EMPLOYEES CONTRIBUTIONS TO FUNDS ground realities must be recognized by the Legislators, Judiciary , Governments and authorities to avoid un-necessary litigation.

Relevant provisions:

S.2.24.x, 36.1.va and 43B of IT Act.

Recent judgment of Tribunal:

2019 (10) TMI 396 - ITAT JAIPUR  THE DCIT CENTRAL CIRCLE-2 JAIPUR VERSUS M/S. J.K. INTERNATIONAL ITA No. 716, 717 & 718/JP/2018 Dated: - 03 October 2019

Judgments referred on the issue by Tribunal:

1. COMMISSIONER OF INCOME TAX, JAIPUR-II Versus JAIPUR VIDYUT VITRAN NIGAM LTD AND RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD - 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT
2. Commissioner of Income Tax Versus M/s. State Bank of Bikaner & Jaipur and Jaipur Vidyut Vitaran Nigam Ltd. - 2014 (5) TMI 222 - RAJASTHAN HIGH COURT
3. COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION - 2014 (1) TMI 502 - GUJARAT HIGH COURT
4. Commissioner of Income Tax, Udaipur Versus M/s. Udaipur Dugdh Utpadak Sahakari Sangh Limited, Udaipur - 2014 (8) TMI 677 - RAJASTHAN HIGH COURT

Judgments not referred to / mentioned by Tribunal:

There are some old judgments of the Supreme Court, on the same issue which are not cited, but observations have  been made by Ld. CIT(A) and  honorable Tribunal about such judgments, however, it is not known exactly which judgments were considered by them.

From order of CIT(A) as reproduced by ITAT in its order we find Ld. CIT(A) has in paragraph 9.3 mentioned as follows:

9.3 Further, in view of the above judgements of the Hon'ble Supreme Court which has been subsequently followed by the Jurisdictional High Court, I find that there is no justification in the action of the AO in making a disallowance on account of delay in depositon of ESI & PF.

Honorable Tribunal has taken note of judgments of the Supreme Court in following terms in paragraph  4.4 of its order:

     “It is also pertinent to mention that Hon'ble Supreme Court has passed the judgment in favour of the assessee on the issue in question”.

The following judgments and orders of honorable Supreme Court are directly relevant on the issue:

2007 (3) TMI 346 - SC ORDER  Other Citation: 213 CTR 268, [2009] 313 ITR (St.) 1 CIT VERSUS VINAY CEMENT LTD. read with :

2006 (6) TMI 71 - GAUHATI HIGH COURT  Other Citation: [2006] 284 ITR 619

COMMISSIONER OF INCOME-TAX VERSUS GEORGE WILLIAMSON (ASSAM) LIMITED.

PRINCIPAL COMMISSIONER OF INCOME TAX-II, JAIPUR Versus M/s. RAJASTHAN STATE BEVERAGES CORPORATION LTD. 2017 (3) TMI 150 - SUPREME COURT read with

Commissioner of Income Tax Versus M/s. Rajasthan State Ganganagar Sugar Mills Ltd. 2016 (5) TMI 1326 - RAJASTHAN HIGH COURT Other Citation: [2017] 393 ITR

Commissioner of Income Tax Versus M/s. Alom Extrusions Limited  2009 (11) TMI 27 - SUPREME COURT  also reported as  [2009] 319 ITR 306 (SC).

The revenue is not considering this judgment as binding because there was no specific question about employees contribution. However, honorable Supreme Court has considered the same in its judgment, and even if it be considered as a matter incidental to appeal about contribution of assesse, as employer, the observations and order about employees contribution is also binding all over India. It is well settled that even obiter dicta, in a judgment of the Supreme Court is binding on all Courts below. 

As we find that the SLP of revenue was dismissed against judgments of Rajasthan High Court , it can be presumed that those decisions being directly on  S. 24, 36.1.va and 43B in relation to deductions from salary and wages of employees have been considered by the Tribunal.

We also notice from reported judgments that many High Courts (except a few like Gujarat High Court, Karnataka High Court and Madras High Court)  have decided issue in favor of assesse and revenue has not challenged many of them.

For this reason also we can say that revenue is indulging into litigation un-necessarily.