DECO MICA LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX

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TAXAP/1188/2018HC GujaratGJHC24052552201801 October 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court acknowledged that the issue was covered by its own prior judgment in CIT vs. Gujarat State Road Transport Corporation Limited. However, it noted the pendency of an SLP before the Supreme Court against this judgment. Considering the smallness of the disputed amount and the potential expense for the assessee to appeal to the Supreme Court, the Court opted for a pragmatic approach. The appeal was dismissed at that stage. However, the Court provided a mechanism for the assessee to revive the appeal if the Supreme Court reverses the judgment in the CIT vs. GSRTC case. The assessee would be permitted to file an application for revival within three months from the date of the Supreme Court's judgment. The ratio is that procedural flexibility can be exercised to grant relief in cases where a higher court is considering a precedent-setting matter, especially when the amount in dispute is small and the assessee faces significant costs.

What were the facts?

The assessee, Deco Mica Limited, is challenging an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad, dated March 22, 2018, for Assessment Year 2014-15. The dispute concerns the disallowance of a deduction of Rs. 15,82,265, representing employees' contributions towards Provident Fund and ESI. The assessee had deposited these amounts but missed the statutory deadlines. The Revenue disallowed the deduction, and the ITAT upheld this disallowance, relying on the Gujarat High Court's decision in CIT vs. Gujarat State Road Transport Corporation Limited (366 ITR 170). The assessee's appeal to the High Court is based on the pendency of a Special Leave Petition (SLP) granted by the Supreme Court against the Gujarat High Court's judgment in the GSRTC case.

What were the issues?

1. Whether the disallowance of employees' contribution to Provident Fund and ESI, deposited after the statutory due date but before the due date of filing the return of income, is justified, considering the provisions of Section 43B of the Income Tax Act, 1961? Assessee's Contention: The assessee acknowledged that the issue is squarely covered by the Gujarat High Court's judgment in CIT v. GSRTC. However, the assessee highlighted that an SLP has been granted by the Supreme Court against the GSRTC judgment. Given the relatively small amount involved and the significant cost of pursuing an appeal to the Supreme Court, the assessee requested that the benefit of the Supreme Court's eventual judgment be made available to them, should it reverse the High Court's decision. Revenue's Contention: The judgment records no specific contention from the Revenue regarding the grounds of appeal. However, the Revenue's position, as upheld by the ITAT, was that the deduction was not permissible due to the delayed deposit.

Which sections of the Income-tax Act were involved?

Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Ahmedabad

did not permit deduction of such sum from the income of the assessee. Such disallowance thereupon became the subject matter of appeal before the Tribunal. The Tribunal dismissed the ground, relying upon the judgment of this Court in the case of Commissioner of Income-tax vs. Gujarat State Road Transport Corporation Limited, reported in 366 ITR 170 [Gujarat].

Counsel for the appellant did not dispute that the issue on hands is squarely covered by this Court in the case of CIT v. GSRTC [Supra]. He, however, submitted that the appeal is pending against the judgment of the High Court before the Supreme Court and SLP has been granted. The amount involved is not very large and it would be extremely expensive for the assessee to carry this in appeal before the Supreme Court. He, therefore, suggested that the benefit of this judgment of the Supreme Court may be made available to the assessee; as and when rendered and in case, the judgment of the High Court is reversed.

Two clear ways are possible to enable the appellant- assessee to get benefit of the judgment of the Supreme Court, in case the High Court judgment is reversed. One is to dismiss this C/TAXAP/1188/2018 ORDER appeal and allow the assessee to approach the Supreme Court; like some other assesses would have. The other way is to make some arrangement under which without filing the appeal, the assessee would also be able to claim the benefit of the judgment. Looking to the smallness of the disputed amount, we adopt the latter option by providing as under : This appeal at this stage is dismissed. However, if the Supreme Court reverses the judgment in the case of CIT vs. GSRTC [Supra], it would be open for the appellant to revive this appeal by filing an application for such purpose within three months from the date of the judgment.

Appeal stands disposed of accordingly. [Akil Kureshi, J.] [B.N Karia, J.] Prakash

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