TMI Blog2004 (6) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... ade within the time. Being not convinced with the explanation of the assessee, the CIT (Appeals) has confirmed the disallowance after having observed that the P.F. contribution should be paid within the due date under Provident Fund Act and as per its provisions the P.F. contribution for a month should be paid within 15 days from the end of the month to which it relates. 13. Aggrieved, the assessee has preferred an appeal before the Tribunal and raised its two fold arguments. First of all it was argued that the period of 15 days should be commenced from the last day of the month in which the payment is made and not from the month for which it becomes due. If the period starts from the end of the month in which the payment is made, all payments are found to be made before the due date as they were made within the period of 15 days from the end of the month in which salary was paid. In support of this proposition, the learned counsel for the assessee has invited our attention to section 38 of Employees Provident Scheme, 1952 according to which the employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the statute with effect from April 1,1989 criminal proceedings launched earlier for an offence committed before the omission of section 276D cannot continue thereafter. The learned counsel for the assessee further placed reliance upon the orders of the Tribunal in the case of Dy. CIT v. Udaipur Distillery Co. Ltd. [2002] 74 TTJ (Jodh.) 193 and Prem Cables (P.) Ltd. v. Asstt. CIT [1996] 56 ITD 382 (Jp.) in which it has been held that even if the payments are made before the due date of the filing of the return, it should be allowed. 15. The learned DR, on the other hand, has emphatically argued that the relevant month must be the month for which salary becomes due irrespective of fact when it was being paid to the employees by the employer. In support of this contention, he has relied upon the judgment of Madras High Court in the case of CIT v. Madras Radiators Pressings Ltd. [2003] 264 ITR 620 in which Their Lordships have categorically held that the only reasonable conclusion is that the employer has to remit both the contributions to the provident fund within 15 days from the close of the month for which the employees earned their salary, i.e. salary payable. It is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Madras High Court in the case of Madras Radiators Pressings Ltd. in which Their Lordships have categorically held that a combined reading of clause (va) of sub-section (1) of section 36 and section 43B of the IT Act makes it clear that if the assessee-employer credited any sum received by him from any of his employees covered by section 2(24)(x) of the Act in the relevant fund on or before the due date, that is the date by which the assessee (employer) is required to credit the employee's contribution to the employee's account in the relevant fund under any Act, Rules, Order or notification issued there under, he would be entitled to deduct the said amount in computing his business income. But section 43B controls the allowability of deduction of payment specified in clauses (a) to (d) thereof and provides certain conditions subject to which alone the deductions could be made. Section 43B read with the proviso thereto provided that there should be actual payment and further the actual payment should have been made within the due date as prescribed under the Act. If the payments are not made within the due date there is contravention of the provisions of the Provident F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective effect. But for holding so, they have elaborated the reasons and these reasons are not applicable in the present case. For the sake of brevity, we extract the findings of the Apex Court as under: "Section 43B of the Income-tax Act, 1961, was inserted with effect from April 1, 1984, to discourage taxpayers who did not discharge their statutory liability of payment of excise duty, employer's contribution to provident fund, 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. After the insertion of section 43B, even if the assessee had regularly adopted the mercantile system of accounting, the amount of tax payable by the assessee could be deducted only in the year in which the sum was actually paid and not in the year in which the assessee incurred the liability to pay that tax. However, an assessee who had collected sales tax in the last quarter of the accounting year and deposited it in the treasury within the statutory period falling in the next accounting year, was not entitled to claim any deduction for it. This was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of any sum referred to in clause (b) be allowed unless such sum has actually been paid in cash or by issue of cheques or drafts or by any other mode on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36. The due date defined in explanation is a due date of the respective Act. By introduction of this proviso, no ambiguity or confusion was created in the interpretation of any provision of section 43B of the Act. By lifting the barrier on the period of payment, the Legislature has intended to give more time to the assessees for the deposition of P.F., E.S.I. and other funds welfare to the employees with effect from 1-4-2004. Had it been the intention of the Legislature that this benefit should be given to all those employers or the assessees who are under litigation on the subject they could have said that the proviso is omitted with immediate effect. But the Legislature is very careful in omitting the second proviso and its omittance is introduced by the Finance Act, 2003 with effect from 1-4-2004, meaning thereby after 1-4-2004 the assessee can make the deposits of the P.F. and E.S.I, and other funds welfare to the employees ..... X X X X Extracts X X X X X X X X Extracts X X X X
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