TalentPro India HR Private Limited Vs DCIT (ITAT Chennai)
Doctrine of Prospective Overruling wont apply unless it is so indicated in the decision- No Prospective Mercy for PF/ESI Default -Checkmate is Retro, Says ITAT
Assessee filed returns for AY 2018-19 & 2019-20. CPC, while issuing intimation u/s 143(1), made disallowances of employees’ contribution to PF & ESIC on the ground of delay in remittance beyond the due dates prescribed under the respective welfare statutes. On appeal, CIT(A) confirmed the additions by relying on the Supreme Court judgment in Checkmate Services Pvt. Ltd. v. CIT (2022), which held that employee’s contribution must be deposited within the statutory due date, failing which deduction u/s 36(1)(va) is not allowable.
Before the Tribunal, Assessee argued that the decision in Checkmate Services should apply prospectively because the Supreme Court had not explicitly stated that it would apply retrospectively. Therefore, for earlier years, Assessee claimed that delayed employee PF/ESI payments should still be deductible if paid before the due date of filing the return u/s 139(1), following earlier High Court interpretations.
Department countered that only the Supreme Court has the power to declare a judgment as prospective, & unless the Supreme Court expressly indicates prospective application, its interpretation of law operates retrospectively. Reliance was placed on M.A. Murthy v. State of Karnataka (2003) 7 SCC 517, where the Supreme Court held that there is no prospective overruling unless expressly declared by the Court.
