TaxTMI 
TaxTMI 
2007 (8) TMI 372
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....nces of the case and in law, the ld. CIT(A)-XIV, Mumbai, has erred in deleting the amount of Rs. 4,57,000 being fixed payment made to M/s. S.N. Raj & Co. (Rs. 3,60,000) and to M/s. D.K. Brushing & Co. (Rs. 97,000) for the repairs and maintenance of the plant and machinery, despite the fact that there was no written agreement for making the aforesaid payments and also despite the fact that the assessee-company had neither been able to produce any evidence regarding any services having been rendered by those twin parties. Another factor which paves the way for disallowability is that the assessee-company had neither deducted TDS on these payments made to these two parties nor had produced the details of the work done, and hence the disallowance made by the Assessing Officer merits to be sustained. 4. On the facts and the circumstances of the case and in law, the ld. CIT(A)-XIV, Mumbai, has erred in deleting the addition of Rs. 7,71,090 in respect of ESIC under section 43B without appreciating the fact that it is clearly not allowable in view of under section 43B of the Income-tax Act, 1961. 5. Further, placed in the above factual and legal scenario, the impugned order of the learne....
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....ident Fund Act, were not deductible in view of second proviso to section 43B than in force. The learned DR further invited our attention to the order of the Special Bench in the case of Kwality Milk Foods Ltd. with the submissions that it has been overruled by the Madras High Court in the case of Synergy Finance Exchange Ltd. Further, the judgment referred to by the assessee in the case of George Williamson (Assam) Ltd. of Gauhati High Court is not rendered on the impugned issues. While deciding the issue they have followed earlier judgments in the case of CIT v. Bharat Bamboo & Timber Suppliers [1996] 219 ITR 212 and CIT v. Assam Tribune [2002] 253 ITR 93 and in those judgments, the impugned issue was not involved. These judgments were rendered with respect to the payment of the sales tax, with regard to which 2nd proviso, is not relevant. The effect of omission of second proviso was examined by the Madras High Court in the case of Synergy Finance Exchange Ltd. 7. Having heard the rival submissions and from a careful perusal of the record, we find that undisputedly the contribution of ESI was not deposited even within the grace period prescribed under the corresponding Act. The a....
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....(1) of the Income-tax Act, 1961. Whether, on the facts and in the circumstances of the case and in view of the Explanation 2 to section 43B as inserted by the Finance Act, 1989, giving retrospective effect from 1-4-1984, the Tribunal has not erred in law in directing the Assessing Officer to allow relief to the extent of the sales tax amount paid even after the close of the accounting period but before the due date of filing the return of income under section 139(1) of the Income-tax Act, 1961? We have heard Mr. G.K. Joshi, senior standing counsel for the Income-tax Department, and Dr. A.K. Saraf, counsel for the assessee. Dr. A.K. Saraf submits that the question has been answered by different High Courts, namely, the Andhra Pradesh High Court in Srikakollu Subba Rao and Co. v. Union of India [1988] 173 ITR 708, the Patna High Court, in Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70, the Kerala High Court in CIT v. P. Janardhanan Pillai [1991] 189 ITR 165, the Orissa High Court in CIT v. Pyarilal Kasam Manji and Co. [1992] 198 ITR 110, the Calcutta High Court in CIT v. Sri Jagannath Steel Corporation [1991] 191 ITR 676, the Gujarat High Court ....
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....and if the Explanation 2nd is with retrospective effect, the 1st proviso will have to be so construed, following the judgment of the Apex Court in the case of Allied Motors (P) Ltd. v. CIT [1997] 224 ITR 677 through which the controversy in this regard has been set at rest. The Hon'ble Punjab and Haryana High Court have held that the amendment by the Finance Act, 1987 was thus held to remedial in nature. The question of law raised before the Hon'ble Punjab and Haryana High Court is with regard to applicability of the 1st proviso to section 43B of the Income-tax Act. For the sake of reference, we extract the question of law raised before the Hon'ble Punjab and Haryana High Court as under: "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the liability of Rs. 94,759 is allowable if the payment is made before the due date prescribed under section 139(1) and that the first proviso to section 43B has retrospective application though it came into being with effect from 1-4-1988?" 11. Since, the issue with regard to the effect of omission of 2nd proviso was not raised before the Hon'ble Punjab & Haryana High Co....
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....he income referred to in section 28 of that previous year in which such sum is actually paid by him. 4.3 During the relevant assessment year, namely, 1994-95, the second proviso to section 43B, as then in force, of course, which stands omitted by the Finance Act, 2003 with effect from 1-4-2004, imposed a further condition that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date. 4.4 Explanation to clause (va): 'Explanation.-For the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise.' 4.5 By Finance Act, 2003, which came into force from 1-4-2004, the said second pro....
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....cknowledged evil or to remove any such hardship. In other words, the real issue in each case is as to the dominant intention of the Legislature to be gathered from the tests, viz., (i) the language used; (ii) the object intended; (iii) the nature of rights affected; and (iv) the circumstances under which the statute is passed. 4.9 We are constrained to examine the instant case on the basis of above tests. The second proviso to section 43B of the Act, which stands omitted by the Finance Act, 2003 with effect from 1-4-2004, related to a condition imposed on the assessee to claim deduction of statutory contribution. The condition under the said second proviso is that to claim deduction, the assessee should make payment towards the contribution before the due date under the relevant Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. 4.10 It is a well-settled principle in law that the Court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the Legislature. The language employed in a statute is the determinative factor of legislative....
