CAE Simulation Technologies Pvt. Ltd. Vs Centralized Processing Centre (ITAT Bangalore)
PF Employees’ Contribution – Debatable Issue Prior to Supreme Court Decision – Disallowance Cannot Be Made u/s 143(1): ITAT Bangalore
The ITAT Bangalore held that disallowance of employees’ contribution to PF u/s 36(1)(va) cannot be made through adjustment u/s 143(1) when, at the time of processing the return, the issue was debatable and covered in favour of the assessee by jurisdictional High Court decisions.
In the present case, the assessee filed its return declaring income of about ₹10.76 crore. While processing the return, the CPC made an adjustment of ₹32.38 lakh under Section 36(1)(va) on the ground that employees’ PF contribution was not deposited within the due date prescribed under the respective statute.
The assessee contended that as on the date of intimation (12.05.2020), several judgments of the Karnataka High Court had held that employees’ contribution deposited before the due date of filing the return was allowable. The contrary ruling of the Supreme Court in Checkmate Services (P.) Ltd. came only on 12.10.2022, much after the CPC adjustment.
The Tribunal observed that Section 143(1) permits adjustments only in clear and undisputed cases. Since the issue was debatable and supported by jurisdictional High Court rulings at that time, the CPC was not justified in making the adjustment under Section 143(1).
Accordingly, the Tribunal deleted the disallowance of ₹32.38 lakh and allowed the appeal of the assessee, holding that such adjustment could not be made prior to the Supreme Court ruling in Checkmate Services.
The connected appeal arising from a rectification application was dismissed as infructuous in view of the above decision.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
