9911796707
TMI Blog1966 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that it was not an expenditure incurred in the relevant year. The assessee went up in appeal and contended that it was only in the relevant accounting year that the assessee, as an employer, was compelled to make the contribution by an order of the Regional Provident Fund Commissioner constituted under Act 19 of 1952. The Appellate Assistant Commissioner, however, held that the liability arose from the 18th April, 1956, onwards and the amount should have been claimed in the earlier assessment years. On appeal, the Tribunal fairly and properly conceded that the liability to contribute under Act 19 of 1952 was being disputed by the assessee, who bona fide believed that the provisions of Act 19 of 1952 did not apply to it as it had not 50 or more " employees " within the meaning of that Act. The liability to contribute was not discovered by any inspector under the Act. It was on the 18th November, 1958, that the assessee had itself filled in a " pro forma " stating that the provisions of Act 19 of 1952 did not apply till the 31st August, 1958, as the number of persons employed was only 49, but as three more persons had since been employed, therefore, the scheme under Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 1(3)(a) of the Employees' Provident Funds Act, 1952, with effect from April 18, 1956." This appears to have been a decision given under section 13(2) of Act 19 of 1952. Thereupon, a representation was made in connection with the enforcement of the scheme under the Act. It was reiterated that the assessee bona fide believed that it was working with less than 50 employees and as such it was not required to collect any contribution from its employees, nor had it made any such collections. An exemption from payment was therefore sought. Ultimately, by a letter dated the 27th May, 1960, the full exemption claimed was not granted but the assessee was permitted under the third proviso of paragraph 32 of the Employees' Provident Fund Scheme, 1952, to recover the employees' share of contribution for the said period from their subsequent wages in eighteen monthly instalments. The Income-tax Appellate Tribunal took the view that as the Regional Commissioner had retrospectively applied the provisions of the Act from April 18, 1956, the liability under the Act also accrued on that date and not on the date when the Regional Commissioner had actually decided that the Act was appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the said affairs are entrusted to a managing agent, such agent shall be deemed to be the occupier of the factory. Under section 5, the Central Government is empowered to frame the scheme of the fund. Section 9 makes a fund created under the Act, a recognised fund under the Income-tax Act, within the meaning of Chapter IXA of that Act. There is a proviso to section 9, which enacts that the provisions of the Scheme will prevail, if any of the provisions of Chapter IXA of the Income-tax Act are repugnant thereto. Section 13 deals with the powers of inspectors and section 1A, with penalties in respect of employers other than companies. Section 14A deals with offences by companies. Section 14B deals with the power to recover damages against the employer. Under section 17, power is given to the appropriate Government to exempt certain factories from the operation of the Act. Section 19A gives the power to the Government to resolve difficulties and doubts which may arise as to whether an establishment is a factory engaged, inter alia, in any industry specified in Schedule I or whether fifty or more persons are employed in the establishment. An elaborate scheme under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly been incurred on the 18th April, 1956, as claimed by the department, merely because an inspector reported some years later that on that date fifty-one employees were shown to have been employed by the assessee ? No opportunity appears to have been given to the assessee to show in a very marginal case, such as this, as to whether the manager or any of the others really were " employees " within the meaning of that word as given in section 2(f) read with section 2(k) of Act 19 of 1952. The inspector's report was certainly not sacrosanct. The matter had to be determined and decided and that decision was only given by the Regional Commissioner on the 17th February, 1960. The impugned payment into the fund was made thereafter during the relevant year of account and the outgoing or expenditure, in these circumstances, can legitimately be held to have been incurred only in that year of account and not at any earlier point of time. The liability to pay the amount under the Act was, therefore, only irrevocably incurred by the assessee during the relevant year of account. The instant case would fall to be decided by applying the ratio of the Supreme Court decision in Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompulsion and the employer's contribution to the provident fund, under Act 19 of 1952, was allowable on general principles under section 10(2)(xv) and further that the expenditure need not be one for carrying on the business or earning profits of that year and an expenditure to meet the liability accruing in that year is allowable under section 10(2)(xv) of the Act. Mr. Gulati, the learned standing counsel, relied upon Calcutta Co. Ltd. v. Commissioner of Income-tax, for the proposition that, if there was a liability, it would accrue regardless of there being any dispute. The case, however, does not, in any way, advance that proposition. The question there was, whether the assessee who had sold certain plots and had undertaken to develop those plots within six months from the dates of the deeds of sale, could deduct such estimated expenditure on development of those plots under section 10(2)(xv) of the Act. The department had contended that such an expenditure was only contingent. But this was repelled by the Supreme Court and it was held that the liability had accrued and the assessee had a right to estimate such expenditure which he considered he was bound to incur under the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
