MUTHA FOUNDERS P. LTD, V. ACIT4(2)(2),

MA 77/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3595 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 08-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K SINGH
• Assessee Lawyers: G P MEHTA
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI B. RAMAKOT AIAH ,(AM) S.NO. M.A. NO. ARISING OUT OF ITA NO. A.Y. 1. 77/MUM/2010 7287/MUM/2007 1999-00 2. 78/MUM/2010 7288/MUM/2007 2001-02 3. 79/MUM/2010 7289/MUM/2007 2002-03 M/S. MUTHA FOUNDERS P. LTD. 1 ST FLOOR, 121, VITHALWADI KALBADEVI MUMBAI-400 002. ..( APPLICANT ) P.A. NO. (AAACM 3091 N) VS. INCOME TAX OFFICER WARD 4(2)(2) ROOM NO.647, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ..( RESPONDENT ) APPLICANT BY : SHRI G.P. MEHTA RESPONDENT BY : SHRI K. SINGH O R D E R PER D.K. AGARWAL (JM). THESE THREE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEE A RE DIRECTED AGAINST THE COMMON ORDER DATED 31.3.2009 PA SSED BY THE TRIBUNAL IN ITA NO.7287, 7288 AND 7289/MUM/2007 FO R THE ASSESSMENT YEARS 1999-00, 2001-02 AND 2002-03 RESPECTIVELY . SINCE FACTS ARE IDENTICAL AND ISSUE INVOLVED IS COMMON ALL THESE MA NO.77,78 & 79/M/10 A.Y:99-00, 01-02 & 02-03 2 MISCELLANEOUS PETITIONS ARE DISPOSED OF BY THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. 2. IN THE MISCELLANEOUS PETITION IT WAS SUBMITTED THAT THE TRIBUNAL IN PARA-3 OF ITS ORDER DATED 31.3.2009 WHILE RELYIN G ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. PAMW I TISSUES LTD. (215 CTR (BOM.) 150) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE WITH REGARD TO PAYMENTS OF EMPLOYE RS CONTRIBUTION OF PROVIDENT FUND, IF PAID BEFORE THE G RACE PERIOD AS PER THE SAID BINDING JUDGMENT OF THE JURISDICTIONAL HIGH CO URT . HOWEVER, THE HONBLE SUPREME COURT IN CIT VS. ALOM EXTRUSIONS LTD. (227 CTR (SC) 417) HAS TAKEN A VIEW THAT THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME TAX ACT, 1961, BY THE FINA NCE ACT, 2003, OPERATED, RETROSPECTIVELY, WITH EFFECT FROM APRIL 1, 1 988 AND NOT PROSPECTIVELY FROM APRIL, 1, 2004. IT WAS THEREFORE SUBMITTED THAT THE STAND OF THE ASSESSEE THAT THE PAYMENT OF EMPLOYERS CONTR IBUTION TO EMPLOYEES PROVIDENT FUND BEFORE THE DUE DATE OF FILI NG OF RETURN OF INCOME IS AN ALLOWABLE DEDUCTION, DESERVES TO BE ACCEPTED , SAME BEING IN CONSONANCE WITH THE LAW OF THE LAND LAID DOW N BY THE HONBLE SUPREME COURT. IT WAS, THEREFORE, PRAYED THAT A FRE SH ORDER ALLOWING THE CLAIM OF THE ASSESSEE BE PASSED. MA NO.77,78 & 79/M/10 A.Y:99-00, 01-02 & 02-03 3 3. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT FOR THE REASONS AS MENTIONED IN THE MISCELLANEOUS PE TITION THE CLAIM OF THE ASSESSEE BE ALLOWED. IN ALTERNATIVE HE SUBM ITS THAT HE HAS NO OBJECTION IF THE TRIBUNAL SUITABLY MODIFIES ITS D IRECTION OF SETTING ASIDE TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT O F THE RATIO OF THE DECISION OF HONBLE SUPREME COURT (SUPRA). 4. ON THE OTHER HAND THE LD. DR WHILE RELYING ON TH E ORDER OF THE TRIBUNAL SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE I S RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME IN ACCORDANCE WITH THE DECISION OF HONBLE SUPREME COURT (SUPRA). 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ON THE ISSUE OF ALLOWABILITY OF PAYMENTS OF EMPLOYERS CONTRIBUTIO N OF PF, THE TRIBUNAL WHILE FOLLOWING THE BINDING JUDGMENT OF HON 'BLE JURISDICTIONAL HIGH COURT IN PAMWI TISSUES LTD. (SUPRA), SET ASIDE THE ISSU E TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF DETER MINING THE EXTENT OF THE EMPLOYERS CONTRIBUTION TO THE PF PAID BEFORE THE GRACE PERIOD ALLOWED IN THE RESPECTIVE STATUTE. 