2017 (11) TMI 124 - HC - Income Tax

Deduction u/s 43-B - Held that - In the present case, no dispute with regard to the fact that the deletion of proviso of section 43-B has curative effect and would operate retrospectively. The fact remains that the claim of deduction must fall within the four corner of the proviso of Section 43-B which unfortunately the appellant does not fulfil, therefore, the aforesaid judgments does not rescue the appellant. We have considered the submission of learned counsel for the appellant as well as learned counsel for the revenue, we are of the opinion that the Tribunal has arrived at right conclusion in rejecting the claim of the appellant for claim of the deduction in view of the proviso to Section 43-B. The authorities have rightly recorded the finding of fact which does not require to interfere by this Court.

Summary

Issues:
- Appeal against Tribunal's judgment for assessment year 1993-94 regarding deduction under Section 43-B of the Income Tax Act.
- Interpretation of proviso to Section 43-B post its deletion from 01.04.1989 by amending Finance Act, 2003.
- Claim for deduction based on actual payment made before the due date.
- Applicability of the proviso to Section 43-B and conditions for deduction.
- Effect of certain court decisions on the retrospective operation of the deleted proviso.

Analysis:
The case involved an Income Tax Appeal challenging the Tribunal's decision for assessment year 1993-94 regarding the deduction claimed under Section 43-B of the Income Tax Act. The appellant, a public limited company engaged in liquor manufacturing, sought a deduction for Provident Fund and Employee State Insurance payments. However, the proviso to Section 43-B, allowing deduction on actual payment before the due date, had been deleted from 01.04.1989 by the Finance Act, 2003, effective from 01.04.2004.

The appellant contended that the deduction should be allowed as the actual payment was made before filing the return. Nevertheless, the tribunal, considering the proviso to Section 43-B, emphasized that the deduction's allowability hinges on fulfilling specific conditions, including making the payment before the due date as per the scheme's requirement. The tribunal highlighted the necessity of actual payment being made in accordance with the Employees Provident Fund Scheme, 1952 Rule 38, which mandates timely payment of contributions.

Despite relying on precedents suggesting a curative and retrospective effect of the deleted proviso, the court emphasized that the appellant's claim must align with the proviso's conditions. The court concurred with the tribunal's decision, stating that the appellant failed to meet the conditions necessary for claiming the deduction under Section 43-B. Therefore, the court dismissed the appeal, affirming the tribunal's rejection of the appellant's deduction claim.

In conclusion, the court upheld the tribunal's decision, emphasizing the importance of fulfilling the conditions stipulated in the proviso to Section 43-B for claiming deductions. The court's analysis focused on the specific requirements for deduction eligibility, despite the appellant's argument and reliance on prior court decisions regarding the retrospective effect of the deleted proviso.