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TMI Blog2014 (1) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of public transportation. The assessee filed their return of income declaring total loss of Rs.35,51,88,507/- on 30/10/2005 for the AY 2005-06. That the return was processed under section 143(1) of the IT Act. That the assessee filed revised return of income on 31/12/2006 declaring total loss of Rs.93,16,88,230/-on the basis of the final audited accounts and auditor report under section 44AB of the IT Act (Revised) after considering the observations / comments of the Statutory Auditor i.e. Accountant Journal. 3.2 That the case was selected for scrutiny and notice under section 143(2) of the IT Act dtd. 21/6/2006 was issued and served upon the assessee on 22/6/2006. That thereafter notice under section 142(1) of the IT Act dtd. 22/5/2007 was issued and served upon the assessee on 23/6/2007. It appears that there was no compliance from the assessee to the said notice and therefore, further notices under section 143(2) of the IT Act and under section 142(1) of the IT Act requiring the assessee to furnish the details were issued on 19/10/2007 and served upon the assessee on 22/10/2007. In response to the same, the Account Officer of the assessee along with its Chartered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y observing that employees' contribution / employer's contribution was deposited before the filing of the return under section 139(1) of the IT Act for the relevant period. 3.6. Being aggrieved by and dissatisfied with the order passed by the CIT(A) in deleting disallowance of Rs.24,89,41,130/- being shortfall in employees' contribution to PF Account and Rs.1,93,55,580/- being shortfall in employers' contribution to PF Account, the revenue preferred appeal before the ITAT being ITA No.2785/Ahd/2009. That the learned ITAT by the impugned Judgement and Order, relying upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-Tax v. Alom Extrusions Ltd., reported in [2009] 319 ITR 306 (SC), has dismissed the said appeal confirming the order passed by the CIT(A) deleting disallowance of short fall in employees' contribution and employers' contribution to PF Account. 3.7 Being aggrieved by and dissatisfied with the Judgement and Order passed by the ITAT in deleting disallowance of Rs.24,89,41,130/- being shortfall in employees' contribution to PF Account, the appellant revenue has preferred Tax Appeal No.637 of 2013. 3.8 In Tax Appeal Nos.637/2013; 1711/2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith respect to section 36(1) (va) of the IT Act. It is, therefore, submitted that the learned appellate tribunal has materially erred in relying upon the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra). 4.3 Mr. Manish Bhatt, learned counsel appearing on behalf of the revenue has further submitted that as per the definition of "Income" provided under section 2(24)(x), any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of Employees State Insurance Act or any other fund for the welfare of such employees is required to be included in the income of the assessee. 4.4 Mr. Manish Bhatt, learned counsel appearing on behalf of the revenue has further submitted that as per the provisions of section 36(1)(va) with respect to any sum received by the assessee from any of its employees to which provision of sub-clause (x) of clause (24) of section 2 apply, and if the same is credited by the assessee to the employees account in the relevant fund or funds on or before the due date, the assessee shall be entitled to the deduction. It is submitted that even explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals and quash and set aside the respective orders passed by the learned appellate tribunal in deleting disallowance of shortfall in employees PF contribution / ESI contribution. 5. On the other-hand, Mr. S.N. Soparkar, learned counsel appearing on behalf of the assessee has supported the respective orders passed by the learned appellate tribunal. The learned counsel appearing on behalf of the assessee has vehemently submitted that as such the controversy raised in the present appeals is squarely covered by the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra). 5.1 Learned counsel appearing on behalf of the assessee has also relied upon the following decisions in support of their submissions that the learned appellate tribunal has rightly deleted disallowance of shortfall in employees' contribution by observing that as the respective assessee have deposited shortfall in employees' contribution in PF Account on or before the due date of filing of the return as provided under section 139 of the IT Act, considering section 43B of the IT Act, the assessee would be entitled to disallowance :- (1) Commissioner of Income-Tax v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds have been deposited by the respective assessee on or before the due date of filing of the return and therefore, they shall be entitled to the deduction in the same year, as rightly allowed by the learned appellate tribunal. 5.3 Relying upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-Tax, Gujarat-I v. Sarabhai Sons Ltd., reported in [1983] 143 ITR 473 SC, it is submitted by Mr. Soparkar, learned counsel appearing on behalf of the assessee that as observed and held by the Hon'ble Supreme Court in the said decision, if two views are possible and different High Courts have taken a particular one view, this Court may not take a different view. Therefore, it is requested to follow the aforesaid decisions relied upon by the assessee and hold that the respective assessee shall be entitled to the deduction even with respect to the shortfall in depositing employees' contribution and ESI contribution, as the same have been deposited on or before the due date of the filing of the return, considering Amended section 43B of the IT Act and it is requested to dismiss all these appeals. 