Law declared by a Court will have retrospective effect if not otherwise stated

Siddhi Vinayaka Graphics Pvt  Ltd  Vs ADIT (ITAT Kolkata)

ITAT Kolkata held that that law declared by a court will have retrospective effect, if not otherwise stated to be so specifically. It is also well settled proposition that whenever, a previous decision is overruled by a larger bench of the Supreme Court, the previous decision is completely wiped out.

Facts- The sole issue raised by the assessee in this appeal is relating to the disallowance/adjustment made of Rs. 12,96,380/- by the Ld. AO on account of delayed deposit of employees’ contribution to PF/ESI u/s. 36(1)(va) read with section 2(24)(x) of the Act in the processing of return carried out u/s. 143(1) of the Act by the Centralised Processing Centre (CPC), Bengaluru.

Conclusion- Even the law as prevailing prior to amendment brought by Finance Act 2021 on this issue has been settled by the Hon’ble Supreme Court and it has been held by the Hon’ble Supreme Court that as per the statutory provision of section 43B of the Income Tax Act as prevailing prior to the amendment brought vide Finance Act 2021, non-obstante clause u/s 43B could not apply in case of amounts which were held in trust as was case of employee’s contribution which were deducted from their income and was held in trust by assessee-employer as per section 2(24)(x), thus, the said clause would not absolve assessee-employer from its liability to deposit employee’s contribution on or before due date as prescribed u/s 36(1)(va) as a condition for deduction.

It has been held time and again that law declared by a court will have retrospective effect, if not otherwise stated to be so specifically. It is also well settled proposition that whenever, a previous decision is overruled by a larger bench of the Supreme Court, the previous decision is completely wiped out and Article 141 will have no application to the decision which has already been overruled and the court would have to decide the cases according to the law laid down by the latest decision of the Hon’ble Supreme Court and not by the decision which has been expressly overruled.

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