2014 (10) TMI 1049 - AT - Income Tax

Disallowance of employees contribution of provident fund ESI in computing taxable total income - Contribution remitted beyond the due date for payment but within the due date for filing of return applying the provisions of section 43B - HELD THAT - This issue has been decided in favour of the assessee by various High Courts following the decision in the case of CIT Vs.Alom Extrusions Ltd 2009 (11) TMI 27 - SUPREME COURT held that omission of second proviso to section 43B and amendment of first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively and thus with effect from 1.4.1988 i.e. the date of insertion of first proviso. The co-ordinate Bench of this Tribunal considering a similar issue in the case of M/s. Venkateswara Electrical Industries P.Ltd. Vs. DCIT 2014 (8) TMI 960 - ITAT CHENNAI following the decision of Amil Ltd. 2014 (8) TMI 960 - ITAT CHENNAI held that even the employees contribution to provident fund is to be allowed as deduction if it is paid within due date for filing of return - Decided in favour of assessee.

Summary

Issues involved: Appeal against disallowance of employees' contribution to provident fund & ESI in computing taxable total income.

Analysis:
The appeals were filed against the Commissioner of Income Tax (Appeals)'s order for the assessment years 2003-04 & 2004-05. The only issue raised by the assessee was the disallowance of employees' contribution to provident fund & ESI in calculating taxable income. The Assessing Officer disallowed the contributions as they were remitted beyond the due date for payment but within the due date for filing the return, citing section 43B of the Act. The Commissioner of Income Tax (Appeals) upheld the disallowance, leading to the appeal. The counsel for the assessee argued that the contributions were paid before the due date for filing the return, relying on various court decisions and a co-ordinate Bench decision. The Departmental Representative supported the lower authorities' orders.

The Tribunal considered the arguments and cited the decision of the Hon'ble Supreme Court in CIT Vs. Alom Extrusions Ltd., stating that the amendment by Finance Act, 2003, was curative and effective retrospectively from 1.4.1988. Referring to a similar issue in a previous case, the Tribunal held that even employees' contribution to provident fund should be allowed as a deduction if paid within the due date for filing the return. The Tribunal directed the Assessing Officer to delete the disallowances made under section 43B for both assessment years, allowing the appeals of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the appeals and directing the deletion of disallowances under section 43B for both assessment years. The decision was pronounced in open court on October 31, 2014, in Chennai.