– “53. ……….. In other words, there is a marked distinction between the nature and character of the two amounts - the employer's liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees' income and held in trust by the employer. MA No. 240/Mum/2024 (A.Y. 2019-20) 4 This marked distinction has to be borne while interpreting the obligation of every assessee under section 43B.” 6. Further, from the perusal of the record, we find that in grounds no. 4 and 5 filed by the assessee before the learned CIT(A), the assessee has raised issues similar to the present appeal. 7. Further, we find that the Hon’ble High Court of Bombay at Goa in Rohan Korgaonkar vs. DCIT,reported in [2024] 159 taxmann.com 321 (Bom.), after considering the aforesaid decision of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. (supra) and the decision of the Co- ordinate Bench of Tribunal in M/s. P.R. Packaging Service vs. ACIT, in ITA. No.2376/Mum./2022, held that merely because the assessment order has been made u/s 143(1)(a) of the Act, the same makes no difference and the decision of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. (supra) is equally applicable. The relevant findings of the Hon’ble High Court, in the aforesaid decision, are reproduced as under: - “7. Though the decision cited was that of the ITAT, we have considered the same. In our judgment, however, the fact that the assessment order in Checkmate Services (P.) Ltd. (supra) was incidentally under section 143(3) and the assessment order in the present case is under section 143(1)(a) of the IT Act, makes no difference to the principle involved in this matter. The ITAT decision does not discuss why this circumstance constitutes a distinguishing feature based on which the ratio of Checkmate Services (P.) Ltd. (supra) could be departed from. 8. Checkmate Services (P.) Ltd. (Supra)holds that the deductions can be claimed or adjustments can be made under section I4l(l)(a)(iv), read with section 36(1)(va) only when the employer deposits the contributions in the employees' accounts on or before the due date prescribed under the Employees Provident Fund /Employees State Insurance Act. In this case, admittedly, the contributions were deposited in the employees' accounts beyond the due date. The circumstance that the assessment order was made under section 143(1)(a) of the IT Act can make no difference.” MA No. 240/Mum/2024 (A.Y. 2019-20) 5 8. We find that the aforesaid decision of the Hon’ble Bombay High Court at Goa in Rohan Korgaonkar (supra), was taken into consideration by the coordinate bench in para-22 of its common order dated 08/05/2024, while rejecting a similar plea raised by the assessee in Revenue’s appeal for the assessment year 2018-19. 9. Therefore, having perused the material available on record, we are of the considered view that all the grounds raised by the assessee in its appeal for the assessment year 2019-20 were adjudicated by the coordinate bench of the Tribunal vide its common order dated 08/05/2024. Thus, we do not find any merits in the prayer of the assessee in seeking rectification of the aforesaid order. Accordingly, the same is rejected. 10. In the result, the Miscellaneous Application filed by the assessee is dismissed. Order pronounced in the open Court on 30/05/2025 Sd/- /-GIRISH AGRAWAL ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 30/05/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "