Employee statutory contribution deposit timing affects tax deduction availability; Supreme Court rule restricts deduction to statutory deadline.

Issue concerns availability of tax deduction for employer payment of employee statutory contributions when deposits occurred after statutory deadlines but before the return filing due date. The Supreme Court held deduction requires deposit within the time stipulated by the relevant enactments, not merely before return filing; that precedent is binding on subordinate fora under the doctrine of binding precedent. Non-consideration of such Supreme Court precedent constitutes a mistake apparent from record, warranting rectification of prior favourable orders. The operative effect is that deductions claimed in such circumstances must be disallowed in view of the binding Supreme Court ruling.

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Issues: Whether, in view of the subsequent decision of the Hon'ble Supreme Court, the Tribunal's earlier orders allowing deduction under section 36(1)(va) for employees' share of EPF/ESI deposited after the statutory time limit but before the due date for filing return under section 139(1) require rectification under section 254(2) of the Income-tax Act, 1961.

Analysis: The Tribunal had allowed deduction on the basis that the employees' share was deposited before the due date for filing return under section 139(1). Subsequently, the Hon'ble Supreme Court in Checkmate Services P. Ltd. clarified that deduction under section 36(1)(va) is permissible only if the deposit is made within the time limit prescribed by the respective statutes and not merely before the due date under section 139(1). A later binding decision of the Supreme Court alters the legal position and operates retrospectively. Where a subsequent binding judgment changes the legal position, earlier orders contrary to that law are rendered erroneous and amenable to rectification as a mistake apparent from the record.

Conclusion: The subsequent Supreme Court decision requires rectification of the Tribunal's impugned orders; the Miscellaneous Applications filed by the Revenue are allowed and the benefit of deduction under section 36(1)(va) is not available unless the employees' share was deposited within the statutory time limit prescribed by the respective enactments.

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