2008 (2) TMI 400 - HC - Income Tax

Nature and effect of amendment to Section 43B payment of contribution to provident fund - the amendment is made applicable from the assessment year 2004-05. The section as it stood earlier was that the employers contribution to provident fund if not paid within the due date the employer was not entitled to deduction held that amendment is prospective and not retrospective - dismissal of the special leave petition cannot be said to be the law decided

Summary

Issues:
Interpretation of sections 43B, 2(24)(x) read with section 36(1)(va) regarding PF, EPF, and ESIC contributions for deduction.

Analysis:

1. The court addressed the appeal concerning the correct interpretation of sections 43B, 2(24)(x) read with section 36(1)(va) regarding the claim of deductions for PF, EPF, and ESIC contributions. The court referred to a previous judgment in Income-tax Appeal No. 256 of 2007, where it was held that the employers' contribution to provident fund, if not paid by the due date, would not be entitled to deduction. Based on this precedent, the court concluded that the appeal had to be allowed for the assessment year 1990-91.

2. The respondents cited a judgment from the Gauhati High Court regarding provident fund dues' contribution after the accounting period but before the filing of returns. The Gauhati High Court's decision was based on earlier judgments and was inclined to review its previous decisions. The respondents also mentioned a special leave petition in the Supreme Court, which was dismissed. The court considered the relevance of the Supreme Court's decision in dismissing special leave petitions and emphasized the need for a judgment to contain material facts, principles of law, and a judgment based on these aspects.

3. The court discussed the importance of a judgment being a precedent based on its facts and the three basic postulates required for a decision to be considered a precedent. Referring to various judgments, including those of the Supreme Court, the court emphasized the significance of finding the principle that is binding. Ultimately, based on the judgments and the interpretation of the law, the court allowed the appeal filed by the Revenue, concluding that the dismissal of the special leave petition did not establish a binding precedent, and the appeal on the question of law was allowed.

4. In summary, the judgment delved into the interpretation of relevant sections concerning deductions for PF, EPF, and ESIC contributions. It considered precedents set by previous judgments and the implications of dismissals of special leave petitions by the Supreme Court. The court emphasized the need for a judgment to contain material facts, principles of law, and a judgment based on these aspects to establish a binding precedent. Ultimately, the court allowed the appeal filed by the Revenue based on the interpretation of the law and the precedents discussed in the judgment.