TMI Blog2003 (10) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... SH BALIA., SUNIL KUMAR GARG. JUDGMENT The judgment of the court was delivered by Rajesh Balia J.- While admitting the appeal, the following question of law was framed by the court for the consideration in this appeal on February 15, 2003. "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in deleting the disallowances made under section 43B read with the second proviso thereto and the Explanation below clause (va) of sub-section (1) of section 36(1) of the Act in spite of the fact that the payments in respect of PF, EPF, DLI and ESI, etc., were not paid within the due date specified?" This appeal relates to the assessment year 1992-93 and as the question suggests, the Assessing Officer has disallowed the claim of deduction in respect of the contributions towards, provident fund, ESI and superannuation fund as the same were made beyond due date. It was contended by the assessee that in respect of ESI contribution which was to be made on 21st of the next month and in respect of other heads it was to be made on 15th of the next month, the sum disallowed though not paid on or before the due date but was paid durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realized within fifteen days from the due date." It is relating to the aforesaid second proviso to section 43B that the Revenue contends that the second proviso which has been inserted with effect from April 1, 1989, by the Finance Act of 1989 has made material difference in the scheme of the liability under the second proviso to section 43B and the payment referred to in clause (b) has to be made timely on or before the due date in respect of the contributions towards different heads when they are payable under the concerned statute or settlement and the mere fact that payment has been made before closing of the previous year is of little relevance. The second proviso to section 43B was inserted, firstly, by the Act No. 11 of 1987 with effect from April 1, 1988 in the following terms: "Provided further that no deduction sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is foreign to the main enactment. The principle was stated in CIT v. Indo-Mercantile Bank Ltd. [1959] 36 ITR 1 by the apex court. The Supreme Court in J.K. Industries Ltd. v. Chief Inspector of Factories and Boilers [1997] 88 Comp Cas 285; [1997] 90 FJR 65 laid down that a proviso qualifies the generality of the main enactment by providing an exception and taking out from the main provision a portion, which but for the proviso would be part of the main provision. A proviso must, therefore, be considered in relation to the principal matter to which it stands as a proviso. A proviso should not be read as if providing something by way of addition to the main provision which is foreign to the main provision itself. The cardinal rule of interpretation is that a proviso to a particular provision of a statute embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other. A perusal of section 43B makes it clear that by generality of the provision, under the main enactment of section 43B the sums mentioned in different clauses of section 43B are to be allowed as deduction in computi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till be allowed as deduction while computing the income of the previous year ending on March 31, 1990. However, if the said liability is actually paid after March 31, 1991, but before filing timely return for the assessment year 1991-92, it will not be allowed as deduction while computing the income for the financial year ending on March 31, 1991. Such payment shall be allowed as deduction only in computing the income of the previous year 1991-92 relevant to the assessment year 1992-93. Thus, the first proviso relieved the hardship by making liberalized exception to the general provision about sums falling in clauses (a), (c), (d) and (e) of section 43B, which have been incurred during the concerned previous year and has been paid before filing the return for the relevant assessment year within time allowed under section 139 and the return is accompanied with proof of such payments. In contrast to the first proviso, the second proviso contained an exception to the general applicability of the main provision of clause (b) by making it further restrictive. It restricted further the provisions of section 43B requiring actual payment within the previous year to permit the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made stringent to the extent that unless the payment is made to these funds on or before the due date, no deduction can be allowed in respect of such liabilities. The second proviso which was originally introduced with effect from April 1, 1988, made it imperative that actual payments are to be made on or before the due date for crediting that sum in the employee's account to the funds concerned and that did not take into account such negotiable instruments which may have been issued in time but realization may have taken place after the due date. It is for this reason that the proviso was amended to make it possible that where payments made by cash or cheque or draft or any other mode on or before the due date, the same may be allowed as deduction notwithstanding that such instruments have been realized after the due date within the period of fifteen days therefrom. The change by way of insertion of the second proviso with effect from April 1, 1988, and substituted in the present form with effect from April 1, 1989 to section 43B is that the deduction in respect of any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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