KARPARA PROJECT ENGINEERING PVT. LTD.,SURAT vs. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(2), SURAT

आदेश /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. This appeal by the Assessee is directed against the order of learned

of Commissioner of Income-tax (Appeals)-1 Surat (in short CIT(A)) dated

10.06.2016 for the assessment year 2012-13.

Karpara Project Engineering Pvt. Ltd. v. ACIT 1(1)(2) Surat/I.T.A. No.2223/Ahd/2016/ A.Y. 12-13 Page 2 of 7

pertaining deals of delayed payments of ESI and Ground No. 2 relates o

confirming the addition of Rs.12,62,027 being payments employers

contribution to Provident fund paid beyond the due date prescribed under

the relevant statutes and treating income as per provisions of section 2

(24) (x) of the Act.

confirmed the disallowance following the judgement of Hon`ble High Court

of Gujarat in the case of CIT v. Gujarat State Road Transport

Corporation [2014] 366 ITR 170 (Guj) : 223 Taxman 398 : [2014] 41

taxmann.com 100 (2014) (1) TML 502 -Guj-HC. The appeal filed by

GSRTC is presently pending for adjudication before the Hon`ble Supreme

Court. The learned counsel for the assessee has relied on the recent

decision of Hon`ble Rajasthan High Court in the case of Pr. CIT v. Rajasthan

State Beverage Corporation Ltd. 84 taxmann.com 173 (Raj.) wherein

Karpara Project Engineering Pvt. Ltd. v. ACIT 1(1)(2) Surat/I.T.A. No.2223/Ahd/2016/ A.Y. 12-13 Page 3 of 7

delayed payment of employees contribution to PF is allowed since the

same is paid before the due date of filing of return of income. The SLP

filed against this decision by the Department has been dismissed by the

Hon`ble Supreme Court in Pr. CIT v. Rajasthan State Beverage Corporation

Ltd. [2017] 84 taxmann.com 185 (SC).

against the assessee by Hon’ble jurisdictional High Court’s judgment in the

case of CIT vs. Gujarat State Road Transport Corporation, 366 ITR 170

(Guj.), wherein it is categorically held that in the case of delayed

deposit of employees contribution to ESI & PF, the same will not be

deductible in computing income under section 28 of the Act.

material on record. We find that the issue is squarely covered against the

assessee by the decision of Hon’ble Gujarat High Court in the case of

CIT v. Gujarat State Road Transport Corporation [2014] 366 ITR 170

Karpara Project Engineering Pvt. Ltd. v. ACIT 1(1)(2) Surat/I.T.A. No.2223/Ahd/2016/ A.Y. 12-13 Page 4 of 7

(Guj) : 223 Taxman 398 : [2014] 41 taxmann.com 100 (2014) (1) TML

502 -Guj-HC, wherein it was held that section 43B does not apply to

employees contribution. Only section 2 (24) (x) read with section 36(1)(va)

is applicable and therefore, employees contribution is disallowed if not

paid within due dates prescribed under relevant Provident Fund /ESI Act.

We are, therefore, of the considered opinion that there is no mistake in the

orders of lower authorities in making disallowance in the light of the ratio

laid down by the Hon’ble Gujarat High Court in the above case (supra).

The law so laid down by the Hon’ble jurisdictional High Court is binding on

us. The mere fact that an appeal against the said decision is pending

before the Hon’ble Supreme Court does not dilute the binding nature of

this judicial precedent.

State Beverages Corporation Ltd [2017] 84 taxmann.com 185 (SC)

(supra), it is only elementary that when a SLP is dismissed by a non-

Karpara Project Engineering Pvt. Ltd. v. ACIT 1(1)(2) Surat/I.T.A. No.2223/Ahd/2016/ A.Y. 12-13 Page 5 of 7

speaking order, it does not constitute a law declared by Hon’ble Supreme

court, and as such, it is not binding under Article 141 of the

Constitution of India. The Hon`ble Supreme Court in the case of S.

Shanmugavel Nadar vs. State of Tamilnadu [2003]; 263 ITR 658 (SC) held

that “A summary dismissal by the Supreme Court without laying down any

law is not a declaration of law as envisaged in article 141 of the

Constitution of India. For declaration of law, there should be a speaking

order. A decision which is not express and is not formulated on reasons nor

on a consideration of the issue can not be deemed to be a law declared

so as to have binding effect under Article 141 of the Constitution of India.”

Following the above decision and in conformity with this principle, it was

laid down in the case of CIT vs. KM Jagannathan 180 ITR 191 (Mad) that

dismissal of special leave petition by the Supreme Court cannot be

construed as affirmation of the decision against which special leave was

sought. In the case of Hindustan Tea Trading Company Ltd. vs. CIT 263 ITR

Karpara Project Engineering Pvt. Ltd. v. ACIT 1(1)(2) Surat/I.T.A. No.2223/Ahd/2016/ A.Y. 12-13 Page 6 of 7

289, 294 (Cal), it was reiterated that a decision becomes binding as a

precedent only when the court decides a particular question of law or lays

down the ratio through a conscious adjudication. Agreement with the

finding of fact by the lower court without adverting to the ratio laid down

in the finding does not create a precedent. The authority, for this

proposition, is contained in a series of judgments of Hon’ble Supreme

Court, including, inter alia, in the cases of State of Manipur vs.

Thingujam Brojen Meetai, (1996) 9 SCC 29; Om Prakash Gargi v. State

of Punjab, (1996) 11 SCC 399 and Sun Export Corporation v. Collector

of Customs, AIR 997 SC 2658. We, therefore, see no legally sustainable

merit in the submissions of the assessee and, respectfully following the

judgment of Hon’ble jurisdictional High Court in the case of CIT v. Gujarat

State Road Transport Corporation [2014] 366 ITR 170 (Guj) : 223

Taxman 398 : [2014] 41 taxmann.com 100 (2014) (1) TML 502 -Guj-HC

Karpara Project Engineering Pvt. Ltd. v. ACIT 1(1)(2) Surat/I.T.A. No.2223/Ahd/2016/ A.Y. 12-13 Page 7 of 7

(supra). In the light of above discussion, the grounds of appeal of the

assessee is being devoid of any merit, is therefore, dismissed.

Sd/- Sd/- (सी.एम.गग� /C.M. GARG) (ओ.पी.मीना/O.P.MEENA) �याियकसद�यतथा/JUDICIAL MEMBER लेखासद�यकेसम� /ACCOUNTANT MEMBER सुरत Dated: 16.10.2018/opm आदेश क� �ितिलिप अ�ेिषत/Copy of the Order is forwarded to : 1.अपीलाथ�/ The Appellant; 2. ��थ�/ The Respondent; 3. आयकरआयु� (अपील) The CIT(A)4.आयकरआयु� / Pr. CIT 5.िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण/D.R. (ITAT) 6. गाड�फाईल / Guard file ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat