TMI Blog2014 (3) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant : Sri S Parthasarathi, Adv Sri K Malhara Rao, Adv For the Respondent : Sri K V Aravind, Adv JUDGEMENT:- PER : Dilip B. Bhosale J. This Income Tax Appeal, filed under Section 260A of the Income Tax Act, 1961 (for short the IT Act ), is directed against the order dated 31.05.2013 passed by the Income Tax Appellate Tribunal, Bangalore Bench A (for short the Tribunal ) in ITA No.785/Bang/2012 pertaining to the Assessment Year 2008-09, whereby the Tribunal allowed the revenue s appeal and set aside the order dated 20.03.2012 passed by the Commissioner of Income Tax-I, Bangalore (for short the First Appellate Authority or FAA ) in ITA No.247/Bang/DC-113/A-1/Co-11. The appeal before the FAA was directed against the assessment order dated 24.12.2010 for the Assessment Year 2008-09. 2. The assessee is a Company registered under the Companies Act, 1956. The assessee had filed its return of income for the Assessment Year 2008-09 on 26.09.2008 declaring income of Rs. 14,45,13,900/-. The return was processed under Section 143(1) of the IT Act and the case was taken up for scrutiny by issue of notice under Section 143(2) thereof on 13.08.2009. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the contribution payable by himself i.e., the employer s contribution as well as the employee s contribution and thereafter he is entitled to recover by means of deduction from the employee the contribution which he has paid as employee s contribution. Therefore, in law, the payment of contribution by the employer to the fund under the scheme means both employer s contribution and employee s contribution. Whether he deducts the employee s contribution from the salary or not, in law, he is liable to pay the said amount. Therefore, Section 2(24)(x) of the Act makes it clear that the employee s contribution which the employer deducts from his salary before it is paid into the fund, is treated as the income of the employer, and the employer by contributing can get the deduction. That payment must be made within the due date i.e., the due date prescribed under Section 139(1) of the Act. Because it was causing lot of problem as discussed in the judgment of the Apex Court, on a representation made by the industry, subsequent amendment was carried out to mitigate the difficulties caused to the employer under Section 43B of the Act. Though such contributions are not paid within the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 36(1)(va). Therefore, with respect to the employees contribution received by the assessee if the assessee has not credited the said sum to the employees account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1)(va), the assessee shall not be entitled to deductions of such amount in computing the income referred to in section 28 of the Act. 9. Sub-section (24) of Section 2 of the IT Act defines income . Clause(x) of sub-section (24) of Section 2 of the IT Act provides that income includes any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of Employees State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees. 10. On the basis of this provision, Mr.Aravind, learned counsel for the revenue, vehemently submitted that the employees contribution to provident fund is also an income of the employer till he deposits the said amount along with his contribution with the fund, as contemplated under the provisions of the Section 36(1)(va) of the IT Act. 11. From bare perusal of this provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) xxxxxx (d) xxxxxx (e) xxxxxx (f) xxxxxx 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 section 28 of that previous year in which such sum is actually paid by him: Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section(1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. 15. From bare perusal of this provision, it is clear that under the provision, for IT Act, an extension is given to the employer to make payment of contribution to provident fund or any other fund till the due date applicable for furnishing the return of income under subsection (1) of section 139 of the IT Act in respect of the previous year in which the liability to pay such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the member employed by the employer directly. 20. Paragraph-38 of the PF Scheme provides for Mode of payment of contributions. As provided in sub-para(1), the employer shall, before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word contribution used in Clause(b) of Section 43-B of the IT Act means the contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income under sub-section(1) of Section 139 of the IT Act is made, the employer is entitled for deduction. 21. The submission of Mr.Aravind, learned counsel for the revenue that if the employer fails to deduct the employees contribution on or before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of Section 2(24)(x) of the IT Act and in which case, the assessee is liable to pay tax on the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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