TMI Blog2022 (1) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... me as is prescribed u/s 139(1) of the 1961 Act. It is also to be noted that while deciding this issue in Sagun Foundry(supra) in favour of the tax-payer , the Hon ble Allahabad has duly discussed Hon ble Supreme Court decision in Alom Extrusion [ 2009 (11) TMI 27 - SUPREME COURT ] and then decided this issue in favour of the tax-payer. Respectfully following the aforesaid decision in assessee s own case for ay:2018-19 [ 2022 (1) TMI 1000 - ITAT ALLAHABAD] in which both of us were part of the Division Bench who pronounced the order, we hold that in the instant appeal for ay: 2019-20 if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va) of the 1961 Act. The assessee s counsel has filed tax-audit report in which detail/ bifurcations of employee share of PF/ESI along with date of payment is mentioned(page 66/pb), but challans are not filed. The said tax-audit report is placed on record in file. Thus for limited purposes , we are directing AO to verify the challans ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g total income of the assessee at ₹ 7,15,86,250/-, wherein , inter-alia, an amount of ₹ 11,20,461/- was added to income of the assessee by invoking provisions of Section 36(1)(va) read with Section 2(24)(x) of the 1961 Act, on the grounds that the assessee has not deposited employee share of PF/ESI collected/deducted by assessee from the salaries of employees , to the credit of said employees maintained with relevant fund concerning PF/ESI within the time prescribed under the relevant statute concerning PF/ESI. The said information of default/delay in depositing the said amounts within due date prescribed under the relevant statute governing PF/ESI was part of information required to be filed electronically along with return of income being expenditure indicated in the audit report but not taken into account while computing the total income in the return, which led to disallowance of aforesaid expenditure of ₹ 11,20,461/- , vide processing return of income u/s 143(1) of the 1961 Act , by invoking provision of Section 36(1)(va) read with Section 2(24)(x) of the 1961 Act , and the aforesaid amount stood added to the income of the assessee, vide orders dated 30.04.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the assessee opened arguments and submitted that the employee share of PF/ESI which is collected by employer is to be allowed as deduction u/s 36(1)(va) of the 1961 Act despite the same is deposited to the credit of employee with relevant fund concerning PF/ESI beyond the due date prescribed for depositing the said amount under the relevant statute concerning PF/ESI, provided the same is deposited before the due date of filing of return of income u/s 139(1) of the 1961 Act. It was submitted by ld. Counsel for the assessee that Finance Act, 2021 made amendment in provision of Section 36(1)(va) and 43B of the 1961 Act, but the Memorandum to Finance Bill, 2021 clearly stipulates that said amendments are applicable from ay: 2021-21 and onwards and hence the same is to be prospectively applied . Similar issue came up for hearing before the Bench in the case of the assessee itself for ay:2018-19 in ITA no. 13/Alld/2021 wherein both of us were part of the Division Bench who pronounced the order , wherein the tribunal has decided this issue in favour of the assessee , vide appellate order dated 16.12.2021 , and statement was made by ld. Counsel for the assessee that the facts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) and 43B of the 1961 Act wherein Explanation 2 and 5 respectively were added to aforesaid sections, the matter is set to rest and the authorities below have rightly decided the issue against the assessee, and prayers were made to uphold the additions as were made by authorities below. Although ld. Sr. DR was aware that in the case of assessee itself for ay: 2018-19 , the Division Bench of Allahabadtribunal has decided this issue in favour of the assessee vide recent orders dated 16.12.2021 in which both of us were part of the Division Bench who pronounced the order, after considering the amendments as were made by Finance Act, 2021 and albeit principles of res-judicata are not applicable to income-tax proceedings but we are bound to maintain consistency in view of judgment of Hon ble Supreme Court in the case of Radhasoami Satsang v. CIT reported in (1992) 193 ITR 321(SC) unless it is shown that our order suffers from patent and manifest error/illegality, the ld. Sr. DR made oral request before the Bench that Revenue in this case wants to file written submissions and prayers were made to grant liberty to file written submissions . The Division Bench , keeping in view request made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds on different footing , because the employer is liable to contribute from its own fund and hence is in the nature of direct business expenditure. c) It is also claimed by ld. Sr. DR that when the provisions of Section 36(1)(va) is very clear that employee contribution of PF/ESI as deducted by employer from salary of employee is to be deposited within due date as prescribed under relevant statute governing PF/ESI for claiming deduction under the 1961 Act, there is no need to resort to any other provision such as Section 37(1) or Section 43B of the 1961 Act. d) It is claimed that so far as employer contribution to PF/ESI is concerned, it is governed by provisions of clause (b) of Section 43B of the 1961 Act and deduction is to be allowed on actual payment basis , but if the amount of employer contribution towards PF/ESI is deposited by employer to the credit of employee with relevant fund on or before the due date for filing of return of income as prescribed u/s 139(1) of the 1961 Act for ay corresponding to previous year to which employer contribution relates, the same shall be allowed as deduction while computing income chargeable to tax for the previous year relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (2010) 326 ITR 457(MP) vii) Popular Vehicles Services Private Limited v. CIT (2018) 96 taxmann.com 13(Ker.) g) It is claimed by ld. Sr. DR that despite the above clear legal position that Section 43B covers only employers contribution towards PF/ESI and does not cover employee contribution towards PF/ESI , many Courts have applied the provisions of Section 43B on employees contribution as well and allowed the deduction to employer in cases even when employees contribution is deposited beyond the due date prescribed for depositing the amount to the credit of employees with relevant fund under the statute , but deposited on or before the due date of filing of return of income u/s 139(1) of the 1961 Act. The