TMI Blog2002 (12) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the assessee - Tax Case No. 218 of 1999 - - - Dated:- 31-12-2002 - Judge(s) : N. V. BALASUBRAMANIAN., K. RAVIRAJA PANDIAN. JUDGMENT The judgment of the court was delivered by K. RAVI RAJA PANDIAN J. - At the instance of the Revenue, the Income-tax Appellate Tribunal stated the case and referred the following questions of law for the opinion of this court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was certain amount of ambiguity over the expression '15 days from the close of the month' as defined in section 38 of the Employees' Provident Funds Scheme, 1952, vis-à-vis month in which salary becomes due to the employees and the salary is paid to the employee? 2. Whether the Tribunal was right in law in reckoning the date of payment of salary (viz.) seventh of the succeeding month as the date from which the due date of payment to the Government of ESI and EPF dues and the delay thereon is to be considered? 3. Whether, the Tribunal was right in law in holding that section 36(1)(va) yields to section 43B when the second proviso to section 43B is to be reckoned as defined in Explanation to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year", the Tribunal was of the view that so long as the payments were made within the previous year, the payments are to be allowed as deduction under the main section. We heard the arguments of Mrs. Pushya Sitharaman, learned senior standing counsel appearing for the Revenue, and perused the materials on record. The assessee in spite of due notice has not represented. In our considered opinion, we are of the view that the Tribunal is not correct in coming to the conclusion that there was some ambiguity in construing the expression "month" used in para. 38 of the Scheme under the Provident Funds Act on the premise that the assessee used to pay the salary to its employees only on the seventh day of succeeding month under section 5 of the Payment of Wages Act. It is true that section 5 of the Payment of Wages Act provided for payment of wages in respect of certain categories of industries on or before the seventh day of succeeding month. However section 4 of the Act provided for fixation of wage period and also provided that no wage period shall extend one month. Para. 29 of the Scheme under the Provident Funds Act provided that the contribution payable should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the employer to remit both the shares of contributions in the first instance and para. 32 of the Scheme enables the employer to recover the employees' contributions from the wages of the employees. The initial responsibility for making payment of the contributions lies on the employer irrespective of the fact whether the wages are paid in time or not As such, the provident fund payments made after the due date will attract the penal damages under section 14B of the Act" The Tribunal committed serious error in coming to the contrary conclusion. Hence, the first two questions of law referred to us are answered in the negative, against the assessee and in favour of the Revenue. In respect of the other question, it is true that section 43B overrides section 36(1)(va) of the Income-tax Act, in view of the opening of section with non obstante clause. But the finding arrived at by the Tribunal that even assuming that the due date for the payment of contributions fell within a period of 15 days from the end of the month for which salaries were payable since all the payments have been made in the year itself though with a marginal delay of a few days on certain occasions, no part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "income" 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 the Employees' State Insurance Act, 1948, or any other fund for the welfare of such employees. Thus, it is clear that the employees' contribution received by the employer would be "income" in his hands and that would be allowed as permissible deduction under clause (va) of sub-section (1) of section 36 in computing the business income under section 28 provided the assessee credits the same to the relevant fund. Under section 43B, the sum referred to in clause (b) of section 43B is treated differently, as it relates to the sum payable by the assessee as an employer which included the employer's contribution as well as employees' contribution. If such contributions which were payable to any provident fund or any fund are paid within the due date, the employer will be able to avail of the benefit of deduction under section 43B. Though section 43B provided for allowability of deduction based on actual payment, the second proviso restricted the same that only when the amounts are paid within the due date as provided under t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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