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Facts
The Revenue appealed against an order by the CIT(A) that deleted a disallowance of Rs. 1,29,63,154/-. This disallowance was related to employer's contribution to welfare funds. The appeal was previously dismissed as withdrawn due to an application under the Vivad Se Vishwas Scheme, but this was recalled due to a mistake.
Held
The Tribunal noted that the tax effect of the disputed addition was less than the monetary limit prescribed by the CBDT for filing an appeal. Therefore, the appeal was liable to be dismissed as withdrawn.
Key Issues
Whether the disallowance of employer's contribution to employee welfare funds is justified, and if the appeal is admissible based on the tax effect.
Sections Cited
36(1)(va), 43B(b)
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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
ORDER
PER : OM PRAKASH KANT, AM
This appeal by the Revenue is directed against order dated 07.02.2019 passed by the Ld. Commissioner of Income Tax (Appeals)-24, Mumbai [In short the Ld. CIT(A)] for assessment year 2015-16, raising following grounds:- “
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs.1,29,63,154/-, without considering the circular No. 22/2015 dated 17.12.2015 of the Board regarding employer's contribution to funds for the welfare of employees in terms of section 43B (b) of the Act and it has been specifically highlighted that the circular of the Act and it has been specifically highlighted that the circular of the Act and it has been specifically highlighted that the circular does not apply to claim of deduction relating to employee's does not apply to claim of deduction relating to employee's does not apply to claim of deduction relating to employee's contribution to welfare funds which are governed by section contribution to welfare funds which are governed by section contribution to welfare funds which are governed by section 36(1)(va) of the Act. a) of the Act.
2. The appellant prays that the order of CIT(A), Mumbai on the 2. The appellant prays that the order of CIT(A), Mumbai on the 2. The appellant prays that the order of CIT(A), Mumbai on the above directions be set aside and that of the assessing officer be above directions be set aside and that of the assessing officer be above directions be set aside and that of the assessing officer be restored.
3. The appellant craves leave to amend or alter any of the 3. The appellant craves leave to amend or alter any of the 3. The appellant craves leave to amend or alter any of the grounds or add a new ground of appeal, grounds or add a new ground of appeal, which may be which may be necessary, at any time before or at the time of hearing of appeal." necessary, at any time before or at the time of hearing of appeal." necessary, at any time before or at the time of hearing of appeal."
2. This appeal was earlier adjudicated by the Income Tax This appeal was earlier adjudicated by the Income Tax This appeal was earlier adjudicated by the Income Tax Appellate Tribunal (in short the ‘Tribunal’) on 22.09.2021, Appellate Tribunal (in short the ) on 22.09.2021, wherein the appeal of the Revenue was dismissed the appeal of the Revenue was dismissed the appeal of the Revenue was dismissed as withdrawn holding that the assessee applied for settlement of tax dispute holding that the assessee applied for settlement of tax dispute holding that the assessee applied for settlement of tax dispute under the ‘Vivad Vivad Se Vishwas Scheme’ (VSVS), 2020. However, (VSVS), 2020. However, on miscellaneous application filed by the Revenue that the on miscellaneous application filed by the Revenue that the on miscellaneous application filed by the Revenue that the assessee had not opted under VSVS for the assessment year assessee had not VSVS for the assessment year under consideration and therefore der consideration and therefore in view of apparent mistake , in view of apparent mistake , the the Tribunal Tribunal vide vide order order in in miscellaneous miscellaneous application application No.214/Mum/2022 dated 05.01.2024 ,recalled the order dated No.214/Mum/2022 dated 05.01.2024 , recalled the order dated 22.09.2021 for deciding afresh for deciding afresh and hence this appeal is before and hence this appeal is before us for adjudication. us for adjudication 3. At the outset, the Ld. Counsel for the assessee submitted At the outset, the Ld. Counsel for the assessee submitted At the outset, the Ld. Counsel for the assessee submitted that in the appeal filed by the Revenue the only issue of that in the appeal filed by the Revenue the only issue of that in the appeal filed by the Revenue the only issue of disallowance of ESI/PF under section 36(1)(va) of ESI/PF under section 36(1)(va) of the Income- of ESI/PF under section 36(1)(va) tax tax tax Act, Act, Act, 1961 1961 1961 ( ( ( in in in short short short the the the ‘Act’) ‘Act’) ‘Act’) amounting to Rs.1,29,63,154/- - has been challenged and the tax effect en challenged and the tax effect involved on the issue is less than the limit of Rs.50,00,000/ involved on the issue is less than the limit of Rs.50,00,000/- involved on the issue is less than the limit of Rs.50,00,000/ prescribed by the Central Board of Direct Taxes for filing appeal prescribed by the Central Board of Direct Taxes for filing appeal prescribed by the Central Board of Direct Taxes for filing appeal before the Tribunal vide circular dated 28.08.2019 the Tribunal vide circular dated 28.08.2019 the Tribunal vide circular dated 28.08.2019 ,therefore the appeal of Revenue of Revenue should be dismissed as withdrawn. dismissed as withdrawn.
We have heard heard rival submission of the parties on the rival submission of the parties on the issue in dispute and perused the relevant material on record. issue in dispute and perused the relevant material on record. issue in dispute and perused the relevant material on record. Evidently the only issue in dispute challenged in the appeal is Evidently the only issue in dispute challenged in the appeal is Evidently the only issue in dispute challenged in the appeal is in respect of the addition of Rs.1,29,63,154/- and the Ld. D.R. in respect of the addition of Rs.1,29,63,154/ and the Ld. D.R. also admitted that the tax effect involved in said addition is less also admitted that the tax effect involved in said addition is less also admitted that the tax effect involved in said addition is less than Rs.50,00,000/- i.e. the limit prescribed for filing the than Rs.50,00,000/ i.e. the limit prescribed for filing the appeal by the Revenue before the Tribunal appeal by the Revenue before the Tribunal , therefore the appeal by the Revenue before the Tribunal appeal filed by the Revenue is liable to be dismiss appeal filed by the Revenue is liable to be dismissed as appeal filed by the Revenue is liable to be dismiss withdrawn. We order accordingly. In case the tax effect withdrawn. We order accordingly. In case the tax effect withdrawn. We order accordingly. In case the tax effect involved is found to be more than the limit prescribed involved is found to be more than the limit prescribed then the involved is found to be more than the limit prescribed Revenue is at liberty to file an application seeking recall of the Revenue is at liberty to file an application seeking recall of the Revenue is at liberty to file an application seeking recall of the appeal which shall be decided by the Tribunal in accordance appeal which shall be decided by the Tribunal in accordance appeal which shall be decided by the Tribunal in accordance with law.
In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on Order pronounced in the open Court on 20/02/2024. /02/2024.