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TMI Blog2017 (10) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... our of assessee. - ITA No. 6165/Del/2014 - - - Dated:- 4-10-2017 - SH. AMIT SHUKLA, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : None For The Respondent : Sh. R.C. Danday, Sr. DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 24/09/2014 passed by the Ld. Commissioner of Income-tax (Appeals)-VI, New Delhi [in short the CIT-(A) ] for assessment year 2011-12 raising following ground of appeal: 1. Whether the learned CIT(A) as well as the Assessing Officer was justified in holding that the delayed payment [Payment not made on due date but made before the due date of filing return u/s 139(1)] in respect of employees contribution by the assessee of Provident Fund and ESIC amounting to ₹ 214549.00 is to be treated income of the assessee as specified in explanation to section 36(1)(vi) of the Income Tax Act, 1961. 2. The facts in brief of the case are that in the assessment completed under section 143(3) of Income-tax Act, 1961 (in short the Act ) the Assessing Officer made disallowance of ₹ 2,14,549/- for depositing contribution of Provident Fund (PF) amounting to & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction is otherwise allowable under the I.T. Act. Therefore, the claim of the appellant in the instant matter under appeal is held not tenable. The due date for crediting any sum received by the appellant from his employees as contribution towards any provident fund or superannuation fund or any fund for the welfare of the employees by the employer appellant to the employees account in the relevant fund or funds must be one specified in Explanation to Section 36(1)(va) and not the due date of filing return of income u/s 139(1) of the Act. Therefore, the appellant gets no relief on this sole ground of appeal. 3. Aggrieved with the finding of the Ld. CIT-(A), the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 4. None attended on behalf of the assessee and, therefore, the case was heard ex parte qua the assessee. 5. On the other hand, learned Sr. DR supported the order of the learned CIT-(A) and submitted that the disallowance might be upheld. 6. We have heard the submission of the Ld. Sr. DR and perused the relevant material on record. In the instant case, the Ld. CIT-(A) has noted that the employee s contributions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny of his employees to which the provisions of sub-cl. (x) of cl. (24) of s. 2 apply, 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. Explanation : For the purposes of this clause, due date means the date by which the assessee 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 or service or otherwise. 6. It would also be appropriate to take note of s. 43B of the Act primarily for the reason that in Vinay Cement (supra) it was this provision which came up for discussion before the Supreme Court and also keeping in view the contention of learned counsel for the Revenue that this judgment would be of no avail to the assessee while discussing the matter under s. 36(1)(va) of the Act. Sec. 43B stipulates that certain deductions are to be given only on actual payment. Clause (b) thereof talks about contribution by the assessee as employer to any PF or superannuation fund or gratuity fund or any other fund for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the employer, only second proviso be looked into. 9. What is sought to be argued is that distinction is to be made while treating the case related to employer s contribution on the one hand and employees contribution on the other hand. It was submitted that when employees contribution is recovered from their salaries/wages, that is trust money in the hands of the assessee. For this reason, rigors of law are provided by treating it as income when the assessee receives the employees contribution and enabling the assessee to claim deduction only on actual payment by due date specified under the provisions. 10. Ms. Prem Lata Bansal, learned counsel for the Revenue, thus, argued that the second proviso to s. 43B, as it stood at the relevant time, clearly mentioned that deduction in respect of any sum referred to in cl. (b) shall not be allowed unless such sum has actually been paid in cash or by issuance of cheque or draft or by any other mode on or before the due date, as defined in the Explanation below cl. (va) of sub-s. (1) of s. 36. Thus, the assessee would earn the entitlement only if the actual payment is made before the due date specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EPF, family pension, PF inspection charges and ESI deposits and what were the due dates for these deposits and on which date these deposits were made. The dates of deposits are mentioned between 23rd May, 2001 to 23rd April, 2002. The latest payment is made on 23rd April, 2002 and assessee being limited company had filed its return on 20th Oct., 2002 which is a date not beyond the due date of filing of the return. Thus, it is clear beyond doubt that all the payments which have been disallowed were made much earlier to the due date of filing of the return. The disallowance is not made by the AO on the ground that there is no proof of making such payment but disallowance is made only on the ground that these payments have been made beyond the due dates of making these payments under the respective statute. Thus, it was not an issue that the payments were not made by the assessee on the dates which have been stated to be the dates of deposits in the assessment order. If such is a factual aspect then according to latest position of law clarified by Hon ble Supreme Court in the case of CIT vs. Vinay Cement Ltd. (2007) 213 CTR (SC) 268 that no disallowance could be made if the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Having heard the learned counsel for the Revenue, as well as, the assessee, we are of the view that the view taken by the Tribunal deserves to be sustained as it is no longer res integra in view of the decision of the Supreme Court in the case of CIT vs. Vinay Cement Ltd. (2007) 213 CTR (SC) 268 which has been followed by a Division Bench of this Court in the case of CIT vs. Dharmendra Sharma (2007) 213 CTR (Del) 609 : (2008) 297 ITR 320 (Del). 8. Despite the aforesaid judgments, the learned counsel for the Tribunal (sic - Revenue) has contended that in view of the judgment of the Division Bench of the Madras High Court in the case of CIT vs. Synergy Financial Exchange Ltd. (2006) 205 CTR (Mad) 481 : (2007) 288 ITR 366 (Mad) and that of the Division Bench of the Bombay High Court in the case of CIT vs. Pamwi Tissues Ltd. (2008) 215 CTR (Bom) 150 : (2008) 3 DTR (Bom) 66 : (2008) Taxindiaonline.com 104 (TIOL) the issue requires consideration. According to us, in view of the dismissal of the SLP in the case of Vinay Cement (supra) by the Supreme Court by a speaking order, the submission of the learned counsel for the Revenue has to be rejected at the very threshold. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as regards the State of the law for a period prior to the amendment to s. 43B has been noticed by a Division Bench of this Court in Dharmendra Sharma (supra). Applying the ratio of the decision of the Supreme Court in Vinay Cement (supra) a Division Bench of this Court dismissed the appeals of the Revenue. In the passing we may also note that a Division Bench of the Madras High Court in the case of CIT vs. Nexus Computer (P) Ltd. by a judgment dt. 18th Aug., 2008 passed in Tax Case (Appeal) No. 1192 of 2008 [reported at (2008) 219 CTR (Mad) 54 : (2008) 12 DTR (Mad) 77 - Ed] discussed the impact of both the dismissal of the special leave petition in the case of George Williamson (Assam) Ltd. (supra) and Vinay Cement (supra) as well as a contrary view of the Division Bench of its own Court in Synergy Financial Exchange (supra). The Division Bench of the Madras High Court has explained the effect of the dismissal of a special leave petition by a speaking order by relying upon the judgment of the Supreme Court in the case of Kunhayammed Ors. vs. State of Kerala Anr. (2000) 162 CTR (SC) 97 : 119 STC 505 at p. 526 in para 40 and noted the following observations : If the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Acts permit the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the IT Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement (supra). 7. We find that the Hon ble jurisdictional High Court has allowed deduction of payment of employee s contribution before the due date of filing of return of income after considering the decision of the Hon ble Supreme Court in the case of CIT Vs. Vinay Cement Limited (supra). In the instant case, identical issue in dispute is before us. The decision of the jurisdictional High Court is binding on the Tribunal and first appellate authority working within the jurisdiction of the High Court. Accordingly, respectfully following the above decision of the Hon ble Delhi High Court, we set aside the order of the Ld. CIT-(A) and direct the Assessing Officer to delete the addition in dispute. The sole ground of the appeal of the assessee is allowed. 8. In the result appeal of the assessee is allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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