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TMI Blog2014 (5) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... lete. Till the provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the amounts were not deposited - the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income u/s 139(1) of the Act thus, where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income u/s 139(1), cannot be disallowed u/s 43B or u/s 36(1)(va) of the IT Act Decided against Revenue. - DB Income Tax Appeal No.177/2011, DB Income Tax Appeal No.272/2011, DB Income Tax Appeal No.189/2011 - - - Dated:- 6-1-2014 - Ajay Rastogi And J. K. Ranka,JJ. For the Appellant : Mr. R. B. Mathur With Mr. Akhilesh Simlote For the Respondent : Mr. P. K. Kasliwal, Mr. Gunjan Pathak JUDGMENT By The Court (Per Hon. Ranka,J.): 1. These Income Tax Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been disallowed on account of the above facts, however, the Commissioner of Income Tax (Appeals) (for short, the ('CIT(A)') as well as the ITAT have clarified that the amount was disallowed under the provisions contained under Section 43B. 6.1 In so far as the case of the respondent-assessee-JVVNL is concerned, the Assessing Officer has certainly observed that the amount is being disallowed under the provisions of Section 43B of the IT Act. 7. It was contended by the respondent-assessee-SBBJ before the Assessing Officer that the payment was made before the due date of filing of the return of income and accordingly as per provisions of Section 43B of the IT Act, the claim was allowable. It was submitted that there is no mistake apparent on the face of record and alternatively the issue, being debatable, will not come within the purview of Section 154 of the IT Act. However, the Assessing Officer did not agree with the contention raised by the respondent-assessee and disallowed the amount as according to him, the payments were made beyond the due date as prescribed under the relevant Act of PF etc. and once the payment was made beyond the prescribed time, then the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these orders of the ITAT which have been assailed before us. 10. Shri RB Mathur, ld. counsel for the revenue drew attention of this Court towards provisions of Section 36(1)(va) coupled with Section 43B of the IT Act and submitted that there was no justification for allowing the claim by the ITAT as well as CIT(A) as under Section 36(1)(va) of the IT Act, the amount was to be allowed only if the amount was paid on or before the due date and therefore, he contended that Section 43B of the IT Act would come at a later stage and the first point, which is required to be looked into, is that under Section 36(1)(va) of the IT Act, if the amount has been paid on or before the due date under the relevant Act, then certainly the deduction could have been allowed. He further submitted that as per explanation, as given under Section 36(1)(va) of the IT Act, the 'due date' means the date by which the assessee is required, as an employer to credit the employees contribution to the concerned department within due date prescribed under that Act and once it has been found as a finding of fact that the amount was not deposited on or before the due date, even the very deduction under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. Section.43B- Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this in respect of- (a).........., or (b)any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity found or any other fund for the welfare of employees, (c)............ (d)............ (e)........... (f)........... shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him. Provided that nothing contained in this section shall 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the ground that they maintain accounts on mercantile or accrual tests basis. On the other hand, they dispute the liability and do not discharge the same. For some reason or the other, undisputed liabilities also are not paid. To curb this practice, it is proposed to provide that deduction for any sum payable by the assessee by way of tax or duty under any law for the time being in force (irrespective of whatever such tax or duty is disputed or not) or any sum payable by the assessee as an employer by way of contribution to any PF, or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed only in computing the income of that previous year in which such sum is actually paid by him. Sec.43B was, therefore, clearly aimed at curbing the activities of those taxpayers, who did not discharge their statutory liability of payment of excise duty, employer's contribution to PF, etc., for long periods of time but claimed deductions in that regard from their income on the ground that the liability to pay these amounts had been incurred by them in the relevant previous year. It was to stop this mischief that S. 43B was inserted. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09) 319 ITR 306 (SC), while considering the scope of the amendment made w.e.f. 01/04/2004, observed that the same is curative in nature, hence it is retrospective in nature and would operate w.e.f. 01/04/1988 (when the first proviso came to be inserted) and after discussing this, held as under:- Before concluding, we extract hereinbelow the relevant observations of this Court in the case of Commissioner of Income Tax, Bangalore vs. J.H. Gotla, reported in [1985] 156 I.T.R. 323, which reads as under: We should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result, i.e., a result not intended to be subserved by the object of the legislation found in the manner indicated before, then if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than injustice, then such construction should be preferred to the literal construction. For the afore-stated reasons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed by the Tribunal, there is no scope of interference 20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), , (d), (e) and (f), are omitted from the above prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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