GENESYS INTERNATIONAL CORPORATION LIMITED,MUMBAI vs. DCIT CPC BANGALORE, BANGALOE

ITA 634/MUM/2024Status: DisposedITAT Mumbai21 February 2025AY 2020-2125 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the appeal is partly allowed for statistical purposes. Regarding Ground Nos. 1 and 2, the Tribunal noted the assessee's argument that the Section 143(1) intimation merges with the regular assessment under Section 143(3) and ceases to be executable if contrary to the regular assessment. The Tribunal found this argument supported by the decisions of the Coordinate Benches and the Calcutta High Court. The Tribunal acknowledged that the AO's order under Section 143(3) was not detailed in the provided excerpt, but the core issue revolved around the validity of the Section 143(1) disallowance in light of the subsequent Section 143(3) assessment. The Tribunal did not explicitly rule on whether the Section 143(1) intimation was indeed withdrawn or if the AO failed to make the disallowance in the 143(3) order, but proceeded to address Ground No. 3. For Ground No. 3, the Tribunal found the ratio laid down by the Hon'ble Jurisdictional High Court in CIT vs. M/s Gem Plus Jewellery India Ltd. and the Pune ITAT in Amdocs Development Centre Indid LLP vs. ACIT Circle-7 to be squarely applicable. The Tribunal agreed that the disallowance of delayed PF/ESIC payments should be examined for eligibility under Section 10AA. The Tribunal directed the AO to examine if the enhanced business income, arising from the disallowance of salary paid to employees out of the export-oriented unit's business income, is eligible for exemption under Section 10AA. If satisfied, the assessee should be extended the benefit. Thus, Ground No. 3 was allowed for statistical purposes.

What were the facts?

The assessee, Genesys International Corporation Limited, filed its return for Assessment Year 2020-21 declaring NIL income. The CPC processed the return under Section 143(1) and determined total income at Rs. 2,26,36,690/-, making a disallowance of Rs. 2,26,36,692/- on account of the employees' share of PF and ESIC contributions paid after the due date prescribed by the respective funds but before the due date for filing the return of income. The Assessing Officer (AO) assessed the total income at Rs. 2,26,36,692/- under normal provisions. The assessee appealed to the CIT(A), who dismissed the appeal, relying on the Supreme Court judgment in Checkmate Services (P) Ltd. vs. CIT-1. The assessee then filed an appeal before the ITAT, Mumbai.

What were the issues?

1. Whether, in law, the CIT(A) erred in affirming the intimation passed under Section 143(1) by the CPC/AO, considering that a regular assessment order under Section 143(3) was passed, thereby withdrawing the Section 143(1) intimation and rendering its disallowances ineffective? - Assessee: Argued that the Section 143(1) intimation is withdrawn upon passing of a Section 143(3) assessment order, citing ITAT decisions in ITA No. 2376/Mum/2022 and ITA No. 354/Del/2024, and Calcutta High Court in Coates of India Ltd vs. DCIT. - Revenue: Did not explicitly address this procedural point, but argued that the disallowance is valid based on the Supreme Court's Checkmate Services (P) Ltd. judgment. 2. Whether, in law, the CIT(A) erred in not appreciating that the AO, while framing the assessment order under Section 143(3), did not himself make the disallowances mentioned in the Section 143(1) intimation, and therefore, the disallowance could not have been affirmed by the CIT(A)? - Assessee: Argued that the AO did not make the disallowance in the Section 143(3) assessment, making the CIT(A)'s affirmation of the Section 143(1) disallowance erroneous. - Revenue: Did not explicitly address this procedural point. 3. Whether, in the alternative, if the disallowance is sustained, the deduction under Section 10AA should be increased by the amount of disallowance, as it ultimately increases the business income eligible for Section 10AA deduction? - Assessee: Submitted that if the disallowance is sustained, the consequential increase in business income should be eligible for deduction under Section 10AA. - Revenue: Argued that the disallowance under Section 36(1)(va) is for late deposit of employee contributions, which are considered employee's monies and not business income, thus not eligible for Section 10AA exemption. Relied on Checkmate Services (P) Ltd. and argued that extending Section 10AA benefit would reward non-compliance.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 36(1)(va),Section 43B,Section 143(3),Section 139(1),Section 10AA,Section 2(24)(x)

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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI

Before: MS. PADMAVATHY S & SHRI RAJ KUMAR CHAUHAN

PER RAJ KUMAR CHAUHAN (J.M.):

1.

This appeal is filed by the appellant/assessee against the order of Learned Commissioner of Income Tax (Appeals) / Addl. JCIT,-1, Lucknow [hereinafter referred to as the “CIT(A)"], passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 14.12.2023 for the A.Y. 2020-21. 2. The brief facts of the case are that the assessee filed the income tax return for the year under consideration on 20.02.2021 declaring total income at Rs. NIL. The return was processed u/s 143(1) of the Act on 30.11.2021 determining the total inco

The order continues below.

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