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2023 (7) TMI 1445 - AT - Income TaxDisallowance on account of alleged delay in payment of P.F. u/s 36(1)(va) r/w section 2(24) - HELD THAT - We find that the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT held that the payment towards employees contribution to P.F. and E.S.I.C., after the due date prescribed under the relevant statute is not allowable as a deduction u/s 36(1)(va) of the Act. In the present case, from the record, it is evident that the employees contribution to P.F. was deposited after the due date prescribed under the relevant statute. Thus, respectfully following the aforesaid decision of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT the grounds raised by the assessee in its appeal are dismissed.
Issues:
Recall of order under section 254(1) of the Income Tax Act, 1961 based on subsequent decision of the Hon'ble Supreme Court regarding disallowance under section 36(1)(va) for delayed payment towards employee contributions to Provident Fund and Employees State Insurance Corporation. Analysis: The Appellate Tribunal ITAT Mumbai, comprising Shri B.R. Baskaran and Shri Sandeep Singh Karhail, addressed a Miscellaneous Application (M.A.) filed by the Revenue to recall an order dated 25/05/2022 passed under section 254(1) of the Income Tax Act, 1961. The M.A. sought a fresh hearing on the merits of the case due to a subsequent decision by the Hon'ble Supreme Court regarding disallowance under section 36(1)(va) for delayed payment of employee contributions to Provident Fund (P.F) and Employees State Insurance Corporation (E.S.I.C). The Tribunal proceeded ex-parte as neither the assessee nor any representative appeared during the hearing. The Revenue argued that the Tribunal's decision, following a previous case, contradicted the recent Supreme Court ruling, justifying the recall under section 254(2) of the Act. Upon reviewing the submissions, the Tribunal acknowledged the issue of disallowance concerning delayed P.F. payments under section 36(1)(va) and the conflicting decisions between the Tribunal's ruling and the recent Supreme Court judgment in Checkmate Services Pvt. Ltd. The Tribunal referenced the principle that judicial decisions act retrospectively and emphasized the need to maintain and expound existing legal principles rather than create new ones. Citing the Hon'ble Supreme Court's precedent in Saurashtra Kutch Stock Exchange, the Tribunal highlighted that non-consideration of higher court decisions could be rectified under section 254(2) of the Act. In light of the legal principles outlined by the Hon'ble Supreme Court and the precedence set by past decisions, the Tribunal found merit in the Revenue's M.A. to recall the order based on the subsequent Supreme Court ruling. The Tribunal emphasized the retrospective nature of judicial decisions and the obligation to adhere to binding legal interpretations. Consequently, the Tribunal recalled the order dated 25/05/2022 in the assessee's appeal for the assessment year 2019-20. Subsequently, the Tribunal proceeded to hear the corresponding appeal, ITA no. 400/Mum./2022, based on the recent Supreme Court judgment in Checkmate Services Pvt. Ltd. regarding the disallowance of delayed employee contributions to P.F. and E.S.I.C. The Tribunal dismissed the grounds raised by the assessee in light of the Supreme Court's decision, leading to the allowance of the Revenue's Miscellaneous Application and the dismissal of the assessee's appeal. In conclusion, the Tribunal's decision, pronounced on 05/07/2023, underscores the importance of legal precedent and the retrospective application of judicial interpretations in tax matters, ultimately guiding the resolution of conflicting decisions and ensuring consistency in legal outcomes.
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