2001 PLP 3076 (PTD)

The amount of damages for delayed payment of contribution under section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, comprises both the element of penal levy as well as compensatory payment and it will be for the authority under the Act to decide with reference to the provisions of that Act and the reasons given in the order imposing and quantifying the damages to determine what proportion should be treated as penal and what proportion as compensatory: Held, that since the matter was not examined by the Tribunal in the light of the principle stated above, the matter had to be remanded to the Tribunal for fresh consideration. Swedeshi Cotton Mills Co. Ltd. v. CIT (1998) 233 ITR 199 (SC); (1998) 93 FJR 461 (SC) and Prakash Cotton Mills (P.) Lid. v. CIT (1993) 201 ITR 684 (SC) and (1993) 82 FJR 546 (SC) fol. R. V. Desai with P. S. Jetley for the Commissioner. Nemo for the Assessee. MRS. RANJANA DESAI, J.‑‑‑By this reference under sec tion 256(1) of the Income Tax Act, 1961, the Income‑tax Appellate Tribunal has referred the following question of law to this Court for opinion at the instance of the Revenue: facts and in the circumstances of the case, payment of damages of Rs.6,06,544 under section 14B of the Employees' Provident Funds and Family Pension Fund Act, 1952, was allowable deduction if the assessee had acted in good faith in normal course of business as trader?" It is evident from the question itself that the controversy in this case pertains to liability of deduction of the payment of damages amounting to Rs.6,06,544 by the assessee under section 14B of the Employees Provident Funds and Family Pension Fund Act, 1952, in computing the income of the assessee. We have heard Mr. R.V. Desai, learned counsel for the Revenue, who fairly stated before us that the controversy in the above question now stands covered by the decisions of the Supreme Court in Prakash Cotton Mills (P.) Ltd. v. CIT (1993), 201 ITR 684 and Swedeshi Cotton Mills Co. Ltd. v. CIT (1998) 233 ITR 199, wherein it has been held that the amount of damages for delayed payment of contributions under section 14B of the Employees' Provident Funds Act, 1952, comprises both the element of penal levy as well as compensatory payment and it will be for the authority under the Act to decide with reference to the provisions of that Act, and the reasons given in the order imposing and quantifying the damages to determine what proportion should be treated as penal and what proportion as compensatory. Since the matter has not been examined in this light by the Tribunal, the matter is remitted back to the Tribunal for consideration afresh in the light‑of he decision of the Supreme Court in the cases cited above. The reference stands disposed of accordingly with no order as to costs. M.B.A./309/FC Order accordingly.