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TMI Blog2016 (8) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... of casus omisus but the court cannot fill the gap and read ‘1961’ instead of ‘1922’ in the Employees Provident Fund and Miscellaneous Provisions Act, 1952, particularly when the said provision is not under consideration before us. Be that as it may, Tribunal is not empowered with such powers. Therefore, we hold that the provisions of section 10(11) are not applicable to the present proceedings but Schedule IV to the Income-tax Act is applicable, this being a case of recognized provident fund. We are also in agreement with ld. CIT(DR) that Rule 69 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 dealing with circumstances in which accumulation in the funds are payable to a member are much broader than Rule 8 of Part A of Fourth Schedule of the Income Tax Act and in no way repugnant to Rule 8,9 and 10 of Part A of Schedule IV. Rule 69 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 only specifies the circumstances in which the accumulation in the funds are payable to a member but that does not impinge upon the deduction of tax as per Rule 10 of Part A of Schedule IV to Income Tax Act. Rule 69 of the Employees Provident Fund scheme nowh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accumulated balance in its total income, then the same is to be excluded while making the computation. Further, he will take guidance from the provisions of section 192A and, accordingly, no deduction should be made where the amount of such payment or, as the case may be, the aggregate amount of such payment to the payee is less than ₹ 30,000/-. The short deduction is to be computed @ 10% in all the cases where the PAN number is furnished by assessee in respect of the employees from whose income tax was to be deducted. - Decided in favour of assessee for statistical purposes. - ITA Nos. 4214/Del/2015, 4215/Del/2015, 4216/Del/2015, ITA Nos. 2415/Del/2015, 2416/Del/2015, 2417/Del/2015, ITA Nos. 2655/Del/2015, 2656/Del/2015, 2657/Del/2015, 2658/Del/2015, ITA No. 481/Del/2015 - - - Dated:- 3-8-2016 - Shri S. V. Mehrotra, Accountant Member And Shri C. M. Garg, Judicial Member Appellant by : Shri R.S. Singhvi Sh. Satyajeet Goel CA Sh. Pankaj Garg Adv Respondent by : Shri A.K. Saroha CIT ( DR ) ORDER Per Bench These are assessee s appeals against separate orders passed by the ld. CIT(A)-X, New Delhi. Since common issues are involved for adjudication, al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of employer Interest on the contribution of employee. 4.3. The AO has reproduced the information furnished by assessee at pages 3 4 of his order. The AO treated the assessee in default, inter alia, observing as under: 8. The fourth schedule of Income Tax, 1961 applies on Employees Provident Fund Act, 1952, as rule I of part A of fourth schedule of Income Tax Act, 1961 excludes its applicability on Provident Fund Act of 1925. Therefore, the rule of taxability on premature withdrawal of EPF before five years applies on EPF Act, 1952 as fourth schedule of I.T Act, 1961 applies on EPF Act, 1952 and fourth schedule of I.T Act does not apply on PF Act, 1925. Further, any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies IO[ or from any other provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette] is exempt from income Tax under the provisions of section 10 Sub section 11 of the Income Tax, 1961 under the category of exempted incomes. In the instant case, the assessee is in default of not abiding by the duty as laid down u/s 206 of the Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act. (4) The payment given under the statutory Provident Fund (hereinafter referred as Employee s Provident Fund Act, 1952), was not liable to tax deduction at source even under the purview of section 192(4) of the I.T. Act, 1961. (5) The EPF Act and the scheme framed there under was special legislation enacted for governing the institution, operation, disbursement etc. of the provident fund of the employees of covered establishment under the provisions of the Act could not over ride the provisions of the EPF Act. (6) The provisions of the Income-tax Act, including 4th Schedule, shall have to yield to the extent of repugnancy vis a vis EPF. It was pointed out that as per the provisions of the EPF Act and the scheme framed there under, the assessee was mandatorily required to repay the accumulated balance to the respective eligible members in full without any diversion of the deduction what-so-ever. (7) The methodology of calculation of tax sought to be applied to the EPFO, necessitates the existence of an employee/employer relationship. Employer is in possession of complete details of income of the employee for deduction of the income-tax on the amount payable at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions advanced before lower revenue authorities. He submitted that Employees Provident Fund Act, 1952 is statutory fund. He further submitted that the present Employees Provident Fund, 1952 is a fund established by the Central Government and also notified by it in the official gazette relying on section of EP MP Act, 1952 and, therefore, Employees Provident Fund Act, 1952 is a notified fund within the terms of the provisions of section 10(11) of the Income-tax Act, 1962. He, therefore, submitted that any payment received under the Scheme of EPF Act, 1952 is covered u/s 10(11) of the Income-tax Act. To further buttress his contention, ld. counsel referred to section 2(38) of the Income-tax act, wherein the recognized provident fund is defined and under those provisions, Employees Provident Fund Act, 1952 is recognized provident fund and besides that, provisions of section 9 of the Employees Provident Fund Act, 1952 also recognizes the Employees Provident Fund Act, 1952 as recognized provident fund under the provisions of Income-tax act, 1922. 5.1. Ld. counsel pointed out that at the time of enactment of Employees Provident Fund Act, 1952, Income-tax Act, 1961 was not in force. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawing analogy from the provisions of section 80C, ld. counsel pointed out that the contribution of a person to the Employees Provident Fund Act, 1952 is covered u/s 80C whereas the Contribution to Public Provident Fund Act are also covered u/s 80C. Therefore, since PPF is covered u/s 10(11), then automatically on the same footing Employees Provident Fund Act, 1952 is also covered under the provisions of section 10(11). 