6. In rejoinder to the above, learned counsel appearing on behalf o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 7.4 Section 36 of the Act provides for deduction in computing the income referred to in section 28. The relevant provisions applicable to the present cases would be Section 36(1)(va). As per sub-section 36(1)(va), assessee shall be entitled to the deduction in computing the income referred to in section 28 with respect to any sum received by the assessee from his employees to which the provisions of sub- clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employees' accounts in the relevant fund or funds on or before the "Due Date". As per explanation to section 36(1)(va) for the purpose of the said clause, "Due Date" means the date by which the assessee is required as an employer to credit the employees' contribution to the employees account in the relevant fund under the Act, Rule, Order or Notification issued thereunder or under any Standing Order, Award, Contract or Service or otherwise. Section 36(1)(va) reads as under : "Section 36(1) : The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 - &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return." 7.6 Considering the aforesaid provisions of the Act, as per section 2(24)(x), any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employees shall be treated as an 'Income'. Section 36 of the Act deals with the deductions in computing the income referred to in section 28 and as per section 36(1)(va) such sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 apply, the assessee shall be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the "due date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee on or before the due date applicable in his case for furnishing the return of the income under sub-section (1) of section 139, assessee would be entitled to deduction under section 43B on actual payment and such deduction would be admissible for the accounting year. However, it is required to be noted that as such there is no corresponding amendment in section 36(1) (va). Deletion of Second Proviso to section 43B vide Finance Act 2003 would be with respect to section 43B and with respect to any sum mentioned in section 43(B) (a to f) and in the present case, employer's contribution as mentioned in section 43B(b). Therefore, deletion of Second Proviso to section 43B and amendment in first proviso to section 43B by Finance Act, 2003 is required to be confined to section 43B alone and deletion of second proviso to section 43B vide amendment pursuant to the Finance Act, 2003 cannot be made applicable with respect to section 36(1)(va) of the Act. Therefore, any sum with respect to the employees' contribution as mentioned in section 36(1)(va), assessee shall be entitled to the deduction of such sum towards the employee's contribution if the same is deposited in the accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant fund or funds on or before the due date mentioned in explanation to section 36(1) (va), the assessee shall not be entitled to deductions of such amount in computing the income referred to in section 28 of the Act. 7.7 Now so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd.(supra), by the learned ITAT as well as learned advocates appearing on behalf of the assessee in support of their submission that in view of amendment in section 43B pursuant to Finance Act, 2003, by which the second proviso to section 43B has been deleted and therefore even with respect to employees contribution despite section 36(1)(va), and explanation to section 36(1)(va), if the employees' contribution is credited after the due date mentioned in the particular Act but credited on or before the due date by filing return under section 139 of the Act, assessee shall be entitled to the deduction of such amount, is concerned, on considering the controversy before the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra), the said decision would not be applicable to the facts of the present case. In the said case before Alom Extrusions Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Pamwi Tissues Ltd. (supra) also would not be applicable to the facts of the case on hand. In the case before the Hon'ble Bombay High Court, the dispute was whether deletion of Second Proviso to section 43B would be applicable retrospectively or not and in that case the dispute was also with respect to employer's contribution. 7.11 Now, so far as the reliance placed upon the decision of the Himachal Pradesh High Court in the case of Nipso Polyfabriks Ltd. (supra); decision of the Karnataka High Court in the case of Spectrum Consultants India (P) Ltd. (supra); decision of the Rajasthan High Court in the case of Udaipur Dugdh Utpadak Sahakari Sandh Ltd. (supra) and decision of the Punjab and Haryana High Court in the case of Hemla Embroidery Mills (P) Ltd. (supra) taking view that where the assessee deposited employees' contribution to ESI and Provident Fund before the due date of filing the return under section 139(1) of the Act, the same would be allowable as deduction, are concerned, With respect and for the reasons stated hereinabove, we are not in agreement with the view taken by the aforementioned High courts. As discussed hereinabove, as there is no amendment in Section sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, the submission made on behalf of the assessee to follow the decisions of the different High Courts refereed to hereinabove and/or not to take a contrary view cannot be accepted. 8. In view of the above and for the reasons stated above, and considering section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause (x) of clause 24 of section 2, it is held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees' account in the relevant fund or funds on or before the "due date" mentioned in explanation to section 36(1)(va). Consequently, it is held that the learned tribunal has erred in deleting respective disallowances being employees' contribution to PF Account / ESI Account made by the AO as, as such, such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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