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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 ..... (DB ITA 177/2011 & 272/2011) "Whether on the facts and in the circumstances of the case, the ITAT was justified in deleting the addition made on account of depositing the PF payment beyond prescribed time, despite the fact that as per Section 36(1)(va) employee's contribution should have been deposited in time; and Section 43B permits delayed payment as regards employer's contribution and not the employee's contribution?" Substantial question of law in the case of JVVNL (DB ITA No.189/2011). "Whether in the facts and circumstances of the case, the ITAT was justified in law in deleting addition made by the Assessing Officer on account of delay in deposit of employees' contribution to PF u/s 36(1)(va)." 4. The brief facts, as emerging on the face of record, are that the respondent-assessees are being assessed to income tax from year to year and the assessment stood completed originally under Section 143(3) of the IT Act in the case of SBBJ and notice u/s 154 was issued, as the Assessing Officer felt that there is a mistake apparent on the face of record. 5. In the case of the respondent-assessee-JVVNL assessment was completed u/s 143(3) of the IT Act and thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of PF Act or GPF etc. and since there was violation of even those Acts, therefore, the benefit/deduction cannot be granted/allowed. Accordingly, the amounts were disallowed. 8. Dissatisfied with the said disallowance, as aforesaid, the matter was carried in appeal before the CIT(A). Before the CIT(A), same explanation was offered and it was further submitted that the payment under the PF Act could not be disallowed under Section 43B of the IT Act even as per the provision as it stood prior to the amendment w.e.f. 01/04/2004. Reliance was placed by the respondents-assessees on the judgment of the Hon'ble Apex Court in the case of CIT Vs. Vinay Cement Ltd.: (2007) 213 CTR 268 (SC) and after considering the said judgment, the CIT(A) agreed with the contention offered by the respondents-assessees and deleted the disallowance as made by the Assessing Officer. 9. Dissatisfied with the deletion of the disallowance under Section 43B of the IT Act, the matter was carried in appeal before the ITAT by the revenue. It was submitted on behalf of the revenue that the Assessing Officer had correctly disallowed the amount as per the provisions of Section 43B of the IT Act and strict compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rong conclusion which is not permissible under the Act. 11. Per-contra, Shri P.K. Kasliwal and Mr. Gunjan Pathak, ld. counsel for the respondents-assessees submitted that the ITAT, after considering all the facts, has come to the correct conclusion in analyzing the provisions contained under the Act. 12. It was further contented by them that though proviso was applicable from 01/04/2004 but it was clarified that it has to be treated as retrospective in nature. Nevertheless, they submitted that even the Hon'ble Apex Court in the case of Vinay Cement Ltd. (supra) has come to the conclusion that even the plain language of Section 43B of the Act makes it clear that even without the proviso the claim was allowable under the provisions of Section 43B of the Act and accordingly submitted that the ITAT has come to the correct conclusion and the appeal deserves to be dismissed. 13. We have heard ld. counsel for the parties. It would be fruitful to quote Sections 2(24)(x), 36(1)(va) and 43B of the IT Act which is required to be considered in the present appeals:- "Section2(24)'Income' includes- (x)any sum received by the assessee from his employees as contribution to any PF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him." 14. On perusal of the above, it transpires that Section 36(1)(va) was inserted by Finance Act, 1987 w.e.f. 01/04/1988 and explanation to this clause, if read collectively, explains to mean that the date by which the assessee is required as an employer to credit the contribution to the employees account in the relevant fund under any Act/Rule or order or notification issued thereunder or under any standing order, award, contract of service or otherwise, prior to the above, clause was inserted to Section 36 for statutory deductions of payment of tax under the provisions of the Act. Section 43B(b) was inserted by the Finance Act, 1983 which came into force w.e.f.01/04/1984. There again, provisions of Section 43B(b) clearly postulates that it is notwithstanding anything contained in other provision of the Act including Section 36(1)(va) and even prior to insertion of the clause, assessee is entitled to get statutory benefit of deduction of payment of amount from the revenue. It may be observed that the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gitimate deduction in respect of the tax paid by them. This was not intended by s.43B. Hence, the first proviso was inserted in s.43B. The amendment which was made by the Finance Act of 1987 in s.43B by inserting, inter alia, the first proviso, was remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the assessee and which made the provision unworkable or unjust in a specific situation." 15. The Hon'ble Apex Court, in the case of Vinay Cement Ltd. (supra), after approving the judgment rendered by Gauhati High Court in the case of CIT Vs. George Williamson (Assam) Ltd.: (2006) 284 ITR 619 (Gau), came to the conclusion that such omission under Section 43B(b), without any saving clause of the General Clauses Act, means that the above provisions namely; Clause (a) or (c) or (d) or (e) or (f) were not in existence or never existed and after considering the judgments rendered by the Hon'ble Apex Court in the case of Kolhapur Canesugar Works Ltd. vs. Union of India, reported in (2000) 2 SCC 536 and Rayala Corporation (P) Ltd. vs. Director of Enforcement, reported in (1969) 2 SCC 412, held the claim of the assessee as allowable. The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the case of CIT Vs. Dharmendra Sharma: (2007) 213 CTR 609 (Del.); Madras High Court, in the case of CIT Vs. Nexus Computer (P) Ltd., reported in (2008) 219 CTR (Mad.) 54; Delhi High Court, in the case of CIT Vs. P.M. Electronics Ltd., reported in (2008) 220 CTR (Del) 635; Karnataka High Court, in the case of CIT Vs. Kurlon Ltd., reported in (2011) 203 Taxman 29 (Kar.); Himachal Pradesh High Court, in the case of CIT Vs. Nipso Polyfabriks Ltd., reported in (2013) 213 Taxman 376 (Himachal Pradesh) also came to the aforesaid view. 19. Uttrakhand High Court, in the case of CIT Vs. M/s. Kichha Sugar Company Ltd., reported in (2013) 356 ITR 351 (Uttaranchal), after considering the aforesaid provisions, held as under:- "Therefore, the due date referred to in section 36(1)(va) of the Act must be read in conjunction with section 43B(b) of the Act and a reading of the same would make it amply clear that the due date as mentioned in Section 36(1)(va), is the due date as mentioned in section 43B(b) i.e. payment/contribution made to the Provident Fund Authority any time before filing the return for the year in which the liability to pay accrued alongwith evidence to establish payment the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3B would become obsolete. Accordingly, contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return. 22. We have already observed that till this 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 said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that 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 under sub-section (1) of Section 139 of the IT Act. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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