2019 (4) TMI 1131 - HC - Income Tax

Disallowance u/s 43B - deposit of contribution of PF and ESIC - HELD THAT - Interpretation of the Proviso to Section 43B of the Income Tax Act,1961, which was omitted by the Finance Act,2003, with effect from 01.04.2004, was held by the Hon'ble Supreme Court to be applicable retrospectively from 01.04.1988, in the case of Commissioner of Income Tax, Kolkata-III v . Alom Extrusions Limited M/S. ALOM EXTRUSIONS LIMITED 2009 (11) TMI 27 - SUPREME COURT . We allow the present Appeal of the Assessee, set aside the impugned order passed by the learned Tribunal and remand the matter back to the learned Tribunal for deciding the Appeal afresh in accordance with the law pronounced by the Hon'ble Supreme Court in the aforesaid case of Alom Extrusions Limited within a period of six months from today.

Summary

Issues: Interpretation of Proviso to Section 43B of the Income Tax Act, 1961

Analysis:
1. The controversy revolves around the interpretation of the Proviso to Section 43B of the Income Tax Act, 1961, which was omitted by the Finance Act, 2003, with retrospective effect from 01.04.1988, as per the decision of the Supreme Court in the case of Commissioner of Income Tax v. Alom Extrusions Limited.

2. The Appellant and Respondent counsel agree that since the Supreme Court judgment was not available when the Tribunal passed the order in 2005, the matter should be remanded back to the Tribunal for fresh consideration in line with the decision in the Alom Extrusions Limited case.

3. The Tribunal's findings in the impugned order of 15.02.2005 stated that payments not made within due dates under relevant statutes are to be disallowed under Section 43B of the Act, citing the case of Madras Radiators & Pressings Ltd. However, this decision was overturned by the Jurisdictional High Court, leading to the setting aside of the Commissioner's order.

4. The Supreme Court in the Alom Extrusions Limited case emphasized the non-obstante clause in Section 43B, which mandates deductions only upon actual payment of taxes, duties, etc. The first proviso allows deductions if such payments are made before the due date of filing the Income Tax Act return, with the second proviso causing implementation issues. The Finance Act, 2003, sought to rectify this by deleting the second proviso and ensuring uniformity, applying retrospectively from 01.04.1988.

5. Consequently, the High Court allowed the appeal, set aside the Tribunal's order, and remanded the matter back to the Tribunal for fresh consideration in line with the law established by the Supreme Court in the Alom Extrusions Limited case within six months. No costs were awarded in this decision.