M/S.MUTHOOT VEHICLE & ASSET FINANCE LTD,KOCHI vs. THE ACIT, KOCHI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that since the issue of disallowance of employee PF and ESI contributions was debatable, with divergent views from the jurisdictional High Court, it could not be a subject matter for revision under Section 263.
What were the facts?
The assessee's appeal concerned a revision order under Section 263 of the Income Tax Act. The issue involved the disallowance of employee PF and ESI contributions not paid by the statutory due date, though paid before the return filing due date.
What were the issues?
Whether a revision under Section 263 is permissible for a debatable issue where the Assessing Officer had made a conscious decision, despite divergent High Court rulings.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George Mathan, JM & Shri M.Balaganesh, AM
This is an appeal filed by the assessee against the order of the Pr.CIT, Kochi-1, u/s.263 of the Income Tax Act, 1961 (Act), dated 17-06-2020 for the AY.2012-13.
Sri P.M.Veeramani, CA appeared on behalf of the assessee and Sri Shantham Bose, CIT-DR appeared on behalf of Revenue.
It was the submission by the Ld.AR that the issue raised by the Ld.Pr.CIT was in respect of the employees PF and ESI contribution, not paid within the due date prescribed under the relevant statutes, but paid before the due date of filing of the return under the Income Tax Act. It was the submission that the issue was the subject matter of assessment completed u/s.143(3) r.w.s.147 of :- 2 -: ITA No.388./Coch/2020 the Act on 06-11-2017. It was the further submission that in fact the reasons for re-opening of the assessment was the issue of the employees’ share of PF and ESI collected for the month of April, July, August and October, 2011, which had not been paid before the due date prescribed under the relevant statute. After considering the submissions of the assessee, the AO had taken a view that no disallowance has called for in the assessment passed u/s.143(3) r.w.s.147 of the Act, which was the subject matter of the revision u/s.263 of the Act. It was the submission that at the outset, the AO had considered the issue and had taken a conscious decision and consequently the issue cannot be a subject matter of revision u/s.263 of the Act. It was the further submission and the fact that that there are multiple decisions both against and in favour of assessee on this issue, shows that the issue is debatable issue on which also revision u/s.263 of the Act does not lie. In fact in respect of Hon’ble Jurisdictional High Court of Kerala in the case of Kerala State Warehousing Corporation has decided the issue in favour of assessee. This was in the year 2009. Subsequently, in the year 2015, in the case of CIT Vs. Merchem Ltd. Hon’ble Jurisdictional High Court of Kerala has held the issue against the assessee. In the decision of the Hon’ble Jurisdictional High Court of Kerala, in the case of CIT Vs. Merchem Ltd., there is no discussion of the earlier decision of the Hon’ble Kerala High Court in the case of Kerala State Warehousing Corporation also. It was the submission that even in respect of the Hon’ble Kerala High Court’s decisions, there are divergent views, which clearly shows it to be a debatable issue. It was the prayer that order passed u/s.263 of the Act may be quashed.
:- 3 -: ITA No.388./Coch/2020
In reply, the Ld.DR vehemently supported the order of the Ld.Pr.CIT. It was the submission that the payments of the employees’ contribution has not been made within the time prescribed under the relevant PF and ESI statutes. It was the submission that the assessee has made undue profit by keeping the said funds. It was the prayer that the order u/s.263 of the Act is to be upheld.
We have considered the rival submissions. A perusal of the assessment order passed u/s.143(3) r.w.s.147 of the Act, which was the subject matter of the order u/s.263 of the Act, clearly mentions this decision and in respect of the employees’ contribution to PF and ESI. Further, as rightly pointed out by the Ld.AR, there are catena of decisions in favour and against the assessee. In respect of the issue the Hon'ble jurisdictional High Court of Kerala has also rendered two decisions, which are divergent. This being so, the issue is a debatable issue the same cannot be made a subject matter of revision u/s.263 of the Act. Consequently, order passed u/s.263 of the Act by the Ld.Pr.CIT stands quashed.
In the result, the appeal of assessee is allowed.
Dictated and pronounced in the open court on 17th March, 2022
More judgments on Section 263
- Gillette India Limited, Mumbai vs Principal Commissioner of Income Tax, JaipurITA 1316/JPR/2026[2018-19]Status: Disposed16 Oct 2026AY 2018-19
- Neo Structo Construction P. Ltd., Ahmedabad vs The Pr. CIT- 3, AhmedabadITA 1216/AHD/2026[2015-2016]Status: Disposed16 Oct 2026AY 2015-2016
- Vimal Harilal Baldania, Gandhidham vs The ITO Ward 2, GandhidhamITA 770/RJT/2025[2017-18]Status: Disposed15 Oct 2026AY 2017-18
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1493/KOL/2026[2015-2016]Status: Disposed15 Oct 2026AY 2015-2016
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1492/KOL/2026[2013-2014]Status: Disposed15 Oct 2026AY 2013-2014
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