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....vide: CIT v. Onkarmal Meghraj (HUF) [1973] CTR (SC) 400 : AIR 1973 SC 2585, p. 2589, 2590 : [1974] 3 SCC 349]. 4.13 We have also gone through the Budget Speech of the Hon'ble Minister for Finance for the year 2003-04, the Notes on Clauses of Finance Bill, 2003 dealing with section 43B and the Memorandum Explaining the Provisions in the Finance Bill, 2003 dealing with section 43B of the Act, and we find that they do not help the assessee to satisfy either of the above tests in favour of the assessee. It is, therefore, not permissible in law to take a liberal view or lenient approach to give retrospective effect to the deletion of second proviso to section 43B of the Act so as to apply the same to the assessment year 1994-95, particularly when there is no indication in the Finance Act, 2003 from the language used and from the object indicated that the Legislature intended expressly or by implication that the second proviso to section 43B was deleted to cure an acknowledged evil for the benefit of the community as a whole or to remove any such hardship, nor there is any express provision in the statute that such deletion of second proviso to section 43B of the Act will have any retro....
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....assessee in this regard. 4.16 The test to be applied for deciding as to whether a later amendment should be given retrospective effect, despite a legislative declaration specifying a prospective date as the date from which the amendment is to come into force, is as to whether without the aid of the subsequent amendment the unamended provision is capable of being so construed as to take within its ambit the subsequent amendment [vide: CWT v. B.R. Theatres & Industrial Concerns (P.) Ltd. [2004] 188 CTR (Mad.) 63 : [2005] 272 ITR 177 (Mad.)]. 4.17 In the instant case, the unamended provision enables the assessee to pay contribution towards provident fund, superannuation fund, gratuity fund, etc. before the due date under the respective enactments, whereas the amended provision, due to the omission of second proviso to section 43B of the Act, enables the assessee to pay contribution to provident fund, superannuation fund, gratuity fund, etc. before the filing of the return. In other words, if the assessee fails to pay contribution to the provident fund, superannuation fund, gratuity fund, etc. before the due date under the relevant Act is not entitled to the deduction without the aid....
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....d as a deduction in view of section 43B of the Income-tax Act, 1961. 4.22 The Calcutta High Court in CIT v. Sudera Services (P) Ltd [2003] 179 CTR (Cal.) 310 : [2004] 268 ITR 505 (Cal.) again held that so long as clause (b) of section 43B of the Income-tax Act, 1961 and the Explanation exist in unmodified terms in the statute book, provident fund contributions must be made within the due date for those to qualify for deductions under the Income-tax Act. 4.23 In CIT v. Udaipur Distillary Co. Ltd [2004] 187 CTR (Raj.) 369 : [2005] 274 ITR 429 (Raj.) a Division Bench of Rajasthan High Court held that in order to avail the benefits of deduction under clause (b) of section 43B in respect of contributions to the provident fund, superannuation fund and gratuity fund or any other funds for the welfare of the employees, the sums are not only to be actually paid before the end of the previous year but are further required to be paid within the time stipulated under the relevant statute or notification, standing order, award, contract of service or otherwise and if the payments have not been made within the stipulated time, the deduction cannot be claimed at any time thereafter." 12.1 Thei....
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....d. "The Court of Appeal found themselves able to disregard the decision of this House in Rookes v. Barnard by applying to it the label per incuriam. That label is relevant only to the right of an appellate court to decline to follow one of its own previous decisions, not to its right to disregard a decision of a higher appellate court or to the right of a Judge of the High Court to disregard a decision of the Court of Appeal." 14. In the case of CIT v. G.M. Mittal Stainless Steel Ltd. [2004] 142 Taxman 349 (M.P.) it has been held that every effort must be made by the Tribunal to decide the issue by taking help from the decisions of the Supreme Court and if there is no direct authority of the Supreme Court on the point, then of a jurisdictional High Court and lastly of any other High Court. It has also been held in the said case that it is the duty of the Tribunal to decide the cases on the basis of law laid down by the Supreme Court/High Court and not what the Tribunal itself decides on a particular issue. A similar view was also expressed by the Third Member of the Tribunal in the case of ITO v. P.M. Suthar [1995] 53 ITD 1 (Ahd.) in which it has been held that in the absence of ....
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.... by the Division Benches of the Tribunal and according to Third Member a solitary judgment of the any High Court on particular issue should be followed by the Tribunal and there is no necessity to refer the matter to the Larger Bench of the Tribunal for the reasons that contrary view is expressed by the other coordinate Benches. The Third Member has expressed his views following the judgments of Jurisdictional High Court in the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bom.) in which their Lordship have held that Income-tax Appellate Tribunal acting anywhere in the country has to respect the law laid down by the High Court though of a different State so long as there is no contrary decision of any other High Court on that question. The view expressed by the jurisdictional High Court in the case of Smt. Godavaridevi Saraf, has not been overruled till date and it still holds the field and as such all respect should be given to the judgment of the non-jurisdictional High Court and if it is solitary judgment, it should be followed in its letter and spirit as the Tribunal is at lower pedestal than the High Courts and the better wisdom of the Court below must yield to th....