SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD,PUNE vs. ITO WARD6(1), PUNE

ITA 157/PUN/2025Status: DisposedITAT Pune22 December 2025AY 2020-2134 pages
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What did the Tribunal hold?

The Tribunal decided on two primary issues. Firstly, concerning the disallowances for late deposit of PF/ESI, the CIT(Appeals) had affirmed the AO's action, relying on the Supreme Court judgment in Checkmate Services Pvt. Ltd. vs. CIT. The judgment does not explicitly detail the Tribunal's finding on this specific point for the assessee's appeals, but the overall result suggests it was not fully allowed. Secondly, on the issue of the subsidy, the Tribunal held that the subsidy received from the Government of Maharashtra under PSI, 2007, was neither directly nor indirectly relatable to acquiring any fixed assets. Therefore, Explanation 10 to Section 43(1) was not applicable. The Tribunal ruled that the total subsidy received is to be treated as income for the year under Section 2(24)(xviii) of the Act. Furthermore, the Tribunal found no infirmity in the adjustment made by CPC under Section 143(1)(a)(ii) due to apparent mistakes in the assessee's ITR, where the assessee claimed the subsidy as exempt income but failed to provide necessary details in Schedule EI, and also credited the subsidy to the profit and loss account while reducing it from asset cost for depreciation purposes in the tax computation. The CIT(Appeals)'s finding on the subsidy issue was reversed.

What were the facts?

The appeals before the ITAT Pune Bench concern Shriniwas Engineering Auto Components Pvt. Ltd. (the assessee) and the Revenue for assessment years 2016-17 to 2020-21. The assessee's appeals (ITA Nos. 154-156/PUN/2025) challenge the CIT(Appeals)'s dismissal of grounds related to disallowances for late payment of ESIC/PF and the addition of capital subsidy received from the Maharashtra Government under the Package Scheme of Incentives (PSI), 2007. The Revenue's appeals (ITA Nos. 1843, 1844/PUN/2024 and ITA No. 114/PUN/2025) challenge the orders concerning the treatment of this subsidy. The Assessing Officer treated the subsidy as revenue in nature, taxable under Section 2(24)(xviii) of the Income Tax Act, 1961. The CIT(Appeals) upheld the AO's action.

What were the issues?

1. Whether the disallowances made by the Assessing Officer on account of late payment of ESIC and PF beyond the prescribed period under the respective Acts are valid, and if the CIT(Appeals) erred in dismissing the assessee's grounds in this regard? (Question of law and fact, concerning Section 36(1)(va) of the Income Tax Act). 2. Whether the capital subsidy of Rs. 43,20,39,280/- received from the Maharashtra Government under the Package Scheme of Incentives (2007) is taxable as revenue receipt, or if it should be treated as a capital receipt or reduced from the actual cost of assets as per Explanation 10 to Section 43(1)? (Question of law and fact, concerning Section 2(24)(xviii) and Section 43(1) of the Income Tax Act). Assessee's Contentions: - Regarding ESIC/PF: The assessee contested the disallowances for late payments. - Regarding Subsidy: The assessee argued that the subsidy was a capital receipt. It contended that since the subsidy was taken into account for determining the actual cost of assets under Explanation 10 to Section 43(1), it should not be treated as income under Section 2(24)(xviii). The assessee also presented a table showing the subsidy received and the amount reduced from the actual cost of assets for depreciation purposes. Revenue's Contentions: - Regarding Subsidy: The Revenue argued that the subsidy received was taxable under Section 2(24)(xviii) as it was granted to encourage business and generate profits, not for acquiring fixed assets. It also contended that the adjustment made by CPC under Section 143(1)(a) for the subsidy was correct due to apparent mistakes in the assessee's ITR filing, specifically the mismatch between claiming subsidy as exempt income and not providing details in Schedule EI, and the inconsistent treatment in financial statements versus the ITR.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 143(1),Section 36(1)(va),Section 43(1),Section 143(1)(a),Section 143(1)(a)(ii)

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IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER

आयकर अपील सं. / ITA Nos.154 to 156/PUN/2025

Assessment Years : 2016-17 to 2018-19

Shriniwas Engineering Auto Components Pvt. Ltd., Office No.5, Mansara Apartments, Near LIC Building, Shivajinagar, Pune 411016 Maharashtra PAN: AAJCS8944F Vs. ACIT, Circle-6, Pune/ ITO, Ward-6(1), Pune/ NFAC, Delhi Appellant Respondent

आयकर अपील सं. / ITA Nos.1843, 1844/PUN/2024 and Assessment Years : 2018-19, 2019-20 and 2020-21

ACIT, Circle-5, PAN : AAJCS8944F Appellant Respondent

आयकर अपील सं. / ITA Nos.1423 and 157/PUN/2025

Assessment Years : 2019-20 and 2020-21

Shriniwas Engineering Auto Components Pvt. Ltd., Office No.5, Mansara Apartments, Near LIC Building, Shivajinagar, Pune 411016 Maharashtra PAN : AAJCS8944F Vs. ACIT, Circle-6, Pune/ ITO, Ward-6(1), Pune/ NFAC, Delhi Appellant Respondent

2 Shriniwas Engineering Auto Components Pvt. Ltd. A.Ys.2016-17 to 2020-21 Appellant by Res

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