TMI Blog2017 (1) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) thereof refers to ‘sum payable by the assessee as an employer by way of contribution’ to any provident fund, superannuation fund or gratuity fund or any other fund for the welfare of the employees. As discussed hereinabove, under the relevant statutes, both the employer’s contribution and employee’s contribution is required to be paid by the employer before the due date and therefore, the expression ‘sum payable by the assessee as an employer by way of contribution’ as used in Section 43B (b) cannot be given restricted meaning as suggested by the Revenue so as to include within its ambit, only the employer’s contribution and not the both the employer’s contribution and the employee’s contribution. Thus, we are of the considered opinion that the provisions as incorporated in Section 43B (b) allowing deduction in respect of any sum payable by the assessee as an employer by way of contribution to provident fund etc. include both the employer’s contribution and the employee’s contribution, if the same is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of the income under sub-section (1) of Section 139 in respect of the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed by the assessee towards the deposit of employee s contribution to the said funds, observing that as per provisions of Section 36 (1) (va) of the Act, if employee s contribution to PF and ESI is not credited to the employee s account on or before the due date, the same being included in income under provisions of Section 2(24) (x) of the Act is liable to be taxed. However, on application being filed on behalf of the assessee under Section 154 of Act, the total disallowance was reduced to ₹ 6,35,092/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before Commissioner of Income Tax (Appeals) [CIT(A)], Udaipur. The CIT(A) dismissed the appeal vide order dated 4.1.05. 5. Aggrieved by the order passed by the CIT (A), the assessee preferred second appeal before the ITAT. After due consideration, the ITAT allowed the appeal vide order dated 23.6.06, holding that the amendment in proviso to Section 43B of the Act made vide Finance Act, 2003 is retrospective and therefore, the payment having been made before the closure of financial year, the deduction as claimed could not have been disallowed. However, the Assistant Commissioner of Income Tax Circle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention, learned counsel also relied upon the decisions of the Hon ble Supreme Court in the matter of CIT vs. Alom Extrusions Ltd. (2009) 319 ITR 306 (SC) and CIT vs. Vinay Cement Ltd., (2009) 313 ITR-St.1 and the decisions of Karnataka High Court in CIT vs. Sabari Enterprises , (2008) 298 ITR 141, Gauhati High Court in CIT vs. George Williamson (Assam) Ltd. , (2006) 284 ITR 619 , Uttrakhand High Court in CIT vs. Desh Raksha Aushdhalaya Ltd. , (2009) 313 ITR 140 CIT vs. Kiccha Sugar Co. Ltd. , (2013) 356 ITR 351, Madras High Court in CIT vs. Nexus Computer P. Ltd. , (2009) 321 ITR 144 and Delhi High Court in CIT vs. AIMIL Ltd. , (2010) 321 ITR 508. Learned counsel submitted that the expression contribution as used in proviso to Section 43B includes employer s contribution and employee s contribution both and therefore, the assessee having deposited the employee s contribution before the due date for filing the return under Section 139 of the Act, the deduction has wrongly been disallowed by the ITAT. In support of the contention, learned counsel has relied upon a decision of the Karnataka High Court in the matter of Essae Teraoka P. Ltd. vs. D.C.I.T. , (2014) 366 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te is not entitled to deduction while computing its income under Section 28 of the Act. 11. Replying the contentions raised on behalf of the Revenue, learned counsel for the appellant submitted that the question with regard to applicability of the provisions of Section 43B (b) as it stands after deletion of second proviso has been specifically dealt with by the various High Courts and therefore, the contention of the Revenue that the question arising in the present appeals is not dealt with by various High Courts specifically is absolutely devoid of any merit. Learned counsel reiterated that a bare perusal of the decision of this court in State Bank of Bikaner Jaipur s case (supra) reveals that the question of law arising in the instant appeals already stand decided after due consideration. Learned counsel submitted that the decision of the Gauhati High Court dealing with an identical issue having been upheld by the Hon ble Supreme Court while rejecting the Special Leave Petition by a speaking order, the said decision is a binding precedent which has to be followed by this court. 12. We have considered the rival submissions and perused the material on record. 13. Indispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, shall be operative irrespective of other provisions of the Act in respect of the deductions specified, which are otherwise allowable under the Act. As per clause (b) of Section 43B read with proviso to Section 43B, 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 the employees shall be an allowable deduction if such sum is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of the income under sub-section (1) of Section 139 in respect of previous year in which liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee alongwith such return. 16. In the instant cases, it is not disputed that the assessee has deposited the employee s contribution and employer s contribution both in respect of the liability incurred in the previous year but the contention of the Revenue is that the employee s contribution to the relevant funds is not covered by clause (b) of Section 43B and therefore, the ITAT has erred in allowing the deduction in respect thereof invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. In the backdrop of the provisions of the PF Act and ESI Act discussed hereinabove, adverting to the provisions of Section 43B of the Act, it is pertinent to note that the clause (b) thereof refers to sum payable by the assessee as an employer by way of contribution to any provident fund, superannuation fund or gratuity fund or any other fund for the welfare of the employees. As discussed hereinabove, under the relevant statutes, both the employer s contribution and employee s contribution is required to be paid by the employer before the due date and therefore, the expression sum payable by the assessee as an employer by way of contribution as used in Section 43B (b) cannot be given restricted meaning as suggested by the Revenue so as to include within its ambit, only the employer s contribution and not the both the employer s contribution and the employee s contribution. Thus, we are of the considered opinion that the provisions as incorporated in Section 43B (b) allowing deduction in respect of any sum payable by the assessee as an employer by way of contribution to provident fund etc. include both the employer s contribution and the employee s contribution, if the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 36(1) of the Act further makes it very clear that the amount actually paid by the assessee on or before the due date applicable i.e. at the time of submitting returns of income under Section 139 of the Act to the Revenue in respect of the previous year can be claimed by the assessees for deduction out of their gross income. 22. In Alom Extrusions Ltd. s case (supra), the Hon ble Supreme Court held that the Finance Act 2003 deleting the second proviso to Section 43B of the Act is curative in nature and would operate retrospectively i.e. with effect from 1.4.88. 23. In Desh Rakshak Aushdhalaya Ltd s case (supra), the Uttrakhand High Court while dealing with the question regarding the entitlement of the assessee for deduction of the amount deposited in relation to employee s contribution towards provident fund with delay, upheld the order of the ITAT deleting the addition made in this regard by the AO, relying upon the decision of the Hon ble Supreme Court in the matter of Allied Motors Private Limited vs. CIT (1997) 224 ITR 677 (SC), holding that the deletion of second proviso to Section 43B of the Act simply removes ambiguity and being curative in nature, impliedly has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it stood prior to the amendment and Sec.36(1)(va) Explanation 1 thereto r/w Sec.2(24)(x) are considered together, it is clear that they operate in different fields. So far as the employee s contribution received is concerned, it should have been paid on or before the due date prescribed under the relevant statutes. Then again the learned counsel contended that on a reading of Sec.43B(b), any sum payable by the assessee as an employer by way of contribution to any provident fund meant payment of both employees contribution and employer s contribution, by the employer and therefore the assessee was entitled to pay both contributions together on or before the filing of the return under Sec.139(1) of the Act. We are unable to accept the said contention advanced by the learned counsel. If such a contention is accepted, that would make Sec.36 (1)(va) and the Explanation thereto otiose. According to us, there was no indication in Sec.43B as it stood prior to the amendment and thereafter also to deface Sec.36(1)(va) and the Explanation thereto from the Income Tax Act. Thus, it means that both provisions are operative and the contributions have to be paid in accordance with the mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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