5.3. Ld. counsel further submitted that section 192A has specifically been inserted w.e.f. 1.6.2015 for the purpose of TDS on the withdrawal under Employees Provident Fund Act, 1952. Therefore, intention of the Parliament is very clear that section 192A is specifically inserted parallel to section 10(11) to the effect of only Employees Provident Fund Act, 1952. 5.4. Ld. counsel further pointed out that in any view of the matter the AO was not justified solely relying on the figures submitted by assessee without examining the applicability of Rule 8 on Part A of IVth schedule. 5.5. In second batch of appeals viz. ITA nos. 2415 to 417/Del/2015, 2655 to 2658/Del/2015 481/Del/2015, ld. counsel Shri R.S. Singhvi appeared and submitted that prior to insertion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that it is not correct to say that no mechanism has been prescribed under Part A of Fourth schedule for deduction of TDS. 6.4. Ld. CIT(DR) further submitted that as far as the introduction of section 192A w.e.f. 1.6.2015 is concerned, in the explanatory note to the Finance Act, 2015, the following heading is there Simplification of tax deduction at source mechanism for Employees Provident Fund Scheme . Therefore, Employees Provident Fund was liable to tax deduction at source earlier also. 6.5. Ld. CIT(DR) further pointed out that as far as the tax rate of 33% applied by AO is concerned, second proviso to the newly introduced section 192A provides that in case of the persons who are entitled to receive any amount on which tax is deductible under the said section and who did not furnish their PAN, tax shall be deducted at the maximum marginal rate. 6.6. It was precisely for this reason that the tax was deducted @ 33%. As regards the assessee s plea that calculation of liability was based on maximum marginal rate, ld. CIT(DR) submitted that AO provided sufficient opportunity to the assessee to provide the details. However, the assessee did not avail those opportunities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, 1961 reads as under: 2(38) recognised provident fund means a provident fund which has been and continues to be recognised by the [Principal Chief Commissioner or] Chief Commissioner or 2 [Principal Commissioner or] Commissioner] in accordance with the rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees' Provident Funds Act, 1952 (19 of 1952) 10(11) any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies [ or from any other provident fund set up by the Central Government and notified ? by it in this behalf in the Official Gazette ]; (12) the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule; 7.2. Section 9 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 reads as under: 9. Fund to be recognised under Act 11 of 1922.For the purposes of the Indian Income-tax Act, 1922, the Fund shall be deemed to be a recognised provident fund within the meaning of Chapter IXA of that Act: [P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not covered under the Act, but is under the same employer; and (iii) where a member is discharged and is given retrenchment compensation under the Industrial Disputes Act, 1947 (14 of 1947);] [(lA) For the purpose of clause (b) of sub-paragraph (1)- (i) where an establishment has been closed, the certificate of any registered medical practitioner may be accepted; (ii) where there is no medical officer in the establishment, the employer shall designate a registered medical practitioner stationed in the vicinity of the establishment; or (iii) where the establishment is covered by the Employees' State Insurance Scheme, medical certificate from a medical officer of the Employees' State Insurance Dispensary with which or from the Insurance Medical Practitioner with whom, the employee is registered under that Scheme, shall be produced: Provided that where by mutual agreement of employers and employees, a Medical Board exists for any establishment or a group of establishments, certificate issued by such Medical Board may also be accepted for the purpose of this paragraph: Provided further that it shall be open to the Regional Commissioner to dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Employees Provident Fund and Miscellaneous Provisions Act, 1952 is covered under the Fourth Schedule to the Income Tax Act being a recognized Provident Fund. This being the very clear position of law, detailed arguments advanced by ld. counsel for the assessee cannot detain us for long to deliberate on the same. It is well settled law that the courts are not supposed to legislate the law and fill the gaps in the legislation. The entire endeavor of ld. counsel for the assessee is that the Provident Fund Act, 1925 should be equated with the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and, accordingly, the withdrawals from the accumulated balances should be covered u/s 10(11). We are unable to accept this contention because of the specific provision contained in the Act. 7.5. Ld. counsel referred to section 9 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, as per which the EPF was deemed to be a recognized provident fund for the purpose of Income-tax Act, 1922. Ld. counsel s submission is that since EPF Act was notified in 1952 itself, therefore, there was no necessity for separate legislation in 1961. In this regard ld. CIT(DR) has fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the deduction of tax as per Rule 10 of Part A of Schedule IV to Income Tax Act. Rule 69 of the Employees Provident Fund scheme nowhere prohibits deduction of TDS from the accumulated balances to the members of the scheme. Therefore, there is no repugnancy between Rule 69 of EPF Scheme and Rules 8,9 and 10 of part A of Schedule IV. 7.8. Now coming to the second limb of argument regarding there being no mechanism for deduction of TDS being prescribed in the Act and only after the introduction of section 192A w.e.f. 1.6.2015, tax deduction scheme has been prescribed. The submission of ld. counsel is that as far as section 192(4) is concerned, the same deals only with specifically recognized provident funds which are private in nature and for Employees Provident Fund Scheme 1952, the provisions for the first time have been made in section 192A. We do not find much substance in this plea of ld. counsel because as per Rule 10 of the Part A of Schedule IV, deduction is required to be made from the amount payable under Rule 9 as per provisions of Chapter XVII B by treating accumulated balance being income chargeable under the head salary . Whenever assessee fails to furnish the nece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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