ITO Vs Infantry Security And Facilities (Supreme Court of India)
The Supreme Court dismissed the Revenue’s Special Leave Petition (SLP) against the judgment of the Bombay High Court in a case concerning the scope of rectification powers under Section 254(2) of the Income Tax Act and the effect of subsequent judicial decisions on concluded Tribunal orders. The Supreme Court condoned the delay in filing the SLP but found no ground to interfere with the High Court’s decision. Consequently, the SLP was dismissed and all pending applications stood disposed of.
The dispute arose from Assessment Years 2017-18, 2018-19, and 2019-20, where the assessee had claimed deductions in respect of employees’ contributions towards Provident Fund (PF) and Employees’ State Insurance (ESI). The Assessing Officer disallowed the expenditure under Section 36(1)(va) of the Income Tax Act on the ground that the payments had been made beyond the due dates prescribed under the relevant welfare statutes.
The assessee challenged the additions before the Commissioner of Income Tax (Appeals) [CIT(A)], who partly allowed the appeals. Thereafter, the assessee approached the Income Tax Appellate Tribunal (ITAT), which, by its order dated 26 July 2022, allowed the assessee’s appeals and deleted the additions.
Subsequently, the Revenue filed Miscellaneous Applications under Section 254(2) of the Income Tax Act seeking rectification of the Tribunal’s order. The Revenue relied upon the Supreme Court’s later decision in Checkmate Services Private Limited, rendered on 12 October 2022, which held that employees’ contributions to PF and ESI are deductible under Section 36(1)(va) only if deposited within the due dates specified under the respective statutes and not by the due date for filing returns under Section 139(1).
