TMI Blog2007 (10) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... d only when the same is paid before the due date of respective month." 2. In both the Appeals the Assessment Officer disallowed the payment towards P.F. as being beyond the due date prescribed under the P.F. Act. The Assessee preferred an Appeal. The Commissioner of Income-tax (Appeals) followed the judgment of the Delhi Bench of the ITAT in the case of Additional C.I.T. vs. Vestas RRB India Ltd., [2005] 275 ITR(AT)dated 28 th May, 2004 and relying on the said decision allowed the Appeal. The Revenue aggrieved preferred an Appeal to ITAT. The learned ITAT observed in para.3 as under;- "3. The first issue is in respect of delayed payment of P.F. and the disallowance was made u/s.43B of I.T. Act of the amounts as per the above chart of respective Assessment Years. In respect of this ground, we hereby follow a decision of Pune bench in the case of Indian Card Clothing Co. Ltd., ITA No.214/PN/98 and direct to consider the following three points before deciding the issue of disallowance to P.F. contribution. (i) The Section 43B would apply only to employer's contribution while the deduction in respect of employees contribution would be governed by the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that a reasonable interpretation can be given to the section as a whole. 8. Counsel for the parties have made reference to judgment as also to other material in aid of their respective contention to the construction that should be given. Consequent to the deletion of the proviso by to the Finance Act, 2003. 4. Section 43B was inserted by the Finance Act 1983 with effect from 1 st April 1984. The two provisos were added by Finance Act 1987 with effect from 1 st April, 1988. The second proviso was substituted by Finance Act, 1989 with effect from 1 st April, 1989. The relevant portion of Section 43B as first enacted with the provisos reads as under:- "43B. "Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of— (a) any sum payable by the assessee by way of tax, duty, cess or fees, by whatever name called, under any law for the time being in force, or (b) 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 fund for the welfare of employees, or (c) any sum referred to in clause (ii) of sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (c) or clause (d) or clause (e) or clause (f)." 12.The section as it stood before the Finance Act, 2003, treated payments in respect of tax, duty, cess or fee, payment made to an employee, as bonus or commission or services rendered as set out therein any sum payable by the assessee as interest on any loan or borrowing from any public financial institution as set out therein, any sum payable by the assessee as interest or any loan advances from a scheduled bank as set out therein and any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee as one class of deductions and employer's contribution by way of contribution to the Provident Fund as another class. 13. Section 36(va) with the explanation reads as under:- "(va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation. —For the purpose of this clause, due date means the date by which the assessee is required as an employer to credit an employee's contrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter of deduction regarding employer's contribution, unlike other payment referred to in Section 43B of the Income-tax Act, the memorandum noted that to avoid any hardship being caused on account of reasons of postal delay, strikes or long holidays, it is proposed to provide that if any sum payable by the employer by way of contribution to any P.F. or superannuation fund or gratuity fund or any other fund for the welfare of employees, if made by cheque, draft or any other mode, has been tendered by the due date, and the actual payment has been realized within fifteen days of the due date, deduction shall be allowed. 18. By Section 21 of the Finance Act, 2003, the following amendments were incorporated in Section 43B of the Act, 2003. . In the first proviso, the words, brackets and letters "referred to in clause (a) or clause (c) or clause (d) or clause (e) or clause (f) have been omitted. The second proviso was omitted. . In the Finance Minister's Budget Speech Act (2003) 260 ITR (St.) 26, 27 pars. 137 to 144 of the Finance Bill, the Honourable Finance Minster indicated the setting up of the Task Force on Direct-Indirect Taxes under the Chairmanship of Dr.Vijay Kelkar. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other fund for the welfare of the employees shall be allowed in computing the income of the year in which such sum is actually paid. In case the same is paid before the due date of filing the return of income for the previous year, the allowance will be made in the year in which the liability was incurred. These amendments will take effect from 1 st April, 2004 and will, accordingly apply in relation to the assessment year 2004-05 and subsequent years. (Clause 18)" 21.The Notes on Clauses the relevant portion reads as follows:- "It is also proposed to amend the first proviso to the said section so as to omit the references of clause (a), clause (c), clause (d), clause (e) and clause (f) which is consequential in nature. It is also proposed to omit the second proviso to the said section. These amendments will take effect from 1 st April, 2004 and will, accordingly, apply in relation to the assessment year 2004-2005 and subsequent years." 22.With the above background we may consider the judgment in Allied Motors (P) Ltd. vs. Commissioner of Income-tax [1997]224 ITR 677. The Supreme Court relied on the Memorandum explaining the provisions in the Finance Bill, 1983 as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the legislative intent and, therefore, by way of inserting a clarificatory amendment and for removal of doubts that the words "any sum payable" be defined to mean any sum, liability for which has been incurred by the tax-payer during the previous year irrespective of the date by which such sum is statutorily payable. The amendment will take effect from 1 st April, 1984. .24. The learned Supreme Court also relied on Departmental Circular No.550 dated 1 st January, 1990 the judgment in R.B. Jodha Mal Kuthrada vs. CIT (1971) 82 ITR 570 and relying on the G.P.Singh's Principles of Statutory Interpretation , 4 th Edition, page 2901 observed that "it is settled that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended". The Court, therefore, held in the circumstances set out that the first proviso was in the nature of curative legislation and consequently held the legislation to be retrospective. 25. Is it possible to apply the same interpretative principle to Section 43(b) in so far as the omission of the second proviso and deletion in the first proviso. When the two provisions were added 43(b) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as High Court in Commissioner of Income-tax vs. Synergy Financial Exchange Ltd ., [2007]288 ITR 366 (Madras). One of thepoints considered was as under:- "Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in deleting the disallowance of Rs.1,45,399/- being the provident fund payments applying the provisions of Section 43B of the Income-tax Act, 1961?" 28.In that case the relevant assessment year was 1994-95. The Court noted that the fiscal legislation imposing liability is generally governed by normal presumption that it is not retrospective and that in interpreting the statute, the Courts in the first instance have to consider the plain literal language of the statute. If on so reading it is not possible to give effect to the intent of Parliament, then the Courts resort to purposeful interpretation to give effect to that intent. The Court did not read the amendment as retrospective. 29.. The Assam High Court in Commissioner of Income Tax Vs. George Williamson ( Assam ) Ltd .[2006] 284 ITR 619 rejected the contention that the amendment should be read as retrospective. 30.After the arguments were concluded and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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