6. IN CIT VS. ALOM EXTRUSIONS LTD. 227 CTR (SC) 417: ( 2009) 319 ITR 306(SC), SUPRA, THE HON'BLE SUPREME COURT HAS HE LD (PAGE 307 OF 319 ITR HEAD NOTES): MA NO.77,78 & 79/M/10 A.Y:99-00, 01-02 & 02-03 4 THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TAX ACT, 1961, BY THE FINANCE ACT, 2003, OPERATED, RETROSPECTIVELY, WITH EFFECT FROM APRIL 1 , 1988 AND NOT PROSPECTIVELY FROM APRIL 1, 2004. EARLIER UNDER THE SECOND PROVISO TO SECTION 43B AS AMENDED BY THE FINANCE ACT, 1989, ASSESSEES WERE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STOO D CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PRO VIDENT FUNDS ACT. THIS CREATED FURTHER DIFFICULTIES AND ON A REPRESENTATION MADE TO THE FINANCE MINISTRY ONE MOR E AMENDMENT WAS MADE BY THE FINANCE ACT, 2003. THOUGH THIS AMENDMENT WAS MADE APPLICABLE WITH EFFECT FROM APRIL 1, 2004, THE AMENDMENT WAS CURATIVE IN NATURE AND APPLIED RETROSPECTIVELY WITH EFFECT FROM APRIL 1, 1 988. WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBVIOUS OMI SSION THEREIN IS REQUIRED TO BE READ RETROSPECTIVELY IN O PERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHO LE. ALLIED MOTORS P. LTD. V. CIT [1997] 224 ITR 677 (SC ) RELIED ON. IF STRICT CONSTRUCTION LEADS TO A RESULT NOT INTEND ED TO BE SUBSERVED BY THE OBJECT OF THE LEGISLATION, AND IF ANOTHER CONSTRUCTION IS POSSIBLE APART FROM THE LITERAL CONSTRUCTION, THEN THAT CONSTRUCTION SHOULD BE PREF ERRED. 7. IN ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (20 08) 305 ITR 227(SC) IT HAS BEEN OBSERVED AND HELD AT PLACITUM 41 AND 42 APPEARING AT PAGE 240 OF 305 ITR AS UNDER : 41. A SIMILAR QUESTION CAME UP FOR CONSIDERATION BEFORE THE HIGH COURT OF GUJARAT IN SUHRID GEIGY LTD. VS. COMMISSIONER OF SURTAX(1999)237 ITR 834. IT WAS HELD BY THE DIVISION BENCH OF THE HIGH COURT THAT IF THE POINT IS COVERED BY A DECISION OF THE JURISDICTIONAL COURT RENDERED PRIOR OR EVEN SUBSEQUENT TO THE ORDER OF RECTIFICATION, IT COULD BE SAID TO BE A MISTAKE APPARENT FROM THE RECORD MA NO.77,78 & 79/M/10 A.Y:99-00, 01-02 & 02-03 5 UNDER SECTION 254(2) OF THE ACT AND COULD BE CORRECTED BY THE TRIBUNAL. 42. IN OUR JUDGMENT, IT IS ALSO WELL-SETTLED THAT A JUDICIAL DECISION ACTS RETROSPECTIVELY 8. RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DECISI ONS WE ARE OF THE VIEW THAT THERE IS AN APPARENT MISTAKE IN THE ORD ER OF THE TRIBUNAL IN TERMS OF THE PROVISIONS OF SECTION 254(2) OF THE ACT. ACCORDINGLY WE MODIFY OUR DIRECTIONS GIVEN IN EIGHTH LINE ONWARDS OF PARA-3 OF THE TRIBUNAL ORDER IN ITA NO.7287, 7288 & 7289/MUM/200 7 (REVENUES APPEALS ) FOR ASSESSMENT YEARS 1999-00, 2001-02 AND 2002- 03 DATED 31.3.2009 AND THE SAME MAY BE READ AS UNDER : ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE AFTER VERIFICATION IN THE LIGHT OF THE RAT IO OF THE RECENT DECISION IN CIT VS. ALOM EXTRUSIONS LTD.(2009) 319 ITR 306(SC). 9. IN THE RESULT, MISC. PETITIONS FILED BY THE ASSESSEE STAN D ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.5.2010. SD/- SD/- (B. RAMAKOTAIAH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21.5.2010. JV. COPY TO: THE APPLICANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. MA NO.77,78 & 79/M/10 A.Y:99-00, 01-02 & 02-03 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 7.5.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 10.5.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 21.5.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 24.5.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER