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TMI Blog2021 (10) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2007-08 respectively, by learned Assessing Officer(hereinafter called " the AO") . We have heard both the appeals through video conferencing mode through Virtual Court. We will deal with both the appeals separately in this common order. First, we shall deal with Revenue's appeal in ITA no. 147/Alld/2016 for ay:2005-06. ITA No. 147/Alld/2016-Assessment Year 2005-06 2. The grounds of appeals raised by Revenue in memo of appeal filed with Income Tax Appellate Tribunal, Allahabad( hereinafter called " the tribunal") in ITA No. 147/Alld/2016 for ay : 2005-06, reads as under :- " 1. That the ld. CIT(A) has erred on facts & in the circumstances of the case in holding that the sums of Rs. 96,26,000/- and Rs. 29,02,000/- lacs paid to the BPCL Employees Provident fund Trust to make good the deficit of interest earnings and interest expenses of the said PF trust for the F.Y.2004-05 & 2003-04 were business expenditure for the assessee and , therefore, deletion of the said both additions is unjustified on facts and in law. 2. That the ld. CIT(A) has erred on facts & in the circumstances of the case in deleting the disallowance of the employees' contributions to VPF amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter called "BPCL") has claimed deduction of Rs. 96,26,000/- on account of shortfall of PF Trust Earning (Interest) as per schedule 9.4 of the P & L Account of the assessee for the impugned assessment year under consideration. The AO was of the view that since liability for payment of interest was of the PF Trust fund and not of the assessee company, hence these expenses are not allowable to the assessee company as deduction from income from business , and hence consequently should be disallowed by adding to income of the assessee and brought to income-tax. Further, the Assessing Officer also observed that the assessee has claimed deduction of Rs. 29,02,000/- made on account of shortfall of PF Trust Earning (Interest) which are part of prior period expenses vide schedule 10.1 of the Profit and Loss Account and these expenses are not allowable as deduction from business income and the same ought to be disallowed and added to the income of the assessee and brought to income-tax. The assessee during the course of reassessment proceedings was asked by AO to explain the same. The assessee submitted before the AO during the course of reassessment proceedings that as per the BPCL Empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial year 2003-04, It was submitted by assessee before ld. CIT(A) that shortfall of Rs. 96.02 lacs for financial year 2004-05 was provided on estimated basis as the audit of the PF Trust was not completed before the closing of the annual accounts of the assessee company . It was submitted by assessee before ld. CIT(A) that as per Rule 25(v) page 14 of the BPCL Employees PF Rules, if there is any shortfall/deficiency between the interest earning of the trust and interest distributed by the trust to its members as per the Central Government notification, such shortfall/deficiency shall be made good by the company. It was submitted that PF trust is for the employees of the assessee company and in case of any shortfall / deficiency in earning of the PF trust, the same shall be recouped by the assessee company to avoid any ultimate loss to member employees , which was acceptable to the assessee company and hence consequently shortfall was debited to Profit and Loss Account and claimed as business expenditure against income of the assessee. Thus, it was claimed that the aforesaid shortfall/deficiency between interest earned by trust and the interest distributed by the trust to its member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the AO did not allowed the said deduction as the same were not incurred for business purposes. Our attention was drawn by ld. CIT-DR to the assessment order and appellate order passed by ld. CIT(A). It was submitted that ld. CIT(A) allowed the said deduction u/s 37(1) of the 1961 Act. It was submitted that this amount is part of employers contribution and the amount is to be paid within due date. Our attention was drawn by ld. CIT-DR to provisions of Section 36(1)(iv),36(1)(va) and 43B of the 1961 Act. It was submitted that specific provision of the 1961 Act viz. Section 36(1)(iv) and 36(1)(va) deals with the contribution to PF and hence general provision namely Section 37(1) will not be applicable because once specific provision of the 1961 Act has applicability, it will lead to ouster of applicability of general provision of the Act. The ld. CIT-DR submitted that the assessee is also claiming deduction towards shortfall in PF Trust earnings of the earlier years and the same cannot be allowed as deduction as the same are prior period expenses which cannot be set off against income of the current year under consideration. It was also submitted by ld. CIT-DR that merely provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT-DR to Annual Report at page 36/Note No. 8 and it was submitted that it was an unascertained liability. It was submitted that it was an old liability and hence the same can not be allowed in this year. It was submitted that it is not clear when the accrual of liability occurred . It was submitted that it is not known when the PF accounts were finalized, and also it was submitted that when the claim was received by PF trust is also not known. 5.4 The ld. Counsel for the assessee rebutted the contentions made by ld. CIT-DR in rejoinder by submitting that the audited accounts of PF Trust for financial year 2003-04 are available and the said accounts were finalized/audited on 25.09.2005, and hence the amounts were claimed in the year under consideration as the accounts for the financial year 2004-05 of the assessee company were finalized on 25.10.2005. 6. We have considered rival contentions and perused the material on record including case laws cited before us. We have observed that the assessee is a PSU and is in the business of manufacturing of Pumps, compressors and gas cylinders. We have observed that the assessee has made contribution towards shortfall in the interest ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or PF , amounting to Rs. 29,02,000/- for ay: 2004-05 and secondly an amount of Rs. 96,26,000/- towards shortfall on account of interest earned by PF trust vis-à-vis rates of interest notified by Central Government for PF , for the year under consideration ay: 2005-06. The assessee has claimed that shortfall of interest earned by PF trust for the ay: 2004- 05 was made in this year as the accounts of PF trust was audited on 25.09.2005 and hence it came to know about this liability after audit of the PF trust and hence the shortfall on interest is accounted for in this year. So far as the impugned ay: 2005-06 is concerned, the assessee has claimed that on estimated basis, the liability for shortfall in interest earned on PF trust is accounted for in this year. It is observed that the AO has disallowed the same on the grounds that these are not regular business expenses, while ld. CIT(A) has allowed the same as business expenses u/s 37(1) of the 1961 Act. In our considered view , the applicability of provision of Section 36(1)(iv) read with Schedule IV of the Income-tax Act,1961, Section 43B of the 1961 Act, and Rule 75 and 88 of the Income-tax Rules, 1962 and other relevant app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of return of income u/s 139(1) of the 1961 Act and hence the assessee conceded that an amount of Rs. 49,96,680/- is to be disallowed as the said sum of employee contribution received by it towards PF was not at all deposited even prior to the due date of filing of return of income u/s 139(1) . The AO disallowed the entire amount of Rs. 2,32,95,170/- by invoking provisions of Section 36(1)(va) read with Section 2(24)(x) of the 1961 Act, vide reassessment order dated 31.12.2009. 8. Aggrieved by re-assessment framed by the AO , the assessee filed first appeal before learned CIT(A) and submitted as under.:- "The Ld. A.R. for the appellant has submitted as under- "As per clause (1) of Paragraph 38 of Employee's Provident Fund Scheme, 1952, Employee's contribution deducted is to be deposited together with employer's contribution within 15 days of the close of the month. Following the apex court judgment in the case of CIT vs. M/s Alom Extrusions Limited (2009) 319 ITR 306 (SC) and judgment of Allahabad High Court in the case of CIT vs. Manoj Kumar Singh (2012), it is clear that after withdrawal of Second Proviso to Sec. 43B of the Act by Finance Act, 2003 w.e.f. 01.04.2004, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 23295170/- as mentioned in the assessment order." Thus, as could be seen from grounds of appeal raised by assessee before ld. CIT(A), out of total disallowance of Rs. 2,32,95,170/- as was made by AO , the assessee has itself conceded that Rs. 49,96,680/- has to be disallowed because the same were not deposited at all before filing of return of income u/s 139(1). Thus, the issue which survives for our consideration is with respect to disallowance of Rs. 1,82,98,490/- made by AO on account of employees contribution received by the assessee from its employees towards PF contribution , which was admittedly deposited late beyond the time prescribed under the PF Act as stipulated u/s 36(1)(va) of the 1961 Act, but was deposited by assessee within due date prescribed for filing of return of income u/s 139(1) of the 1961 Act , and against which relief was granted by ld. CIT(A) vide its decision as reproduced above by following the decision of Hon'ble Allahabad High Court in the case of CIT v. Manoj Kumar Singh (ITA no. 480 of 2008), decided on 12.03.2012. 9.2 The ld. CIT-DR opened argument before the Division Bench and submitted that this issue of allowability of employee contribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka High Court judgment in the case of Essae Teraoka Private Limited v. DCIT in ITA No. 480/2013 , judgment dated 04.02.2014 Our attentions was also drawn by ld. counsel for the assessee to amendment made by Finance Act, 2021 to provisions of Section 36(1)(va) of the 1961 Act and it was submitted that the said amendment is prospective from ay:2021-22 and subsequent assessment years. 10. We have considered rival contentions and perused the material on record. We have observed that the issue before us is regarding allowability of employees contribution of Rs. 1,82,98,490/- towards PF received by assessee from its employees , but which was deposited by assessee to the credit of employees with PF trust late beyond the time provided under the relevant PF Act , but albeit the same was admittedly deposited within the due date prescribed for filing of return of income u/s 139(1) of the 1961 Act. This issue was subject matter of different interpretation by different High Courts . The Hon'ble Gujarat High Court and Hon'ble Kerala High Court has decided this issue against the tax-payer and in favour of Revenue, while Hon'ble Allahabad High Court, Hon'ble Bombay High Court, Hon'ble Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute but admittedly the said amount stood deposited by assessee to the credit of employee with relevant fund before the due date prescribed for filing of return of income u/s 139(1) of the 1961 Act , by relying on following judicial decision(s) as stipulated hereunder:- 1. CIT v. Alom Extrusions Ltd., in 319 ITR 306(SC) 2. CIT v. Industrial Security and Intelligence India Pvt. Ltd., (Mad) Tax Case Appeal Nos.585 and 586 of 2015 and M.P No.1 of 2015 , dated 24.07.2015 3. ACIT v. M/s.Easun Products of India (P) Ltd., in I.T.A. No. No.182/Mds./2016 , vide order of Chennai Tribunal dated 19.05.2016, for ay: 2012-13. 10.2 Aggrieved by an appellate order dated 30.08.2017 passed by learned CIT(A), the Revenue has now filed an appeal before the tribunal agitating against the decision of learned CIT(A) granting relief to assessee despite specific provision as is contained in Section 36(1)(va) read with Explanation 1 of the 1961 Act that deduction towards employees contribution to PF can be allowed only when the employer remits the said employee contribution to the credit of employee with relevant fund on or before the due date specified in statute governing PF, which admittedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requires,- * * * * * * (24) "income " includes- * * * * * * (x) 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 (34 of 1948), or any other fund for the welfare of such employees ;] " "Other deductions. 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- [(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 purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise;] " "Certain deductions to be only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him. [Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) [or clause (c)] which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return: Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid during the previous year on or before the due date as defined in the Explanation below clause (va) of subsection (1) of section 36.] * * * * * * Thus, Section 43B of the 1961 Act as it stood vide amendment made by Finance Act, 1987 w.e.f. 01.04.1988 , inter-alia, provided that notwithstanding anything contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. * * * * * * 10.3.4 It is pertinent at this stage to reproduce the decision of Hon'ble Supreme Court in the case of Alom Extrusions Limited (supra) wherein the amendments made by Finance Act, 2003 w.e.f. 01.04.2004 were held to be curative in nature and applicable retrospectively effective from 01.04.1988, which decision of Hon'ble Supreme Court is reproduced hereunder: "6. The lead matter in this batch of civil appeals is CIT v. Alom Extrusions Ltd. [Civil Appeal arising out of S.L.P. (C) No. 23851 of 2007]. Prior to the amendment of section 43B of the Act, vide Finance Act, 2003, the two provisos to section 43B of the Act read as under : "Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) or clause (c) or clause (d) or clause (e ) or clause (f), which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense by merely making a provision to that effect in his Books of Account. The same situation arose prior to 1st April, 1984, in the context of assessees collecting sales tax and other indirect taxes from their respective customers and claiming deduction only by making provision in their Books without actually remitting the amount to the exchequer. To curb this practice, section 43B was inserted with effect from 1-4-1984, by which the Mercantile System of Accounting with regard to tax, duty and contribution to welfare funds stood discontinued and, under section 43B, it became mandatory for the assessee(s) to account for the afore- stated items not on Mercantile basis but on cash basis. This situation continued between 1-4-1984 and 1-4-1988, when the Parliament amended section 43B and inserted first proviso to section 43B. By this first proviso, it was, inter alia, laid down, in the context of any sum payable by the assessee(s) by way of tax, duty, cess or fee, that if an assessee(s) pays such tax, duty, cess or fee even after the closing of the accounting year but before the date of filing of the Return of income under section 139(1) of the Act, the assessee(s) would be entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent vide Finance Act, 2003, which, as stated above, came into force with effect from 1-4-2004. In other words, after 1-4- 2004, two changes were made, namely, deletion of the second proviso and further amendment in the first proviso, quoted above. By the Finance Act, 2003, the amendment made in the first proviso equated in terms of the benefit of deduction of tax, duty, cess and fee on the one hand with contributions to Employees' Provident Fund, superannuation fund and other welfare funds on the other. However, the Finance Act, 2003, bringing about this uniformity came into force with effect from 1-4-2004. Therefore, the argument of the assessee(s) is that the Finance Act, 2003, was curative in nature, it was not amendatory and, therefore, it applied retrospectively from 1-4-1988, whereas the argument of the Department was that Finance Act, 2003, was amendatory and it applied prospectively, particularly when the Parliament had expressly made the Finance Act, 2003, applicable only with effect from 1-4-2004. It was also argued on behalf of the Department that even between 1-4-1988 and 1-4-2004, Parliament had maintained a clear dichotomy between payment of tax, duty, cess or fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003, which is made applicable by the Parliament only with effect from 1-4-2004, would become curative in nature, hence, it would apply retrospectively with effect from 1-4- 1988. Secondly, it may be noted that, in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677(SC), the scheme of section 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant Sales Tax law should be disallowed under section 43B of the Act while computing the business income of the previous year? That was a case which related to assessment year 1984-85. The relevant accounting period ended on 30-6-1983. The Income-tax Officer disallowed the deduction claimed by the assessee which was on account of sales tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under section 43B which, as stated above, was inserted with effect from 1-4-1984. It is also relevant to note that the first proviso which came into force with effect from 1-4-1988 was not on the statute book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (s) would not be entitled to deduction under section 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right up to 1-4-2004, and who pays the contribution after 1-4-2004, would get the benefit of deduction under section 43B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1-4-1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate with effect from 1-4-2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003. 10. Before concluding, we extract hereinbelow the relevant observations of this Court in the case of CIT v. J.H. Gotla [1985] 156 ITR 323, which reads as under: "...We should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result, i.e., a result not intended to be subserved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matters dealt with therein, in computing the income referred to in section 28 of the Act. Different types of deductions are provided therein in various clauses of section 36. Clause (iv) of sub-section (1) deals with deductions on account of contribution towards a recognized provident fund or an approved superannuation fund made by the assessee as an employer, subject to certain limits and also subject to certain conditions as the CBDT may think fit to specify. Clause (v) of sub-section (1) of section 36 enables the assessee to seek deduction in respect of sum paid by it as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust. Then comes clause (va) which deals about employees' contribution in the provident fund and ESI and 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 purposes of this clause, 'due date' mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect from 1 - 4-2004. Since, this provision existed at the relevant time, it also needs to be reproduced : - "Provided further that no deduction 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." 8. As per the first proviso, if the payment is actually made on or before the due date applicable in his case for filing the return, it would be admissible as deduction. Thus, the 'due date' is the date on which return is to be filed. The case of the Revenue is that for employees' contribution, the 2nd proviso was specifically incorporated and in the present case, as we are concerned with nondeposit of the employees' contribution towards provident fund as well as ESI contribution by the employer, only 2nd proviso be looked into. 9. What is sought to be argued is that distinction is to be made while treating the case relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. However, on making deposit with the concerned authorities, the assessee becomes entitled to deduction under the provisions of section 36(1)(va) of the Act. Section 43B(b), however, stipulates that such deduction would be permissible only on actual payment. This is the scheme of the Act for making an assessee entitled to get deduction from income insofar as employees' contribution is concerned. It is in this backdrop we have to determine as to at what point of time this payment is to be actually made. 12. Since the ITAT while holding that the amount would qualify for deduction even if paid after the due dates prescribed under the Provident Fund/ESI Act but before the filing of the income-tax returns by placing reliance upon the Supreme Court judgment in Vinay Cement Ltd.'s case (supra). at this juncture we take note of the discussion of ITAT on this aspect: - "11. We have carefully considered the rival submissions in the light of material placed before us. In the assessment order ld. Assessing Officer has categorically stated that what the amount due was for which month in respect of EPF, Family Pension, PF inspection charges and ESI deposits and what were the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Ltd.'s case (supra) is applied and followed, it will not be possible to accept the contention of the Revenue. 15. In CIT v. Dharmendra Sharma [2008] 297ITR 320, this Court specifically dealt with this issue and relying upon the aforesaid judgment of the Guwahati High Court, as affirmed by the Supreme Court in Vinay Cement Ltd.'s case (supra), the appeal of the Revenue was dismissed. More detailed discussion is contained in another judgment of this Court in CIT v. P.M. Electronics Ltd. [2009] 177 Taxman 1 . Specific questions of law which were proposed by the Revenue in that case were as under : - "(a ) Whether amounts paid on account of PF/ESI after 'due date' are allowable in view of section 43B, read with section 36(1)(va) of the Act? (b) Whether the deletion of the 2nd proviso to section 43B by way of amendment by the Finance Act, 2003 is retrospective in nature" (p. 2) 16. These questions were answered by the Division Bench in the following manner : - "7. Having heard the learned counsel for the revenue, as well as, the assessee, we are of the view that the view taken by the Tribunal deserves to be sustained as it is no longer res integra in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including Vinay Cement Ltd.'s case (supra). The order in Vinay Cement Ltd.'s case (supra) was passed by the Supreme Court on 7-3-2007 wherein it observed as follows:- 'Delay condoned. In the present case we are concerned with the law as it stood prior to the amendment of section 43B. In the circumstances, the assessee was entitled to claim the benefit in section 43B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return. Special leave petition is dismissed'. 10. In view of the above, it is quite evident that the special leave petition was dismissed by a speaking order and while doing so the Supreme Court had noticed the fact that the matter in appeal before it pertain to a period prior to the amendment brought about in section 43B of the Act. The aforesaid position as regards the state of the law for a period prior to the amendment to section 43B has been noticed by a Division Bench of this Court in Dharmendra Sharma's case (supra). Applying the ratio of the decision of the Supreme Court in Vinay Cement Ltd. 's case (supra) a Division Bench of this Court dismissed the appeals of the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of this Court in Dharmendra Sharma's case (supra). 13. In these circumstances, we respectfully disagree with the approach adopted by a Division Bench of the Bombay High Court in Pamwi Tissues Ltd.'s case (supra). 14. In these circumstances indicated above, we are of the opinion that no substantial question of law arises for our consideration in the present appeal. The appeal is, thus, dismissed." (p. 3) It also becomes clear that deletion of the 2nd proviso is treated as retrospective in nature and would not apply at all. The case is to be governed with the application of the 1st proviso. 17. We may only add that if the employees' contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income-tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find no question of law much less any substantial question of law arises for consideration in these appeals. Accordingly, both the Tax Case(Appeals) stand dismissed. No Costs. Consequently, M. P. N. 1 of 2015 is also dismissed." 10.3.7 We have also observed that Co-ordinate Division Bench of Chennai Tribunal in ACIT v. SPEL Semiconductor Limited in I.T.A. No. 3263/Chny/2018 for ay:2013-14 has decided this issue in favour of the tax-payer as in that case the employee contribution of the Provident Fund was deposited by employer to the credit of employees with respective PF fund after the due date as prescribed in the applicable PF Act, but was deposited before the due date as prescribed for filing of return of income under Section 139(1) of the 1961 Act, by relying on decision of Hon'ble Madras High Court in the case of CIT v. Industrial Security & Intelligence India Private Limited (supra) . One of us namely Hon'ble Judicial member was part of the Division Bench who pronounced the order in the case of SPEL Semiconductor Limited (supra). 10.3.8 We have observed that most of the Hon'ble High Courts in India have taken a view on this issue of belated deposit of emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivate Limited (supra). The Revenue brought to the notice of the Hon'ble Madras High Court , decision(s) of Hon'ble Kerala High Court in the case of CIT v. Merchem Limited reported in (2015) 378 ITR 443(Ker.) and also decision in the case of Popular Vehicles and Services Private Limited v. CIT reported in (2018) 96 taxmann.com 13(Ker.), wherein this issue is decided by Hon'ble Kerala High Court in favour of Revenue and with this background, Hon'ble Madras High Court remanded the matter back to the file of learned CIT(A) for fresh adjudication of the issue , after considering entire law in statute and decisions of Courts post the decision of Hon'ble Delhi High Court in the case of Aimil Limited (supra). We have observed that Hon'ble Supreme Court in the case of Alom Extrusion (cited supra) while adjudicating on applicability of amended provision of Section 43B of the 1961 Act by virtue of deletion of second proviso and amendment of first proviso by Finance Act, 2003 which was applicable wef 01.04.2004 , held the said amendments to be curative in nature and to apply retrospective wef 01.04.1988. The Hon'ble Supreme Court also referred to larger bench decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Security Services Private Limited v. DCIT reported in (2019) 101 taxmann.com 192(Bom.), CIT v. Hindustan Organics Chemicals Limited (2014) 366 ITR 1(Bom.). The Hon'ble Delhi High Court in AIMIL Limited (supra) held that if employees contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payments but can incur penalties also , for which specific provisions are made in the Provident Fund Act as well as the ESI Act. It further held that the statutes governing PF/ESI permits the employer to make the deposit with some delays , subject to the aforesaid consequences. Insofar as the 1961 Act is concerned, the assessee can get the benefit if the actual payment made is before the return of income is filed , as per the principle laid down by the Supreme Court in Vinay Cement Ltd.'s case(supra). However, Hon'ble Delhi High Court has now decided this issue in favour of Revenue in the case of CIT v. Bharat Hotels Limited reported in (2019) 410 ITR 417(Del.) , while impliedly reversing the stand taken in its earlier decision in the case of Aimil Limited (supra). However, the decision in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 Act, thus applying strict interpretation and holding that otherwise Section 36(1)(va) read with Explanation 1 will become otiose which was not the intention of legislature. It further went on to hold that the issue before Hon'ble Supreme Court while adjudicating appeal in the case of Alom Extrusion (supra) was never with respect of employees contribution to PF/ESI and it was only in context of employers contribution to PF/ESI , wherein amendments brought in by Finance Act, 2003 were held to be retrospective by Hon'ble Supreme Court in the case of Alom Extrusion (supra). The decision of Hon'ble Kerala High Court in the case of Popular Vehicles (supra) is reproduced as hereunder: "7. We will first notice the provisions. "S.2(24) "income " includes - * * * * * * (x) 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 A(34 of 1948), or any other fund for the welfare of such employees". "S.36. Other deductions (1) The deductions provided for in the following clauses shall be allowed in respect of the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether there should be a reconsideration of Merchem Ltd.'s case (supra). Alom Extrusions Ltd.'s case (supra)and Merchem Ltd.'s case (supra) applied in two different fields; the former with reference to Section 43B(b), being employer's contribution and the latter dealing with employee's contribution as covered by Section 36(1)(va). We would first deal with Alom Extrusions Ltd.'s case (supra)which has dilated upon the history of the legislation and the reason for the various amendments brought in. We first notice that the question which arose for consideration in Alom Extrusions Ltd. 's case (supra)was as to "whether omission (deletion) of the second proviso to section 43B of the Income-tax Act, 1961, by the Finance Act, 2003, operated with effect from April 1, 2004, or whether it operated retrospectively with effect from April 1, 1988" (sic para 4). The Hon'ble Supreme Court noticed that prior to Finance Act, 2003, the second proviso to Section 43B restricted the deduction in respect of any sum payable by an employer by way of contribution to provident fund/superannuation fund or any other fund for the welfare of employees, unless it stood paid within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year. This relaxation, however, was restricted to tax, duties, cess and fee and not applied to contributions to labour welfare funds. The reason also stated by the Hon'ble Supreme Court "to be that the employer(s) should not sit on the collected contributions and deprive the workmen of the rightful benefits under social welfare legislations by delaying payment of contributions to the welfare funds" (sic - para 16). It is this declaration by the Hon'ble Supreme Court which is relied on by the learned Counsel for the appellant to contend that the Hon'ble Supreme Court was considering the question of employee's contribution also. Otherwise, there would not have been a reference to an 'employer sitting on the collected contribution', is the compelling argument. 12. We have to understand this statement with reference to the question framed by the Hon'ble Supreme Court at the first instance in the opening paragraph of the judgment. We also have to notice that even otherwise the Explanation to subclause (va) of Section 36(1) took care of the employee's contributions; which was introduced by the Finance Act, 1987 with effect from 01.04.1988, from w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-obstante clause, makes deductions to be allowable only on actual payment; when such deductions are otherwise allowable. Primarily it is to be noticed that it is a restrictive clause, the amendments to which or the deletion of a proviso in which cannot lead to it being converted as an enabling provision permitting deduction even when there was no deduction permissible by the other provisions of the Act. The nonobstante clause has no effect insofar as the employee's contribution which is specifically covered by sub-clause (va) of Section 36(1). By virtue of the Explanation below subclause (va), no deduction could be claimed if the contribution has not been paid, after collection from the employees by way of deduction from their salaries, within the due date under the EPF&MP Act. The deletion of a proviso under Section 43B cannot render otiose the Explanation under Section 36(1)(va). 15. Merchem Ltd.'s case (supra), we notice, dealt with the specific question of disallowance of employee's contribution when the same was not paid within the time provided under the statute under which the welfare fund was created and held so in paragraph 19: '19. Therefore, inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983 or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him." Therefore, according to us, since the Respondent has admittedly not paid the deduction so made within the due date as provided under Sec. 36(1)(va), the Respondent was not entitled to get deduction of the amounts deducted thereunder for and on behalf of the employees'. 16. The learned Judges had elaborately considered the decision in Alom Extrusions Ltd.'s case (supra) and has found the provisions having application in different fields. Section 43B(b) dealt with the employer's contribution and sub-clause (va) of Section 36(1) was concerned with the employees contribution as rightly held. We do not find ourselves persuaded to take a different view with respect to employee's contribution and we respectfully follow the decision of the Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received by the employer- Company and is treated as income under Section 2(24). On remittance of this contribution, within the due date, it is allowed as a deduction under Section 36. If it is not paid to the welfare fund within the due date provided under the relevant statute, it remains as an income in the books of accounts of the assessee/employer Company. The said contribution having not been paid to the applicable welfare fund within the due date provided, the assessee for all time is deprived of claiming such a remittance, made subsequently, as deduction from the income. This, as the Hon'ble Supreme Court noticed, is looking at the spirit behind the labour welfare legislation and the need for the employer to satisfy the remittance within the time provided under the statute creating the welfare fund. At least with respect to the employee's contributions, which the employer deducts from the salary of the employees, if it is not remitted into the fund within the due date, the employer not only has defaulted the stipulation in the labour legislation but has received an income; albeit an illegal enrichment. Sub-section (v) is with respect to and confined to a gratuity fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the return of income u/s 139(1) of the 1961 Act . So , what is important for entering into provisions of Section 43B of the 1961 Act is that the deduction ought to be firstly allowable under the provision of the 1961 Act before recourse to Section 43B of the 1961 Act can be taken. Provisions of Section 36(1)(va) allows deduction towards employees contribution to PF/ESI and other welfare funds of employees which is required to be deposited by employer to the credit of employee with relevant fund on or before the due date as is prescribed under the relevant statute applicable for PF/ESI and other welfare funds of employees , otherwise deduction u/s 36(1)(va) of the 1961 Act is not allowable and employee contribution towards PF/ESI and other employees welfare funds received by employer shall be deemed to be income of the assessee u/s 2(24)(x) of the 1961 Act. Thus, firstly to get deduction u/s 36(1)(va) of the 1961 Act of the employee contribution received by employers towards PF/ESI which constitute income in the hands of employer by virtue of Section 2(24)(x) of the 1961 Act, the employers is required to deposit the employees contribution to the credit of employees with relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 43B of the 1961 Act which deals with allowing deduction on payment basis provided the deduction is otherwise allowable under the provisions of the 1961 Act. Section 36(1)(va) of the 1961 Act is a provision which entitles taxpayer to claim deduction from the income and hence the provision is to be strictly construed and the onus is on the assessee to prove that it fulfills all the conditions as stipulated under Section 36(1)(va) read with Explanation before claiming deduction from its income. The decision of Constitution Bench of Hon'ble Supreme Court in the case of Commissioner of Customs (Imports) v. Dilip Kumar & Co. reported in (2018) 9 SCC 1 is relevant . The recent decision of Hon'ble Supreme Court in the case of Ramnath & Co. v. CIT reported in (2020) 116 taxmann.com 885(SC) is relevant (refer para 17 to 20) , which is reproduced hereunder: Dilip Kumar & Co. 17. The core question referred for authoritative pronouncement to the Constitution Bench in the case of Dilip Kumar & Co. (supra) was as to what interpretative rule should be applied while interpreting a tax exemption provision/notification when there is an ambiguity as to its applicability with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is why its construction, unlike charging provision, has to be tested on different touchstone. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject, but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction." (emphasis supplied) * * * * * * 58. In the above passage, no doubt this Court observed that: (Parle Exports case, SCC p. 357, para 17) "17. when two views of a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by the Constitution Bench in Hari Chand case " (emphasis in bold supplied) 17.2. The Constitution Bench decision in Hari Chand Shri Gopal (supra) was also taken note of, inter alia, in the following:- "50. We will now consider another Constitution Bench decision in CCE v. Hari Chand Shri Gopal (hereinafter referred as "Hari Chand case", for brevity). We need not refer to the facts of the case which gave rise to the questions for consideration before the Constitutional Bench. K.S. Radhakrishnan, J., who wrote the unanimous opinion for the Constitution Bench, framed the question viz. whether manufacturer of a specified final product falling under the Schedule to the Central Excise Tariff Act, 1985 is eligible to get the benefit of exemption of remission of excise duty on specified intermediate goods as per the Central Government Notification dated 11-8-1994, if captively consumed for the manufacture of final product on the ground that the records kept by it at the recipient end would indicate its "intended use" and "substantial compliance" with procedure set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject/assessee and it must be interpreted in favour of the Revenue. 66.3. The ratio in Sun Export case is not correct and all the decisions which took similar view as in Sun Export case stand overruled." (emphasis in bold supplied) 17.4. Obviously, the generalised, rather sweeping, proposition stated in the case of Sun Export Corporation (supra) as also in other cases that in the matters of taxation, when two views are possible, the one favourable to assessee has to be preferred, stands specifically disapproved by the Constitution Bench in Dilip Kumar & Co. (supra). It has been laid down by the Constitution Bench in no uncertain terms that exemption notification has to be interpreted strictly; the burden of proving its applicability is on the assessee; and in case of any ambiguity, the benefit thereof cannot be claimed by the subject/assessee, rather it would be interpreted in favour of the revenue. 18. It has been repeatedly emphasised on behalf of the appellant that Section 80- O of the Act is essentially an incentive provision and, therefore, needs to be interpreted and applied liberally. In this regard, we may observe that deductions, exemptions, rebates et cete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson claiming such deduction, it could be construed liberally in regard to other requirements, which may be formal or directory in nature. 10.3.11 Thus, keeping in view strict and literal interpretation of provisions of Section 36(1)(va) of the 1961 Act read with Explanation 1 and Section 2(24)(x) of the 1961 Act , the assessee will not be entitled for deduction as the employee contribution towards PF received by assessee was deposited late beyond the time stipulated under the relevant statute governing PF. But, it is equally true that the Constitutional Courts viz. Hon'be High Courts and Hon'ble Supreme Court in India have powers to read down the provisions of the 1961 Act to make it workable and to avoid absurdity. On perusal of the decision of Hon'ble Supreme Court in the case of Alom Extrusion (supra) , it is observed that Hon'ble Supreme Court has elaborately discussed provisions of Section 36(1)(va) ,2(24)(x) and amendments made by Finance Act, 2003 to Section 43B of the 1961 Act, which amendments to Section 43B of the 1961 Act were held to be retrospective in nature. The Hon'ble Supreme Court also referred in its decision in Alom Extrusion (supra) to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant funds within time stipulated as due date by respective statute governing PF/ESI etc. but at the same time if the employer does not deposit the contribution towards PF/ESI etc within due date as prescribed under relevant statute governing PF/ESI etc, the employers are visited with Interest for delayed deposit of PF/ESI as well Penalties for late deposit beyond the time stipulated under the relevant statute governing PF/ESI and other employees welfare funds. Reference is drawn to Section 7Q and 14 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 . Similarly, Hon'ble Madras High Court in the case of Industrial Security and Intelligence India Private Limited (supra) after considering and interpreting the decision of Hon'ble Supreme Court in the case of Alom Extrusion (supra) and Hon'ble Delhi High Court in the case of Aimil Limited (supra) held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI , but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has held that Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. The recent decision of Hon'ble Supreme Court in the case of Ramnath & Co. v. CIT reported in (2020) 116 taxmann.com 885(SC) is also relevant (refer para 17 to 20), which are reproduced hereunder: "Dilip Kumar & Co. 17. The core question referred for authoritative pronouncement to the Constitution Bench in the case of Dilip Kumar & Co. (supra) was as to what interpretative rule should be applied while interpreting a tax exemption provision/notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax? The reference to the Constitution Bench was necessitated essentially for the reason that in a few decisions, one of them by a 3-Judge Bench of this Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject, but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction." (emphasis supplied) * * * * * * 58. In the above passage, no doubt this Court observed that: (Parle Exports case, SCC p. 357, para 17) "17. when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment." This observation may appear to support the view that ambiguity in a notification for exemption must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in Hari Chand Shri Gopal (supra) was also taken note of, inter alia, in the following:- "50. We will now consider another Constitution Bench decision in CCE v. Hari Chand Shri Gopal (hereinafter referred as "Hari Chand case", for brevity). We need not refer to the facts of the case which gave rise to the questions for consideration before the Constitutional Bench. K.S. Radhakrishnan, J., who wrote the unanimous opinion for the Constitution Bench, framed the question viz. whether manufacturer of a specified final product falling under the Schedule to the Central Excise Tariff Act, 1985 is eligible to get the benefit of exemption of remission of excise duty on specified intermediate goods as per the Central Government Notification dated 11-8- 1994, if captively consumed for the manufacture of final product on the ground that the records kept by it at the recipient end would indicate its "intended use" and "substantial compliance" with procedure set out in Chapter 10 of the Central Excise Rules, 1994, for consideration? The Constitution Bench answering the said question concluded that a manufacturer qualified to seek exemption was required to comply with the preconditions fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bold supplied) 17.4. Obviously, the generalised, rather sweeping, proposition stated in the case of Sun Export Corporation (supra) as also in other cases that in the matters of taxation, when two views are possible, the one favourable to assessee has to be preferred, stands specifically disapproved by the Constitution Bench in Dilip Kumar & Co. (supra). It has been laid down by the Constitution Bench in no uncertain terms that exemption notification has to be interpreted strictly; the burden of proving its applicability is on the assessee; and in case of any ambiguity, the benefit thereof cannot be claimed by the subject/assessee, rather it would be interpreted in favour of the revenue. 18. It has been repeatedly emphasised on behalf of the appellant that Section 80- O of the Act is essentially an incentive provision and, therefore, needs to be interpreted and applied liberally. In this regard, we may observe that deductions, exemptions, rebates et cetera are the different species of incentives extended by the Act of 1961 15. In other words, incentive is a generic term and 'deduction' is one of its species; 'exemption' is another. Furthermore, Section 80- O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(va) of the 1961 Act read with Explanation 1 and Section 2(24)(x) of the 1961 Act , the assessee will not be entitled for deduction as the employee contribution towards PF received by assessee was deposited late beyond the time stipulated under the relevant statute governing PF. But, it is equally true that the Constitutional Courts viz. Hon'be High Courts and Hon'ble Supreme Court in India have powers to read down the provisions of the 1961 Act to make it workable and to avoid absurdity. On perusal of the decision of Hon'ble Supreme Court in the case of Alom Extrusion (supra) , it is observed that Hon'ble Supreme Court has elaborately discussed provisions of Section 36(1)(va) ,2(24)(x) and amendments made by Finance Act, 2003 to Section 43B of the 1961 Act, which amendments to Section 43B of the 1961 Act were held to be retrospective in nature. The Hon'ble Supreme Court also referred in its decision in Alom Extrusion (supra) to its earlier decision in CIT v. J.H. Gotla [1985] 156 ITR 323(SC) , para 10 that intention of the legislature is to be found out from the language used and if strict literal construction leads to an absurd result i.e. result not intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding our Jurisdictional High Court (barring Hon'ble Gujarat High Court and Hon'ble Kerala High Court) to make it workable as otherwise the tax-payer will lose the deduction for ever if the employee contribution is not deposited within due date as prescribed under relevant statute , although the said contribution stood deposited by employer belatedly before the due date for filing of return of income u/s 139(1) of the 1961 Act and the amount will stood brought to tax as income keeping in view provisions of Section 2(24)(x) of the 1961 Act so far employee share of contribution towards PF ,ESI and other employees welfare funds is concerned. No doubt it is well cherished objective that there should not be an unjust enrichment of the employer of the amount which it collects from its employees towards employees share of PF , ESI and other employees welfare funds and in the ideal situation , the said amounts ought to have been deposited by employer which it collected from its employees, to the credit of employee with relevant funds within time stipulated as due date by respective statute governing PF/ESI etc. but at the same time if the employer does not deposit the contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicates that it ought to have retrospective effect , but on perusal of Memorandum to Finance Bill 2021, it transpires that the lawmakers have consciously made it applicable from ay: 2021-22 and subsequent assessment years. It is also recognised in the said Memorandum that some courts have applied the provision of section 43B on employee contribution as well and have decided this issue in favour of taxpayer. The said explanation was inserted to rationalise the provisions of Section 36(1)(va) and 43B of the 1961 Act and it is stated in Memorandum to Finance Bill, 2021 that the said explanation is inserted to provide certainty. It is specifically stated in Memorandum to Finance Bill, 2021 that these amendments to Section 36(1)(va) and 43B shall take effect from 01st April , 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years. It is also to be noted that several of the tax-payers (except in the State of Gujarat and Kerala , and such other States where Hon'ble jurisdictional High Court has decided this issue in favour of Revenue) situated in the States where Hon'ble Jurisdictional High Court has decided this issue in favour of tax-payers, have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service or otherwise. Section 43B specifies the list of deductions that are admissible under the Act only upon their actual payment. Employer's contribution is covered in clause (b) of section 43B. According to it, if any sum towards employer's contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees is actually paid by the assessee on or before the due date for furnishing the return of the income under sub-section (1) of section 139, assessee would be entitled to deduction under section 43B and such deduction would be admissible for the accounting year. This provision does not cover employee contribution referred to in clause (va) of sub-section (1) of section 36 of the Act. Though section 43B of the Act covers only employer's contribution and does not cover employee contribution, some courts have applied the provision of section 43B on employee contribution as well. There is a distinction between contribution and employee's contribution towards welfare fund. It may be noted that employee's contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 1-4-2021 only. It is further not an issue that the forergoing legislative amendments have proposed employers contributions; disallowances u/s 43B as against employee u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1-4-2021, I hold that the impugned disallowance is not sustainable in view of all these latest developments even if the Revenue's case is supported by the following case law. (i) CIT v. Merchem Ltd, [2015] 378 ITR 443(Ker) (ii) CIT v. Gujarat State Road Transport Corporation [2014] 366 ITR 170 (Guj.) (iii) CIT v. South India Corporation Ltd. [2000] 242 ITR 114 (Ker) (iv) CIT v. GTN Textiles Ltd. [2004] 269 ITR 282 (Ker) (v) CIT v. Jairam & Sons [2004] 269 ITR 285 (Ker) 3. The impugned ESI/PF disallowance is directed to be deleted therefore. 4. This assessee's appeal is allowed." We have observed that Hon'ble Jurisdictional High Court in the case of Sagun Foundry Private Limited (supra) has held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al for ay: 2007-08 concerns itself with deletion of addition by ld. CIT(A) of Rs. 1,47,36,408/- on account of undisclosed deposit/ investment by assessee . The AO observed that the assessee has credited interest income of Rs. 73,93,000/- in its P&L Account, while the assessee was able to submit evidences of interest bearing investments/deposit held to the tune of Rs. 1951.42 lacs corresponding to interest income of Rs. 64,27,092/- , while no evidences could be produced by assessee towards the interest bearing deposits/investment held corresponding to interest income of Rs. 9,65,908/- found credited in the Profit and Loss Account. The AO brought to tax income from undisclosed sources of investments/deposits to the tune of Rs. 1,47,36,408/- based on computation made of unexplained deposits/investment computed on yield @ 8% on the unexplained interest income of Rs. 9,65,908/- , and also taking into effect other differences in disclosed investment/deposits. The second addition to the income of the assessee as was made by AO was to the tune of Rs. 1,16,62,230/- on account of difference in the income towards contractual receipts as covered u/s 194C and professional /technical fee covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s income from undisclosed sources of investments/deposits , by holding as under.:- "Decisions. The assessee company has been able to reconcile the figures of interest income. In any case, the addition made by the A.O. was hypothetical, fantastic, unwarranted and unreasonable. The addition so made is, therefore, deleted." 13.5. On the second issue of additions being made owing to non reconciliation of income as stated in 26AS and the income as declared in the books of account. The assessee submitted before ld. CIT(A) as under.:- "The Ld. A.R. has submitted a reconciliation statement as under- Particulars Amount (Rs. In Lakhs) Amount credited as per Form 26 AS of the department 286.29 Less: Duplicate entry in Form 26 AS of the department 74.93 Less: Income accounted for in the financial year i.e. 2005-06 (Details attached) 29.99 Total 181.37 Income from Job work shown in Audited P &L Account for Financial Year 2006-07 169.76 Difference to be Reconciled 11.61 13.6. The LD. CIT(A) was pleased to hold as under: 3.2 Decision : The AO is directed to reconcile these figures. In any case, the assessee has failed to give any evidence with regard to difference of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rule 46A of the Income-tax Rules, 1962. Under these circumstances, we are of the considered view that the appellate order passed by ld. CIT(A) cannot be accepted and is hereby set aside. Thus, keeping in view the entire factual matrix of the case as well in the interest of justice and fairness to both the parties, in our considered view, the matter need to be set aside and restored to the file of Assessing Officer for fresh determination of the issue after considering the evidences/details/explanation filed by assessee in its defense in the set aside proceedings . Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings in accordance with principles of natural justice in accordance with law. The evidences/explanation/details furnished by assessee in its defense before AO during set aside proceedings shall be admitted by AO and shall be adjudicated on merits in accordance with law. The AO is directed to pass a reasoned and speaking order. We order accordingly. 16. With respect to second issue regarding addition to the tune of Rs. 1,16,62,230/- made by AO on account of difference in income as reflected in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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