Income-Tax Officer Ward 1(2), Pune V. Eagle Home Appliances Pvt.Ltd, Pune

MA 46/PUN/2023

AI Insights

The case revolves around a dispute concerning the deduction of the Employees' share of EPF and ESI contributions by M/s. Eagle Home Appliances Pvt. Ltd. for the assessment year 2016-17. Initially, the Tribunal allowed the deduction based on the timing of the deposits relative to the due date for filing the tax return under section 139(1) of the Income Tax Act, referencing a favorable High Court decision. However, this view was challenged by the Revenue following a Supreme Court decision that clarified the legal position, stating that such deductions are only permissible if the contributions are made within the statutory deadlines prescribed by the respective laws governing EPF and ESI. The Tribunal, acknowledging the change in legal interpretation due to the Supreme Court's ruling, rectified its earlier order and disallowed the deductions claimed by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137676 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-10-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-08-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 13-03-2023
• Other Referred Cases: CIT Vs. Nipso polyfabriks Ltd., Checkmate Services P. Ltd. & Ors. VS. CIT & Ors., ACIT VS. Winjit Tehnologies P. Ltd., CIT Vs. Saurashtra Kutch Stock Exchange Ltd., CIT Vs. Arun Luthra, Kailashnath Malhotra Vs. JCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 139(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT Miscellaneous Application No.46/PUN/2023 (arising out of ITA No.12/PUN/2022) Assessment Year : 2016-17 The DCIT, Circle 1(1), Pune Vs. M/s. Eagle Home Appliances Pvt. Ltd., 4 th Floor, Parmar Galary, 77, Shivarkar Road, Wanwori, Pune – 411040 PAN: AAACT3316M Applicant Respondent आदेश / ORDER PER R.S. SYAL, VP : This Miscellaneous application by the Revenue is directed against the order passed by the Tribunal on 30-06-2022 in relation to the assessment year 2016-17. 2. The facts of the case, in a nutshell, are that the Assessing Officer (AO) made disallowance on the ground that the assessee late deposited the Employees‟ share of EPF and ESI etc. The Tribunal, in its order u/s.254(1), observed that the Assessee by Shri M.K. Kulkarni Revenue by Shri Ramnath P Murkunde Date of hearing 06-10-2023 Date of pronouncement 09-10-2023 MA No.46/PUN/2023 Eagle Home Appliances Pvt. Ltd. 2 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 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 the Act. 3. We have heard the rival contentions and gone through the relevant material on record. The admitted facts in this case 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. Such a view has since been overturned by the Hon‟ble Supreme Court in Checkmate MA No.46/PUN/2023 Eagle Home Appliances Pvt. Ltd. 3 Services P. Ltd. & Ors. VS. CIT & Ors. (2022) 448 ITR 518 (SC), rendering the earlier order passed u/s 254(1) as erroneous. 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 the 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. 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. MA No.46/PUN/2023 Eagle Home Appliances Pvt. Ltd. 4 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 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.‟ MA No.46/PUN/2023 Eagle Home Appliances Pvt. Ltd. 5 4. As the facts and circumstances of the instant miscellaneous application are mutatis mutandis similar, we hold that the disallowance was called for. The impugned order is rectified to this extent, dismissing the corresponding ground raised by the assessee. 5. In the result, the Miscellaneous Application is allowed. Order pronounced in the Open Court on 09 th October, 2023. Sd/- (R.S.SYAL) उपाध्यक्ष/ VICE PRESIDENT प ु णे Pune; ददन ांक Dated : 09 th October, 2023 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. 3. प्रत्यर्थी / The Respondent The concerned Pr.CIT, Pune 4. 5. DR, ITAT, „SMC‟ Bench, Pune गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune MA No.46/PUN/2023 Eagle Home Appliances Pvt. Ltd. 6 Date 1. Draft dictated on 06-10-2023 Sr.PS 2. Draft placed before author 06-10-2023 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. *