Deputy Commissioner of Income-Tax, CPC, Bengaluru V. Fashionking Brands P Ltd, Pune

MA 179/PUN/2023

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9895 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-11-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-11-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-07-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: INCLUDING NIPSO
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE „A‟ BENCHES:: PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI PARTHA SARATHI CHAUDHURY, HON. JUDICIAL MEMBER M.A.No. 179/PUN/2023 (Arising out of ITA No.622/PUN/2021) (A.Y. 2017-18) DCIT, Circle-1, Pune. vs M/s. Fashionking Brands Pvt. Ltd., 1, Butte Patil Plaza, Off Karve Road, Nalstop, Pune. PAN: AAACC 7418 H Applicant Respondent Assessee by : Shri Kishor B. Phadke, CA Revenue by : Shri Suhas Kulkarni, Addl. CIT Date of hearing : 17/11/2023 Date of pronouncement : 22/11/2023 ORDER Per PARTHA SARATHI CHAUDHURY, JM: This Misc. Application preferred by the Revenue emanates from the order of this Tribunal passed in ITA No.622/PUN/2021 dated 29/09/2022 for A.Y. 2017-18 as per the grounds of application on record. 2. The Registry has pointed out that there is a delay of 100 days in filing this Misc. Application. In this regard, ld.DR submitted that the order of the Tribunal (supra) has been received in the office of PCIT, Pune on 17/02/2023 and the present application was filed on 10/07/2023. Ld.DR further submitted that as per sec. 254(2), the application should be filed within six months from the end of the MA No.179/PUN/2023 M/s. Fashionking Brands Pvt. Ltd. 2 month in which the order was passed, therefore, submitted that there is no delay in filing this Misc. Application and prayed for ignoring the defect raised by the Registry. We have gone through the contents of the application and find that there is no delay in filing the instant Misc. Application, hence, the same is heard on merits. 3. The facts of the case are that the Assessing Officer (AO) made disallowance of Rs.14,30,749/- u/s.36(1)(va) of the Act on the ground that the assessee deposited the Employees‟ share of EPF and ESI etc. belatedly. The Tribunal in its order u/s.254(1) observed that the Employees‟ share was deposited prior to the due date of filing return u/s.139(1) and hence deduction was allowable under section 36(1)(va) of the Act. In reaching this conclusion, the Tribunal relied on various judgements as appearing in the order including a judgment of Hon‟ble Himachal Pradesh High Court in CIT Vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP). 4. The Revenue has moved the instant Misc. Application urging that the view taken by the Hon‟ble Himachal Pradesh High Court in Nipso Polyfabriks Ltd. has since been overruled by the Hon‟ble Supreme Court in Checkmate Services P. Ltd. & Ors. VS. CIT & Ors. (2022) 448 ITR 518 (SC) holding that the deduction of the Employees‟ share can be allowed u/s.36(1)(va) only if it is deposited before the time limit under the respective statutes and not by the due date u/s.139(1) of MA No.179/PUN/2023 M/s. Fashionking Brands Pvt. Ltd. 3 the Act. It was, thus, urged by the ld. DR that the order earlier passed by the Tribunal granting the deduction required rectification for disallowing the same. 5. Per contra, the ld. AR submitted that the Misc. Application should not be entertained because the Tribunal took note of the law as prevalent at that point of time when the order was passed. The subsequent judgment in Checkmate Services P. Ltd. (SC) would not render the correct order passed at that time becoming erroneous later on and hence amenable to rectification. 6. We have heard the rival submissions and perused the relevant material on record. There is no dispute on the fact the law prevalent at that time of passing the order u/s.254(1) was in favour of the assessee by virtue of certain judgments, including Nipso PolyfabriksLtd., granting deduction u/s.36(1)(va) of the employees‟ share of EPF etc. even if the deposit was made after the due date under respective Acts but before the time limit provided for filing the return u/s.139(1) of the Act. Such favourable view has since been reversed by the Hon‟ble Supreme Court in the case of Checkmate Services P. Ltd.(SC). 7. The moot question is whether the subsequent judgment, which was not available at the time of passing of the order u/s 254(1) of the MA No.179/PUN/2023 M/s. Fashionking Brands Pvt. Ltd. 4 Act, would provide a foundation for rectification? It is fundamental that the Courts declare law and do not legislate. The declaration of law by the Courts is always retrospective taking effect from the date of insertion of the provision. The Hon‟ble Supreme Court in CIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) has held that any existing order in derogation of a subsequent binding judgment requires rectification. To be more specific, the Hon‟ble Apex Court has held that „if a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.‟ Similar view was taken by the Full Bench of the Hon‟ble Punjab & Haryana High Court in CIT Vs. Arun Luthra (2001) 252 ITR 76 (P&H) (FB). In that case also, it was argued on behalf of the assessee that a decision rendered by a court subsequent to the passing of the order cannot constitute an error apparent from the record so as to entitle an authority to proceed u/s.154. Rejecting such a contention, the Hon‟ble High Court held that if such a view point is accepted “the result would be that even though the order of the authority is contrary to the law declared by the highest court in the state or the country, still the mistake could not be rectified for the reason that the decision is subsequent to the date of the order”. MA No.179/PUN/2023 M/s. Fashionking Brands Pvt. Ltd. 5 Almost similar view has been taken in a Third Member decision by the Mumbai Benches of the Tribunal in Kailashnath Malhotra Vs. JCIT (2009) 34 SOT 541 (TM) holding that non-consideration of a judgment of the Hon‟ble Supreme Court or that of the Hon‟ble jurisdictional High Court delivered prior to or even subsequent to the order constitutes a mistake apparent from record. In view of the above discussion, it is observed and held that the subsequent judgment of the Hon‟ble Supreme Court in Checkmate Services P. Ltd. denying the benefit of deduction has rendered the order u/s 254(1) erroneous necessitating its rectification in terms of section 254(2) of the Act. 8. In the result, the Miscellaneous Application is allowed. Order pronounced in open Court on 22 nd November, 2023. Sd/- Sd/- (INTURI RAMA RAO) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 22 nd November, 2023 vr/- Copy to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT concerned. 4. The DR, ITAT, “A” Bench Pune. 5. Guard File. By Order // TRUE COPY // Senior Private Secretary ITAT, Pune.