9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2007 (8) TMI 372 - AT - Income TaxAddition made of non deposit of Contribution of ESI with in due date u/s 43B - Scope of 2nd proviso to section 43B - Powers Of Income-tax Appellate Tribunal - Assessee raised a plea that since the second proviso to section 43B has been omitted by the Finance Act, 2003 with retrospective effect, the payment made before the due date of filing of the return, is to be allowed u/s 43B - HELD THAT - The retrospectivity of the omission of second proviso was examined by the Special Bench at Madras of the Tribunal in the case of Kwality Milk Foods Ltd. 2006 (3) TMI 262 - ITAT MADRAS-A in which it has been held that the omission of second proviso to section 43B is with retrospective effect. But, the view taken by the Special Bench has been overruled by Madras High Court which is a Jurisdictional High Court in the case of Synergy Finance Exchange Ltd. 2006 (7) TMI 106 - MADRAS HIGH COURT in which it has been held that the omission of the second proviso to section 43B by Finance Act, 2003 with effect from 1-4-2004 has no retrospective operation so as to make it applicable to the earlier period and, therefore, the P.F. payments made after the due date under Provident Fund Act, were not deductible in view of second proviso to section 43B than in force. We have considered the judgments rendered by the Apex Court in the case of Dunlop India Ltd. 1984 (11) TMI 63 - SUPREME COURT and other judgments of different High Courts on the subject and we are of the view that if all these judgments are read conjointly, only one inference would be drawn that a due respect should be given to the judgment of the non-jurisdictional High Court and it should ordinarily be followed by other subordinate judicial or non-judicial bodies situated outside the jurisdiction of that High Court, unless and until, subordinate authorities have strong reasons to deviate from the view taken by the non-jurisdictional High Court. If it is not done, the hierarchical judicial system would collapse. In the case of CIT v. Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME COURT held that if two contrary views are taken by different High Courts, view favourable to the assessee should be adopted, but, nowhere, it has been stated that the view expressed by a solitary High Court can be ignored by the non-jurisdictional subordinate bodies without any reasons. We, therefore, are of the view that a solitary judgment of any High Court, in the country on a particular point or issue, should be followed in its letter and spirit by all Benches of the Tribunal notwithstanding contrary views are expressed by some Benches of the Tribunal, unless there are strong reasons to deviate from the view expressed by the High Court. Otherwise, the hierarchical judicial system would collapse. Thus, we are of the view that since the view taken by the Special Bench of the Tribunal in the case of Kwality Milk Foods Ltd. 2006 (3) TMI 262 - ITAT MADRAS-A was overruled by its jurisdictional High Court in the case of Synergy Finance Exchange Ltd., it looses its binding effect upon the Division Bench of the Tribunal. At present, the solitary judgment on this issue, i.e., effect of omission of the 2nd proviso to section 43B of the Income-tax Act, is of the Madras High Court in the case of Synergy Finance Exchange Ltd. and there is no contrary view available of any other High Court in the country. In these circumstances, the solitary judgment of Madras High Court in the case of Synergy Finance Exchange Ltd., should be followed by the all Benches of the Tribunal unless there are strong reasons to deviate, to maintain the hierarchical judicial system. We, therefore, following the judgment in the case of Synergy Finance Exchange Ltd., are of the view that, assessee is not entitled for deduction u/s 43B of the Income-tax Act for payment of ESI, as it was not paid even within the grace period prescribed under the relevant Act. We, Order accordingly. In the result, appeal of the revenue is partly allowed.
Issues Involved:
1. Deletion of processing charges paid by the appellant company. 2. Deletion of fixed payments made for repairs and maintenance. 3. Deletion of addition in respect of ESIC under section 43B. 4. General contention that the CIT(A)'s order is perverse and contrary to law. Detailed Analysis: 1. Deletion of Processing Charges Paid by the Appellant Company: The revenue contended that the CIT(A) erred in deleting the amount of Rs. 55,46,340 being processing charges paid by the appellant company without sufficient evidence of work done by sub-contractors. The Tribunal examined the order and found that this issue was covered by its earlier decision in the assessee's own case for the assessment year 1999-2000, where an identical issue was decided in favor of the assessee. Therefore, the Tribunal upheld the CIT(A)'s decision to delete the addition. 2. Deletion of Fixed Payments Made for Repairs and Maintenance: The revenue argued that the CIT(A) erred in deleting the amount of Rs. 4,57,000 paid to M/s. S.N. Raj & Co. and M/s. D.K. Brushing & Co. for repairs and maintenance of plant and machinery. The Tribunal found that this issue was also covered by its earlier decision in the assessee's own case, where the identical issue was examined and decided in favor of the assessee. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the addition. 3. Deletion of Addition in Respect of ESIC under Section 43B: The revenue contended that the CIT(A) erred in deleting the addition of Rs. 7,71,090 related to ESIC under section 43B. The Tribunal noted that the contribution to ESI was not deposited even within the grace period prescribed under the corresponding Act. The Tribunal referred to the judgment of the Madras High Court in the case of Synergy Finance Exchange Ltd., which held that the omission of the second proviso to section 43B by Finance Act, 2003 with effect from 1-4-2004 has no retrospective operation. Therefore, the P.F. payments made after the due date were not deductible. The Tribunal concluded that the assessee was not entitled to deduction under section 43B for the payment of ESI, as it was not paid within the prescribed period, and thus, reversed the CIT(A)'s decision. 4. General Contention that the CIT(A)'s Order is Perverse and Contrary to Law: The revenue's general contention was that the CIT(A)'s order was patently perverse and contrary to law. The Tribunal, after examining the specific issues and corresponding judgments, found that the CIT(A)'s decisions on the processing charges and fixed payments were in line with the Tribunal's earlier decisions in the assessee's favor. However, the Tribunal found merit in the revenue's contention regarding the ESIC addition under section 43B, based on the Madras High Court's judgment. Conclusion: The Tribunal partly allowed the revenue's appeal by upholding the CIT(A)'s decisions on the deletion of processing charges and fixed payments but reversed the CIT(A)'s decision on the ESIC addition under section 43B, thereby restoring the Assessing Officer's disallowance on this issue.
|
