TMI Blog2011 (7) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... ntribution to PF and ESIC, the same is not allowable u/s.36(1)(va). 2. The appellant submits that the Ld. A.O as well as CIT(A) out to have allowed the claim of appellant in view of the decision of Hon ble Supreme Court in the case of CIT vs. Alom Extrusions Ltd. 319 ITR 306 relied upon by the appellant. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing. P A Y E R The appellant therefore respectfully prays that:- 1. The disallowance of P.F ESIC ofRs.1,36,926/- confirmed by the Ld. CIT(A) may kindly be deleted. 2. Such and further relief as the nature and circumstances of the case may justify. 2. Facts, in brief ,as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee's contribution is allowable u/s 36(1)(va). The amendment in sec. 43B on which judicial decision as referred by the appellant, is not applicable to employee's contribution. On a plain reading of sec. 43B it can be seen that it restricts the allowance of expenses which are otherwise allowable under the Act. The items covered u/s 43B are listed from clause-a to f. Employee's contribution to PF. or other employees' welfare fund is not covered in any of the clause mentioned in Sec. 43B. Employer's contribution is mentioned in clause-b and therefore, employer's contribution is only subject to sec. 43B. Since, it is otherwise allowable u/s 37(1) of IT. Act. Since, provision of sec. 43B is not at all relevant for emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied to employee's contribution, it will make provisions of Sec. 36(i)(va) redundant. The rule of harmonious construction requires that interpretation to the statute should be such that it should not render any provision redundant. Since, there is a clear provision for disallowance of employee's contribution; the same cannot be made redundant by linking it with sec. 43B. In view of this, it is clear that all the decisions interpreting the applicability of sec. 43B where employee's contribution is also loosely mentioned , do not apply to employee's contribution covered u/s 36(i)(va). It is true that there are conflicting decisions wherein employee's contribution is also clubbed with the employer's contribution. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chemicals P Ltd vs. DCIT, in ITA no.2757/Ahd./2010 dated 13.1.2011.and contended that disallowance made by Assessing Officer was not justified. On the other hand, the ld. DR supported the findings of the ld. CIT(Appeals). 5. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions. As regards employer s and employees contribution towards PF , we find that the ITAT Ahmedabad Benches have been consistently following the decision of the Hon ble Delhi High Court in the case of CIT v. P.M.Electronics Ltd., 220 CTR 635 (Delhi), wherein relying upon the decision of Hon ble Apex Court in the case of CIT Vs. Vinay Cement Ltd.,213 CTR (SC) 268 , the Hon ble Court concurred with the view taken by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be read retrospectively in operation, particularly to give effect to the section as a whole. 5.2 Hon ble Karnataka High Court in their decision in ANZ Information Technology P Ltd., 318 ITR 123 while following their earlier decision in CIT vs. Sabari Enterprises,298 ITR 141(Kar.) concluded that deposits made by the employer of the employees contribution belatedly and contribution towards ESI PF under the relevant enactments can not be treated as income of the assessee u/s 36(1)(va) read with sec. 2(24)(x) in view of provisions of sec. 43B of the Act. 5.3 Hon ble Delhi High Court in another decision dated 23.12.2009 in CIT Vs. AIMIL Ltd.(Delhi)in ITA no. 1063/2008 observed that sec. 2(24)(x) provides that amounts received by an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulates that such deduction would be permissible only on actual payment; (ii) The question as to when actual payment should be made is answered by Vinay Cements 213 CTR 268 where the deletion of the second Proviso to s. 43B w.e.f 1.4.2004 was held applicable to earlier years as well. As the deletion of the 2nd Proviso is retrospective, the case has to be governed by the first Proviso. Dharmendra Sharma 297 ITR 320 (Del) P.M. Electronics 313 ITR 161 (Delhi) followed; (iii) If the employees contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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