2011 (9) TMI 30 - HC - Income Tax

Delayed Employees' Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) - HELD THAT - As after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd. (2009 - TMI - 35073 - SUPREME COURT), find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988 - Such being the position, the deletion of the amount paid by the Employees' Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act - Decided in favour of assessee.

Summary

Issues:
Whether the deletion of the addition by the Assessing Officer on account of Employees' Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not.

Analysis:
The High Court of Calcutta heard an appeal by the Revenue against an order of the Income Tax Appellate Tribunal related to the assessment year 2006-07. The main issue was the correctness of the deletion of the addition by the Assessing Officer concerning Employees' Contribution to ESI and PF under Section 36(1)(va) and Section 2(24)(x) of the Act. The Tribunal, following the Supreme Court decision in Commissioner of Income Tax vs. Alom Extrusion Ltd., held that the deletion was justified, leading to the Revenue's appeal.

The High Court noted that the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd. had held that the amendment to the second proviso to Sec 43(B) of the Income Tax Act introduced by the Finance Act, 2003, was curative and required retrospective application from 1st April, 1988. Accordingly, the deletion of the amount paid by the Employees' Contribution beyond the due date was deductible by invoking the amended provisions of Section 43(B) of the Act. As a result, the Court found no substantial question of law involved in the appeal and dismissed it.

In conclusion, the High Court upheld the Tribunal's decision based on the Supreme Court's interpretation of the relevant provisions of the Income Tax Act. The retrospective application of the amendment to Section 43(B) allowed for the deduction of the Employees' Contribution, leading to the dismissal of the Revenue's appeal.