MANIPAL TECHNOLOGIES LIMITED,MANIPAL vs. ITO 1 UDUPI, UDUPI

ITA 10/BANG/2026Status: DisposedITAT Bangalore28 September 2026AY 2018-201912 pages
AI SummaryAllowed

What were the facts?

The assessee, Manipal Technologies Limited, is in appeal against the order of the CIT(A) for Assessment Year 2018-19. The Assessing Officer (AO) completed the assessment under Section 143(3) on November 17, 2021. Subsequently, the AO initiated rectification proceedings under Section 154, alleging that the assessee had failed to pay employee contributions to PF/ESIC of Rs. 87,01,378/- before the due dates, violating Sections 36(1)(va) read with Sections 2(24)(x) and 43B of the Income Tax Act, 1961. The AO disallowed this amount as a deduction. The assessee contended that the payments were made shortly after the due dates and that the issue was debatable. The CIT(A) upheld the rectification, relying on the Supreme Court's decision in M/s. Checkmate Services (P) Ltd. v. CIT.

What did the Tribunal hold?

The Tribunal admitted the additional grounds of appeal, finding them to be purely legal and critical for fair adjudication, with all facts already on record. The Tribunal held that the adjustment made by the AO under Section 154 for disallowing employee's contribution to provident fund and ESI deposited beyond the due date was not correct prior to Assessment Year 2021-22. The Tribunal relied on the Memorandum explaining the provisions of the Finance Bill 2021, which indicated that amendments clarifying these provisions were intended to take effect from April 1, 2021, and subsequent assessment years. The Tribunal also referred to decisions of the Chhattisgarh High Court in Sanjay Kumar Sharma vs. Income Tax Officer and Delhi High Court in Principal Commissioner of Income Tax vs. TV Today Network Ltd., which supported the assessee's position for assessment years prior to 2021-22. The Tribunal directed the AO to delete the disallowance of Rs. 87,01,378/-. Other issues were deemed academic and dismissed.

What were the issues?

1. Whether the learned CIT(A) erred in law and facts by upholding the rectification order passed under Section 154 of the Act, considering that the allowability of employee's contribution to PF and ESI was a debatable issue on the date of the original assessment order, and thus not a mistake apparent on record. Assessee's Contention: The issue was debatable on the date of the original assessment order. A subsequent judicial pronouncement cannot convert a debatable issue into a mistake apparent on record. The power under Section 154 is confined to obvious and patent mistakes, not debatable legal issues. The jurisdictional High Court of Karnataka was in favor of the assessee at the time of the original assessment. Revenue's Contention: Not recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(3),Section 36(1)(va),Section 2(24)(x),Section 43B,Section 143(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE

Before: SHRI BALAKRISHNAN S. & SHRI KESHAV DUBEY

For Appellant: Dr. Sheetal Borkar, Advocate - AR
Hearing: 07.07.2026Pronounced: 28.09.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. Addl/JCIT(A)-1, Ahmedabad dated 04.11.2025 vide DIN & Order No. ITBA/APL/S/250/2025-26/1082269636 (1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19. 2. The assessee has raised the following grounds of appeal:- Manipal Technologies Limited, Manipal 3. The assessee has also raised the following additional grounds of appeal:

1.

The learned CIT(A) erred in law and in facts in upholding the rectification order passed u/s 154 of the Act without appreciating that t

The order continues below.

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