2018 (8) TMI 519 - HC - Income Tax

Disallowance made under Section 36(1)(Va) read with Section 2(24)(x) - Employees Contributions to ESIC paid by the assessee-Company beyond the due dates under ESIC Act - Held that - The issue arising herein stands concluded against the Revenue and in favour of the respondent-Assessee by the decision of this Court in Commissioner of Income-Tax, (Central), Pune V/s. Ghatge Patil Transports Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT). Claim of set-off of unabsorbed depreciation of assessment year 2000-01 beyond the period of 8 years - Held that - SMS communication by Mr. Pinto to the Associate of this Court is contrary to the statement made on behalf of the Revenue yesterday by the learned Additional Solicitor General, assisted by Mr. Mohanty, learned advocate for the Revenue. Requesting an Advocate to put in a praecipe the facts which correctly records the reason for having the matters taken out of turn and being put on board, does not in any manner detract from dignity of an advocate. We are not sure, whether this indignation on the the part of the Advocate Mr. Pinto stems from not understanding our view or it is a made up indignation so as to accuse of us of pressurizing him to do an activity not expected of an Advocate. It appears to be in the second category as the SMS appears to give a completely different twist to the facts as stated to him by Associate. Our endeavor is only to ensure that the law is settled for the tax payers within the State of Maharashtra till the time the Apex Court takes a final view on the issue arising before us. Failing this, the Officers of the Revenue may arbitrarily decide which view of this Court it should follow and the justification would be (even in the absence of any distinguishing facts) the contradictory views of this Court. We have time and again reiterated that equality of treatment at the hands of law is an essential attribute of the Rule of Law, about which we as a State are justifiably proud..In the above view, for the aforesaid reasons we list the following appeals on board tomorrow i.e. on 3rd August, 2018

Summary

Issues Involved:

1. Deletion of disallowance under Section 36(1)(Va) read with Section 2(24)(x) of the Income-Tax Act, 1961 regarding Employees' Contributions to ESIC paid beyond due dates.
2. Allowance of setoff of unabsorbed depreciation beyond the period of 8 years.
3. Consistency in the Revenue's approach and adherence to previous Court decisions.
4. Conduct and communication of the Advocate representing the Revenue.

Issue-wise Detailed Analysis:

1. Deletion of Disallowance under Section 36(1)(Va) read with Section 2(24)(x) of the Income-Tax Act, 1961:

The Court addressed whether the Tribunal was justified in deleting the disallowance made under Section 36(1)(Va) read with Section 2(24)(x) of the Act on account of Employees' Contributions to ESIC paid by the assessee-Company beyond the due dates under the ESIC Act. The Revenue's counsel acknowledged that this issue was resolved against the Revenue and in favor of the assessee by the decision of the Court in Commissioner of Income-Tax, Pune V/s. Ghatge Patil Transports Ltd. 368 ITR 749 (Bombay). Thus, the Court concluded that this question did not give rise to any substantial question of law.

2. Allowance of Setoff of Unabsorbed Depreciation Beyond the Period of 8 Years:

The Court examined whether the Tribunal was justified in allowing the claim of setoff of unabsorbed depreciation of assessment year 2000-01 beyond the period of 8 years. The Revenue's counsel referred to previous decisions of the Court in Commissioner of Income-Tax-1, Mumbai V/s. M/s. Hindustan Unilever Ltd. and The Commissioner of Income Tax, Central-III V/s. M/s. Arch Fine Chemicals Pvt. Ltd., which dismissed the Revenue's appeal on this question of law. However, subsequent cases like Commissioner of Income-Tax V/s. M/s. Milton's Pvt. Limited and Commissioner of Income-Tax-8 Vs. M/s. Confidence Petroleum India. Ltd. admitted the issue. The Court noted the inconsistency and emphasized the need for the Revenue to ensure a consistent view and inform their Advocates of previous decisions to avoid contradictory outcomes. The Court highlighted the importance of equality of treatment at the hands of the law.

3. Consistency in the Revenue's Approach and Adherence to Previous Court Decisions:

The Court expressed its concern over the Revenue's failure to maintain a consistent approach by not pointing out earlier decisions that dismissed similar questions of law. This inconsistency led to the admission of appeals on identical issues previously dismissed. The Court reiterated the need for the Revenue to take a consistent view and ensure that previous decisions are communicated to their Advocates. The Court expected the Revenue to address this issue at the highest level to prevent arbitrary decisions and ensure the rule of law.

4. Conduct and Communication of the Advocate Representing the Revenue:

The Court addressed the inappropriate conduct and communication of the Advocate representing the Revenue, Mr. Pinto. Despite being requested to modify the praecipe to align with the statement made by the Additional Solicitor General, Mr. Pinto refused and sent an unjustified SMS to the Associate of the Court. The Court emphasized that requesting an Advocate to accurately record the reason for listing matters does not detract from the dignity of an Advocate. The Court clarified that the goal was to ensure the law is settled for taxpayers until the Apex Court takes a final view. The Court expressed disappointment in Mr. Pinto's response and emphasized the need for accurate representation and communication by Advocates.

Conclusion:

The Court listed several appeals for final disposal and directed the Registry to forward a copy of the order to the Chairman, Central Board of Direct Taxes, to address the issues raised and ensure consistency in the Revenue's approach. The Court's judgment underscores the importance of adherence to previous decisions, consistent legal views, and professional conduct by legal representatives.