Debangsu Basak, J. - (1.) The petitioner has assailed an Order dated January 9, 2017 passed by the Principal Commissioner of Income Tax withdrawing the approval of the petitioner under Rule 91 of the Income Tax Rules, 1962.
(2.) Learned Senior Advocate for the petitioner has submitted that, the petitioner 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 Rule. He has submitted that, the petitioner could not receive excess fund than as prescribed under such Rules. The impugned order does not consider the aspect of excess payment. It does not take into consideration that, the petitioner being put in excess payment had refunded it to the legal entity from which it had received the same. The petitioner and the company had acted in accordance with law in doing so.
(3.) Learned Senior Advocate for the petitioner has submitted that, a number of disputes between the employer and the various sections of its employees were pending in different forai. Ultimately a suit was filed in Bangalore by a disgruntled section of the employees of the company. The issues raised therein had received the consideration of the Karnataka High Court. The parties were sent to mediation. The mediation was successful and an award was filed in the mediation. The same was accepted by the Karnataka High Court. Withdrawal of approval is not permissible in the facts of the present case. The withdrawal of approval under Rule 91 of the Income Tax Rules, 1962 will prejudicially affect the ex-employees. If the impugned order is allowed to stand in the manner and form that it stands today, the ex-employees would suffer. The petitioner would be obliged to refund the entire corpus to the employer. In such circumstances, it would be appropriate to set aside the impugned order.;