AI Insights
The case involves multiple Miscellaneous Applications by the Revenue against orders of the Income Tax Appellate Tribunal which had allowed deductions for late deposits of Employees' share of EPF and ESI under section 36(1)(va) of the Income Tax Act. The Tribunal's earlier decisions were based on the Himachal Pradesh High Court's judgment in Nipso Polyfabriks Ltd., which was later overruled by the Supreme Court in Checkmate Services P. Ltd. The Supreme Court clarified that such deductions are only permissible if the deposits are made within the statutory deadlines, not merely by the due date for filing tax returns under section 139(1). The Tribunal, referencing this new precedent, rectified its earlier orders in favor of the Revenue.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 137933 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
18-05-2023
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
18-05-2023
Assessment Year
2018-2019
Appeal Filed On
22-12-2022
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER Miscellaneous Application No.401/PUN/2022 (arising out of ITA No.417/PUN/2021) Assessment Year : 2018-19 1 ADIT, CPC, Bengaluru Vs. Vikas Vilasrao Kurade (HUF), Office No.28, 4 th Floor, Highway Tower, Mumbai-Pune Road, Pune 411 019 Maharashtra PAN : AAHHV3934R (Applicant) (Respondent) Miscellaneous Application No.379/PUN/2022 (arising out of ITA No.466/PUN/2021) Assessment Year : 2019-20 2 ADIT, CPC, Bengaluru Vs. Prashant Arun Sangai, 2, Swastik Chambers, Pathardi Phata, CIDCO, Nashik 422 009 Maharashtra PAN : AACCPS1596F (Applicant) (Respondent) Miscellaneous Application No.385/PUN/2022 (arising out of ITA No.372/PUN/2021) Assessment Year : 2018-19 3 ACIT, Circle- 1, Nashik Vs. Shareen Auto Pvt. Ltd., Plot No.117/A, Street No.16, MIDC, Satpur, Nashik 422 007 PAN : AAECS0452K (Applicant) (Respondent) Assessee by : None - Sl.No. 1 & 2 Shri Pramod S. Shingte – Sl.No.3 Revenue by : Shri Suhas Kulkarni Date of Hearing : 19-05-2023 Date of Pronouncement : 19-05-2023 M.A.No.401, 379 & 385/PUN/2022 Vikas Vilasrao Kurade (HUF) and 2 others 2 ORDER PER R.S.SYAL, VP : The above Miscellaneous applications by the Revenue are directed against the captioned orders passed by the Tribunal on different dates in relation to the assessment years cited above. 2. The facts of the cases, in a nutshell, are that the Assessing Officer (AO) made disallowance in these cases on the ground that the assessee late deposited the Employees’ share of EPF and ESI etc. The Tribunal in its orders u/s.254(1) observed that the depositing of the Employees’ share was prior to the due date of filing the return u/s.139(1) and hence deduction under section 36(1)(va) was called for. In reaching this conclusion, the Tribunal primarily relied on the judgment of Hon’ble Himachal Pradesh High Court in CIT Vs. Nipso polyfabriks Ltd. (2013) 350 ITR 327 (HP). The Revenue has moved the instant Miscellaneous Applications 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 M.A.No.401, 379 & 385/PUN/2022 Vikas Vilasrao Kurade (HUF) and 2 others 3 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 the Act. 3. We have heard the rival submissions and perused the relevant material on record. The admitted fact in all the cases are that the Tribunal allowed deduction u/s 36(1)(va) of the Act on the premise that the deposits were made prior to the due date u/s 139(1) of the Act. It is seen that similar issue in miscellaneous application u/s.254(2) of the Act came up for consideration before the Tribunal in the case of ACIT VS. Winjit Tehnologies P. Ltd. (MA No. 384/Pun/2022), which was argued elaborately by both sides. Taking note of all the arguments, the Tribunal has allowed the Miscellaneous application of the Department, vide its order dated 19.05.2023, by holding as under: `5. 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 polyfabriks Ltd., 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. M.A.No.401, 379 & 385/PUN/2022 Vikas Vilasrao Kurade (HUF) and 2 others 4 Ltd.(SC). 6. 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 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”. 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 M.A.No.401, 379 & 385/PUN/2022 Vikas Vilasrao Kurade (HUF) and 2 others 5 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.’ 4. As the facts and circumstances of the instant miscellaneous application are mutatis mutandis similar, we hold that the disallowance was called for. 5. In the result, the Miscellaneous Applications are allowed. Order pronounced in the Open Court on 19 th May, 2023. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT प ु णे Pune; दनांक Dated : 19 th May, 2023 Satish आदेश क त ल प अ े षत / Copy of the Order is forwarded to : 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The CIT (TDS), Pune 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे “B” / DR ‘B’, ITAT, Pune; 5. गाड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune M.A.No.401, 379 & 385/PUN/2022 Vikas Vilasrao Kurade (HUF) and 2 others 6 Date 1. Draft dictated on 19-05-2023 Sr.PS 2. Draft placed before author 19-05-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
