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TMI Blog2017 (8) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner was established when the employer company was not of the size that it presently is. However, over the period of time, the size of the company has increased. The employee base consequently has increased. There is a consequent increase in the liability of the company to pay to the petitioner. Again the scales of salaries of the employees have also increased. The company, from time to time had paid in excess towards the fund. This excess payment was not detected till its detection as reflected in the balance-sheet of the company as at March 31, 2003. Once the same was detected, the petitioner and the company took steps for the purpose of refunding the excess payment. In terms of the trust deed as also the relevant provisions of the law, the trust cannot retain excess payment. Retention of excess payment by the trust would be acting in breach of the trust. Consequently, the excess payment was refunded. It is not a case where the company had taken a loan from the petitioner. The company having paid in excess than its obligations is entitled to refund of such excess payment. He has relied upon Rules 87 and 88 of the Income Tax Rules, 1962 read with Rule 9(b) of the Trust Refund Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h & Ors.) in support of such contentions. Relying upon an Order dated December 15, 2016 passed in W.P. No. 12951 (W) of 2007 (Britannia Industries Limited Covenanted Staff Pension Fund & Anr. v. Union of India & Ors.) learned Senior Advocate for the respondent nos. 8 and 9 has submitted that, the Court had noted that, the disputes stood settled by mediation and that, the award was accepted by the Karnataka High Court. He has prayed for setting aside of the impugned order. Learned Senior Advocate appearing for the respondent no. 3 has submitted that, the petitioner can receive such payment from the employer as it is legitimately entitled to. In the present case, the petitioner had received excess payment. He has referred to Section 2(6) of the Income Tax Act, 1961 for the purpose of the definition of an approved superannuation fund. He has referred to Part B of the Fourth Schedule of the Income Tax Act, 1961 and Rules 2, 3, 5 and 11 thereunder. He has submitted that, Rule 91(2) of the Income Tax Rules, 1962 is a subordinate legislation and is subservient to Rules 2, 3, 5 and 11 of the Rules appearing at Part B of the Fourth Schedule. He has submitted that, Part B of the Fourth Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the petitioner. The petitioner being obliged in law to refund the same, had repaid such sum by three cheques for the financial year ended March 31, 2004. Such quantum being an admitted excess payment, the petitioner was obliged to refund the same. Therefore, such an issue not being raised, the question of decision thereon does not arise. Whether the impugned Order dated January 9, 2017 withdrawing approval granted under Rule 91 of the Income Tax Rules, 1962 in favour of the petitioner, justified in the facts and circumstances of the instant case is the issue falling for consideration. The first petitioner is a trust. It was constituted by the respondent no. 3 by a deed of trust dated March 4, 1971. By an order dated December 22, 1971 the Commissioner of Income Tax had approved and registered the first petitioner under Part 3 of Schedule IV of the Income Tax Act, 1961. The name of the first petitioner was changed from time to time. Such change of name was approved by the authorities. The petitioners claim that, the sole purpose of the first petitioner is to provide annuities to the exemployees of the respondent no. 3. The petitioners claim that, the petitioners had discovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 30, 2016 requesting the Income Tax authority to accept and assist in the implementation of such settlement. The memorandum of settlement was finally accepted by the Hon'ble Karnataka High Court and a decree was passed on October 18, 2016. The first petitioner had informed the Income Tax authority about the same by a letter dated November 16, 2016. The petitioners had moved an interim application being CAN 11463 of 2016 in W.P. No. 12591 (W) of 2007. Such application and the writ petition being W.P. No. 12591 (W) of 2007 were heard and disposed of on December 15, 2016 by directing the respondent no. 2 to consider and decide the representation dated August 31, 2016 of the respondent no. 5 as also the representation dated September 30, 2016 made by the first petitioner and the respondent no. 3, after giving an opportunity of hearing to the parties or their authorized representatives. Such order as corrected was communicated to the respondent no. 2. The respondent no. 2 through the impugned order had withdrawn the approval granted to the first petitioner under Rule 91(2) of the Income Tax Rules, 1962. Excepting the revenue, all other parties have contended that, the impugned order p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Fourth Schedule of the Income Tax Act, 1961 contemplates a situation where the approved fund may refund an amount to the employer. Jharna Sarkar & Ors. (supra) has observed that, if a person enjoys a benefit de hors his right conferred by statute or by agreement he cannot claim continuation of the same and the other party is entitled to rectify such mistake and/or wrong. Naurang Singh & Ors. (supra) has held that, an evident mistake cannot constitute a valid basis for compelling a party to keep on repeating such mistake. Whether or not the respondent no. 3 had paid any excess amount to the first petitioner and that too by mistake and if so, the quantum thereof, are the issues which require adjudication. As rightly pointed out by the learned Senior Advocate for the respondent nos. 8 and 9, the issue of refund of excess payment was raised in the reply dated June 8, 2007 to the show-cause notice dated April 11, 2007. At the second page of such reply, it has been contended by the respondent no. 3 that, a sum of Rs. 1,211.99 Lakhs was paid over, above and in addition to the annual contribution which the respondent no. 3 was required to make under Rule 9(b) of the Fund Rules a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent no. 3 in the reply dated June 8, 2007. The issue is one of mixed question of fact and law. The showcause notice and the reply thereto raises such an issue. The parties at issue are the Income Tax department and the respondent no. 3 as well as the first petitioner. It cannot be said, in the facts of the present case that, the Income Tax department had accepted that, there is an excess payment made by the respondent no. 3 to the first petitioner for the relevant years. The Income Tax department has also not accepted the quantum of the alleged excess payment. A consensus between the petitioner and the respondent no. 3 cannot bind the Income Tax department. In such circumstances, it would be appropriate to set aside the impugned order and remand the matter to the Income Tax authority for the purpose of deciding the show-cause notice and the reply thereto in accordance with law. Needless to say that, the Income Tax authority is at liberty to hear such parties and consults such documents as it deems appropriate. The authority will pass a reasoned order which it will communicate to the parties it has heard forthwith thereafter. It is expected that, the authority will complete th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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