TMI Blog2007 (12) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... he said chart that even cheques have been deposited in the bank account well after due date. Therefore, the assessee was asked to explain as to why the payment deposited late into Government account be not disallowed under s. 43B of the Act and added to the total income of the assessee. The assessee filed its reply to the said show-cause notice. The AO, however, did not find any merits in the said reply and observed that there was obligation on the part of the assessee to deposit the amount of EPF within due dates as defined in Explanation to s. 36(1)(va) of the Act. The due date for deposit of EPF is 15th of the following months. In the instant case, even cheques in most of the months have been deposited after the due date. Since the assessee had defaulted in depositing the EPF in treasury by due date AO disallowed the claim of deduction under s. 43B of the Act and added an amount of Rs. 6,10,794 to the income of the assessee. For the same reason, the AO made a disallowance of Rs. 83,196 in respect of late payment of ESI under s. 43B of the Act. 3. On appeal, before the CIT(A), the assessee has submitted that most of the payments were tendered through account payee cheques withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been tendered and the cheques have been cleared even beyond the grace period permitted. The details are as under: ------------------------------------------------------- Month Extended Date of Date of Amount due date tendering clearing the cheque of cheque ------------------------------------------------------- EPF ------------------------------------------------------- August 20.9.2000 12.10.2000 19.10.2000 51,191 ------------------------------------------------------- November 21.12.2000 23.12.2000 30.12.2000 51,984 ------------------------------------------------------- ESI ------------------------------------------------------- August 20.9.2000 12.10.2000 19.10.2000 9,834 ------------------------------------------------------- November 21.12.2000 23.12.2000 30.12.2000 10,582 ------------------------------------------------------- Total 1,23,587 ------------------------------------------------------- In my opinion, these payments aggregating to Rs. 1,23,587 have to be considered as belated payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 43B of the Act certain deductions are allowable only on actual payments. For the purpose of the present appeal. we are concerned only with the deduction claimed by the assessee towards payment of PF and ESI under s. 43B of the Act. Sec. 43B(b) of the Act provides that any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other provident fund for the welfare of employee shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in s. 28 of that previous year in which such sum is actually paid by him. 8. During the relevant assessment year i.e., asst. yr. 2001-02, the second proviso as then in force imposed a further condition that no deduction shall, in respect of any sum referred to in cl. (b) be allowed unless such sum has actually been paid in cash or by issue 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, and where such payment has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn. There is no material to hold that the deletion is either clarificatory or declaratory or intended for the removal of doubts to give a consequential retrospective effect to the deletion so as to make it applicable to earlier assessment years. 12. It may be mentioned that in the case of CIT vs. Godaveri (Mannar) Sahakari Sakhar Karkhana Ltd. (2007) 212 CTR (Bom) 384, the Hon'ble Bombay High Court has held that the deletion of second proviso to s. 43B by Finance Act, 2003 w.e.f. 1st April, 2004 as prospective in nature and not retrospective in nature. The observation of the Hon'ble Court are as under: "Held: When the two provisions were added s. 43B(b) was covered by the second proviso and the first proviso covered the other provisions. They were treated as two different classes. The Finance Act of 1987, therefore, treated s. 43B(b) as a distinct class from the other provisions. Noting certain hardships that were being occasioned by the operation of the second proviso, the Finance Act, 1989 substituted the second proviso. Parliament in its wisdom chose not to delete the second proviso but substituted the same by Finance Act of 1989 by noting the hardship that may be occasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Memorandum Explaining the Provision in the Finance Bill, 2003, the Notes on Clauses and the language of the amendment itself it is clear that the omission of the second proviso was not curative and consequently it cannot be said that the amendment is retrospective. Thus, the Tribunal was not right in law in direction to allow the claim in respect of delayed payment of PF, which has been paid upto the date of filing of return of income ignoring the fact that said amendment to the provisions of s. 43B was made w.e.f. 1st April, 2004 i.e., from asst. yr. 2004-05-CIT vs. Synergy Financial Exchange Ltd. (2006) 205 CTR (Mad) 481 : (2007) 288 ITR 366 (Mad) concurred with; CIT vs. Sabari Enterprises (IT Appeal No. 1088 of 2006, dt. 3rd July, 2007 [reported at (2007) 213 CTR (Kar) 269 : (2008) 2 DTR (Kar) 394-Ed.] by the Karnataka High Court) dissented from; Allied Motors (P) Ltd. vs. CIT (1997) 139 CTR (SC) 864 : (1997) 224 ITR 677 (SC) distinguished." 13. In the case of CIT vs. George Williamson (Assam) Ltd. the Hon'ble High Court of Gauhati vide order dt. 26th June, 2006 has examined the issue of allowability of deduction of PF for asst. yr. 1992-93 in context of omission of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
