TMI Blog2013 (1) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 - - - Dated:- 13-8-2012 - MR. AJAY KUMAR MITTAL.AND MR. JUSTICE G.S. SANDHAWALIA. JJ. PRESENT: Mr. S.K. Mukhi, Advocate with Mr. Rajiv Sharma, Advocate for the appellant. Mr. Tejinder Joshi, Advocate for the revenue, in ITA Nos. 116 and 343 of 2008. Mr. Rajesh Katoch, Advocate for the revenue, in ITA No. 365 of 2008. AJAY KUMAR MITTAL, J. 1. This order shall dispose of three appeals bearing ITA Nos. 116, 343 and 365 of 2008 as learned counsel for the parties are agreed that the similar issue is involved in all the three appeals. The facts are being taken from ITA No. 116 of 2008. 2. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal has erred in overlooking a catena of judicial pronouncements on the issue of retrospective applicability of procedural laws which are clarificatory in nature? 3. The relevant facts for adjudication of the present appeal as mentioned therein are that the assessee is engaged in the business of manufacture and sale of various products viz. moulding powders, glue, formaldehyde, hydraulic presses etc. and filed its return for the assessment year 1998-99 (financial year 1997-98) on 30.11.1998 declaring a loss of Rs. 18,10,76,940/-. The said return was processed under Section 143(1)(a) of the Act on 17.3.1999 and an addition of Rs. 1,72,143/- was made against which the assessee filed an appeal before the Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions proposed by the Assessing Officer vide notice dated 17.6.2003 on account of delayed payments towards Provident Fund and ESI. Against the said order, the assessee filed an appeal before the CIT(A) who vide order dated 27.1.2004 dismissed the appeal. On further appeal by the assessee, the Tribunal vide order dated 2.2.2007 upheld the addition of Rs. 23,31,489/- made on account of delayed payment of Provident Fund and ESI and dismissed the appeal filed by the assessee which gave rise to the filing of the present appeal. 4. The issue involved herein is whether the statutory payment in respect of ESI contribution and Provident Fund of the employees which were paid by the assessee before the filing of the return were allowable deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fee is paid before the date of filing of the Return under the Income Tax Act [due date], the assessee(s) then would be entitled to deduction. However, this relaxation/incentive was restricted only to tax, duty, cess and fee. It did not apply to contributions to labour welfare funds. The reason appears to be that the employer(s) should not sit on the collected contributions and deprive the workmen of the rightful benefits under Social Welfare legislations by delaying payment of contributions to the welfare funds. However, as stated above, the second proviso resulted in implementation problems, which have been mentioned hereinabove, and which resulted in the enactment of Finance Act, 2003, deleting the second proviso and bringing about un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re made in the case of Allied Motors (P) Limited (supra). However, the assessee contended that even though the first proviso came to be inserted with effect from 1st April, 1988, it was entitled to the benefit of that proviso because it operated retrospectively from 1st April, 1984, when Section 43-B stood inserted. This is how the question of retrospectivity arose in Allied Motors (P) Limited (supra). This Court, in Allied Motors (P) Limited (supra) held that when a proviso is inserted to remedy unintended consequences and to make the section workable, a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give the section a reasonable interpretation, it could be read retros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under Section 43-B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under Section 43-B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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