M/S.MUTHOOT VEHICLE & ASSET FINANCE LTD,KOCHI vs. THE ACIT, KOCHI

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.

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.