Asst. Director of Income Tax, CPC, Bengalure V. SEAM ENGINEERS, NASHIK

MA 87/PUN/2023

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The case revolves around a Miscellaneous Application filed by the Revenue against an earlier Tribunal order that allowed deductions under section 36(1)(va) of the Income Tax Act for contributions made by employees to PF and ESI. The original Tribunal decision was contested based on a Supreme Court judgment in Checkmate Services P. Ltd. & Ors. vs. CIT & Ors., which established that such deductions are only allowable if the contributions are deposited by the employer within the deadlines set by the respective Acts, independent of the deadlines for filing income tax returns under section 139(1). The Tribunal, upon reviewing the Supreme Court's decision, rectified its earlier ruling to align with the established legal precedent.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137430 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 30-03-2023
• Other Referred Cases: Checkmate Services P. Ltd. & Ors. vs. CIT & Ors. (2022) 448 ITR 518 (SC), ACIT v. Saurashtra Kutch Stock Exchange Ltd., 305 ITR 227 (SC), Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat, (1999) 237 ITR 834 (Guj)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 139(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER M.A. No.87/PUN/2023 (Arising out of ITA No.672/PUN/2021) िनधाᭅरण वषᭅ / Assessment Year : 2019-20 ACIT, CPC, Bengaluru. Vs. Seam Engineers, 95/8, 19 Street Trimbak Road, Nashik- 422007. PAN : AAJFS1685A Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This present Miscellaneous Application is filed by the Revenue against the order passed by this Tribunal in ITA No.672/PUN/2021 for the assessment year 2019-20 dated 15.09.2022. 2. At the outset, the ld. Sr. DR submitted that the addition made u/s 36(1)(va) of the Income Tax Act, 1961 (‘the Act’) in respect of contribution of employees to PF and ESI deposited beyond the stipulated period under the respective Acts was required to be disallowed by virtue of judgment of Hon’ble Supreme Court in the Revenue by : Smt. Shraddha Nichal Assessee by : None Date of hearing : 06.10.2023 Date of pronouncement : 13.10.2023 MA No.87/PUN/2023 2 case of Checkmate Services P. Ltd. & Ors. vs. CIT & Ors. (2022) 448 ITR 518 (SC), as against the same having been allowed by this Tribunal in the impugned order. 3. We heard the ld. Sr. DR and perused the material on record. The Tribunal in the impugned order had allowed the 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. However, the issue of making disallowance u/s 36(1)(va) in respect of Employees share of PF and ESI deposited beyond the due date under the respective Acts, but before the time limit for filing the return of income u/s 139(1) is no more res integra in view of the later judgment of Hon’ble Supreme Court in Checkmate Services P. Ltd. & Ors. VS. CIT & Ors. (supra). The Hon’ble Apex Court has held that the deduction u/s 36(1)(va) can be allowed only if the employees’ share in the relevant funds is deposited by the employer before the due date stipulated in respective Acts and further that the due date u/s 139(1) of the Act is alien for this purpose. The above enunciation of law by the Hon’ble Supreme Court (supra) 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. In this context, we refer to the observation made by the Hon’ble Supreme MA No.87/PUN/2023 3 Court in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd., 305 ITR 227 (SC) vide paras 40 to 43, as under :- “40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under Section 254(2). 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat, (1999) 237 ITR 834 (Guj). 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 "mistake apparent from the record" 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. According to Blackstonian theory, it is not the function of the Court to pronounce a `new rule' but to maintain and expound the `old one'. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. 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. 43. Salmond in his well-known work states; "The theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime". (emphasis supplied).” MA No.87/PUN/2023 4 4. Thus, the impugned order of the Tribunal is, therefore, modified. 5. In the result, the Miscellaneous Application filed by the Revenue stands allowed. Order pronounced on this 13 th day of October, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 13 th October, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.