2008 (11) TMI 3 - HC - Income Tax

EPF contributions - allowability of deduction u/s 36(1)(5a) read with S. 2(24)(x) & S. 43(B) matter pertain to a period prior to the amendment in S. 43B Whether the deletion of 2nd Proviso to S. 43 is retrospective - held that the view taken by the Tribunal deserves to be sustained as it is no longer res integra in view of the decision of SC in CIT v Vinay Cement Ltd. which has been followed by a Division Bench of this Court in CIT v. Dharmendra Sharma- no substantial question of law arises

Summary

Issues Involved:
Allowability of deduction under Section 36(1)(5a) read with Section 2(24)(x) and Section 43(B) for employer/employees contributions towards provident fund payments made after the due date but before the due date for filing income tax return.

Analysis:
The judgment pertains to an appeal under Section 260A of the Income Tax Act, 1961 concerning the allowability of deduction under Section 36(1)(5a) read with Section 2(24)(x) and Section 43(B) for provident fund payments made post the due date but before the return filing due date. The Revenue contested the Tribunal's decision, arguing that the amendment to Section 43B by the Finance Act, 2003 was not retrospective, thus disallowing the deduction. The key questions raised were the allowability of PF/ESI payments after the due date under Section 43B and the retrospective nature of the amendment to Section 43B by the Finance Act 2003.

The facts revealed that the Assessing Officer disallowed a deduction of Rs 17,94,042 towards EPF contribution as payments were late. The CIT(A) partially allowed the deduction, reducing the disallowed amount to Rs 13,10,791. The Tribunal, following judicial precedents, allowed the appeal of the assessee, leading to the Revenue's challenge before the High Court.

The High Court, after considering various judgments including those of the Supreme Court and other High Courts, upheld the Tribunal's decision. It noted the dismissal of the Special Leave Petition by the Supreme Court, emphasizing the applicability of the law prior to the amendment of Section 43B. The Court highlighted the significance of speaking orders by the Supreme Court and the binding nature of its decisions on lower courts. It also referenced the Madras High Court's decision in Nexus Computer Pvt Ltd, affirming the binding effect of the Supreme Court's rulings.

In conclusion, the High Court dismissed the appeal, stating that no substantial question of law arose for consideration. It aligned with the views of the Supreme Court in Vinay Cement and the Division Bench of the Court in Dharmendra Sharma, disagreeing with the approach of the Bombay High Court in M/s Pamwi Tissues Ltd. The judgment emphasized the importance of judicial discipline in following established legal principles and binding precedents.

This detailed analysis reflects the thorough examination of the issues involved in the judgment, highlighting the legal interpretations, precedents, and reasoning behind the High Court's decision.