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TMI Blog2019 (10) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/09/2017 directed the Assessing Officer to delete the addition. For the sake of convenience, the relevant portion of the ld.CIT(A)'s order is extracted as under:- "6.3. I have carefully considered the facts of the case, submissions and the judicial pronouncements relied upon by the Authorised Representative of the appellant and the assessment order made by the Assessing Officer. The issue to decide here is whether the addition of Rs. 60,19,129/- u/s.36(1)(va) rws.43B of the Income tax Act, 1961 made by the Assessing Officer by disallowing the claim of the appellant towards employees contribution to EPF amounting to Rs. 49,74,380 and ESI of Rs. 10,44,479 is correct or not. During the course of appellate proceedings, the Authorized Representative of the appellant stated that the appellant deposited the employees contribution of PF & ESI are delayed as per the respective Acts, but have paid the same before the due date of filing the return of income. In this regard, the Authorized Representative of the appellant relied upon the Honourable Jurisdictional Tribunal, Visakhapatnam Bench, Visakhapatnam in the case of DCIT Vs. Circle-3(1), Vsp Vs. Eastern Power Distribution Co. Ltd vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to the A.O., employees' contribution to provident fund is deductible under the provisions of section 36(1)(va) of the Act, if the same is paid on or before the due date specified under the provident fund Act. The A.O. further was of the opinion that in view of the clear provisions of section 2(24)(x) r.w.s. 36(1)(va) of the Act, any recovery from employees towards provident fund contribution is deemed to be income of the assessee, if the employer not paid the same to the provident fund account of the employee within due date specified under the provisions of PF Act. It is the contention of the assessee that second proviso to section 43B of the Act provides that no deduction shall be allowed unless such sum is actually been paid on or before due date as specified in explanation to 36(1)(va) of the Act which was omitted by the Finance Act, 2003 w.e.f. 1.4.2004 and accordingly, there was no special provision regarding employees' contribution to PF. It is further contended that as per the amended provisions of section 43B of the Act, any sum payable by the assessee as an employer by way of contribution to PF shall be allowed, if the same is paid on or before the due date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyer contribution under the PF scheme. 7. Section 43B of the Act provides for certain deductions to be allowed only on actual payment basis. Sub clause (b) of section 43B of the Act covers 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. The proviso to section provides that any sum paid by the assessee on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made under the provisions of section 43B of the Act. A careful consideration of section 43B of the Act, it is clear that an extension is granted to the assessee to make the payment of PF contributions or any other fund till the due date of furnishing return of income u/s 139(1) of the Act. Therefore, in our opinion, there is no difference between employees and employer contribution to PF and if such contribution is made on or before the due date of furnishing return of income u/s 139(1) of the Act, then deduction is to be allowed under the provisions of section 43B of the Act. 8. The Hon'ble Karnataka High Court, in the case of Essae Teraoka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt held that since assessee had not deposited said contribution to respective fund account on the date as prescribed in explanation to section 36(1)(va) of the Act, disallowance made by the A.O. was just and proper. Though, the D.R. relied upon certain judicial precedents which are in favour of the revenue, in view of the decision of Hon'ble Supreme Court, in the case of CIT Vs. M/s. Vegetables Products Ltd. reported in 88 ITR 192, wherein the Hon'ble Supreme Court held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted, therefore, by respectfully following the decision of Supreme Court, when divergent views are expressed by different judicial forums, we prefer to follow the views expressed by the Courts which are in favour of the assessee. 10. Considering the facts and circumstances of this case and also following the judicial precedents as discussed above, we are of the view that there is no distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer by disallowing the claim of the appellant towards festival/ entertainment expenses of Rs. 2,08,616/- and pooja expenses of Rs. 1,01,641 totalling to Rs. 3,10,257/- is correct or not. During the course of appellate proceedings, the Authorized Representative of the appellant stated that the appellant got around 3000 employees working in different sites situated around 46 locations. It was contended that the said expenditure of Rs. 2,08,616/- was incurred on the staff during festivals to keep them feel that they are at home. It is not in personal nature but to encourage staff to work. Apart from the above, the appellant had incurred pooja expenses of Rs. 1,01,641/- to perform pooja at various sites on various occasions. After taking into consideration the nature of the expenditure i.e., festival/entertainment expenses of Rs. 2,08,616/-and pooja expenses of Rs. 1,01,641/- totalling to Rs. 3,10,257/incurred by the appellant for which he could not maintain any bills / vouchers, I deem it fit to restrict the disallowance to50% of such expenditure which would be fair and reasonable in this line of business. Therefore, the Assessing Officer is hereby directed to restrict the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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