ld. Sr. DR has sighted judicial decisions in his written submissions, in which Courts have allowed extended period as provided u/s 43B while allowing deduction even to the employees contribution towards PF deducted by employer , as under: 1. CIT v. Hindustan Organics Chemicals Limited v. 366 ITR 1(Bom.) 2. CIT v. Aimil Ltd. [2010] 188 Taxman 265/321 1TR 508 (Delhi HC) 3. Pr. CIT v. Planman HR (P) Ltd, [IT Appeal No. 170 of 2018, dated 12.02.2018 (Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985 SCR Supl. (2) 711 ii) JK Spinning Weaving Mills Limited v. UOI [1988 SCR (1) 700] iii) R. Rajagopal Reddy(dead) by Lrs. Ors. v. Padmini Chandrasekharan (dead) by Lrs. (1995(2)SCC630) iv) Godrej Soaps Limited Anr. v. State of Maharashtra Ors. ( 2006 145 STC 137 Bom.) v) CIT v. Archean Granites Private Limited (Madras High Court) vi) Vijay State of Maharashra Ors. vii) CIT v. Vatika Township Private Limited in Civil Appeal No. 8750 of 2014(Arising out of SLP(C) No. 540 of 2009 (i) Thus, relying upon aforesaid judicial decisions and the unambiguous wording of the existing amended provisions of Section 36(1)(va) and 43B of the 1961 Act, it is submitted by ld. Sr. DR in his written submissions that it is clear that so far as employees contribution towards PF/ESI is concerned , the deduction can be allowed only if it has been deposited to the credit of employee with relevant fund within the prescribed due date under the relevant statute governing PF/ESI. It is claimed that the position of law is and always been the case and the clarifications brought by amendment by Finance Act, 2021 clearly apply retrospectively. It is also claimed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is regarding allowability of employees contribution of ₹ 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 High Court , Hon ble Rajasthan High Court, Hon ble Himachal Pradesh High Court , Hon ble Madras High Court have decided the issue in favour of assessee and against Revenue. It is pertinent to reproduce hereunder the decision of ITAT, Chennai in the case of DCIT v. Repco Home Finance Private Limited reported in (2020) 117 taxmann.com 233( in which one of us being Accountant Member was part of DB which pronounced the order) , wherein the tribunal discussed the relevant law in details and then deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2015 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 was not complied by the assessee . Before us, the Ld. D.R. submitted that Section 36(1)(va) read with Explanation 1 of the 1961 Act clearly provides that employee contribution to Provident Fund amount should have been deposited before the due date as prescribed under the statute governing Provident Fund. By relying on the provisions of section 36(1)(va) of the Act so far as employees contribution is concerned, the learned DR relied upon the decision of Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auses 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 on actual payment. 43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- ** ** ** (b) 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 employees, ** ** ** shall be allowed ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in any other provision of the 1961 Act, a deduction which is otherwise allowable under the 1961 Act shall be allowed of 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 employees provided the said sum is actually paid during the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade 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 subsection (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 in cash or by issue of a cheque or dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 deduction under section 43B on actual payment basis and such deduction would be admissible for the accounting year. This proviso, however, did not apply to the contribution made by the assessee(s) to the labour welfare funds. To this effect, first proviso stood introduced with effect from 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 on one hand and payment of contributions to the welfare funds on the other. According to the Department, that dichotomy continued up to 1-4-2004, hence, looking to this aspect, the Parliament consciously kept that dichotomy alive up to 1- 4-2004, by making F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assesseewhich 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 when the assessments were made in the case of Allied Motors (P.) Ltd. (supra). However, the assessee contended that even though the first proviso came to be inserted with effect from 1-4-1988, it was entitled to the benefit of that proviso because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 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 by the object of the legislation found in the manner indicated before, then if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. Thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (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' 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 noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall, 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 non-deposit 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 related to employers' contribution on the one hand and employees' contribution on the other hand. It was submitted that when employees& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 due dates for these deposits and on which date these deposits were made. The dates of deposits are mentioned between 23rd Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with other matters 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) as also the view of the Division 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind no reason to differ with the findings of the Tribunal. Accordingly, we 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hon'ble Madras High Court in the case of Industrial Security and Intelligence Private 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 wef01.04.2004 , held the said amendments to be curative in nature and to apply retros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistently held this issue in favour of the tax-payer in its other decisions also such as Geekay 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 36(1)(va) read with Explanation 1 and provisions of Section 2(24)(x) of the 1961 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. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. We have carefully gone through the decisions of the Hon'ble Supreme Court as also of the Division Bench. The primary question to be considered is whether 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 payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsofar as the tax, duties, cess or fee paid before the filing of the return under the IT Act though after the previous year; the liabilities having accrued in that previous 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 Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to employee's contribution is regulated by clause (x) of Section 2(24) and sub-clause (va) of Section 36(1) and would not be affected by Section 43B. Section 43B though a 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& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reads thus: For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income 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 conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alary of the employees which had to be paid to the welfare fund within the due date; as provided under the statute which created the welfare fund. The contributions which are deducted at the time of payment of salary is 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 43B of the 1961 Act , by a proviso stipulates that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of employees share of PF contribution being deposited to the credit of employee with relevant fund by assesseeemployer beyond the time stipulated as due date under PF Act , there is no question of entering into provisions 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 pronounc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freedom from liability, tax or duty. Fiscally, it may assume varying shapes, specially, in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective, etc. That 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 ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case deduced as follows: (Wood Papers Ltd. case, SCC p. 262, para 6) 6. ... Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally. 60. We do not find any strong and compelling reasons to differ, taking a contra 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y; 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. 66.2. 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. 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/asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (supra), which have been precisely approved by the Constitution Bench. Thus, at and until the stage of finding out eligibility to claim deduction, the ambit and scope of the provision for the purpose of its applicability cannot be expanded or widened and remains subject to strict interpretation but, once eligibility is decided in favour of the person 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 observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished 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 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 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew on the issue was decided by Hon ble Gujarat High Court and Hon ble High Court of Kerala in favour of Revenue. It will be relevant to refer at this stage to the Constitution Bench decision of Hon'ble Supreme Court in the case of Commissioner of Customs (Imports) v. Dilip Kumar Co. reported in (2018) 9 SCC 1 , in which Constitution Bench of Hon ble Supreme Court 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective, etc. That 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally. 60. We do not find any strong and compelling reasons to differ, taking a contra 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 capt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parameters of the exemption clause or exemption notification. 66.2. 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. 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 emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of finding out eligibility to claim deduction, the ambit and scope of the provision for the purpose of its applicability cannot be expanded or widened and remains subject to strict interpretation but, once eligibility is decided in favour of the person claiming such deduction, it could be construed liberally in regard to other requirements, which may be formal or directory in nature. 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) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ightly applied Section 43B in respect of both contributions i.e. employers and employees . The Hon ble Jurisdictional High Court has with great respect dissented with the view taken by Hon ble Gujarat High Court and Hon ble High Court of Kerala, which view on the issue was decided by Hon ble Gujarat High Court and Hon ble High Court of Kerala in favour of Revenue. Thus, the applicable provision as is contained in Section 36(1)(va) is read down by most of the Constitutional Courts including 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 sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed deposit beyond the time stipulated for deposit under relevant statute governing PF by virtue of being hit by Section u/s 36(1)(va) of the Act as it is stated in the explanation that provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the due date under this clause , although the said amounts were deposited before the due date as prescribed for filing of return of income u/s 139(1) of the 1961 Act. The above amendment from the plain reading of the Section 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 stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to the said clause provides that, for the purposes of this clause, due date to mean 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 there-under or under any standing order, award, contract of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2021, by holding as under: 2. Coming to the sole substantive issue of ESI/PF disallowance of ₹ 1,09,343/- and Rs. 3,52,622/-, the assessee's and revenue's stand is that the same has been paid before the due date of filing sec. 139(1) return and after the due date prescribed in the corresponding statutes; respectively. I notice in this factual backdrop that the legislature has not only incorporated necessary amendments in Sections 36(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va) of the 1961 Act. The assessee s counsel has filed tax-audit report in which detail/ bifurcations of employee share of PF/ESI along with date of payment is mentioned, but challans are not filed. The said tax-audit report is placed on record in file. Thus for limited purposes , we are directing AO to verify the challans evidencing deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing claim of deduction u/s 36(1)(va) of the 1961 Act. The assessee is directed to file before AO complete details/bifurcation of employees share of PF/ESI , to the tune of ₹ 13,14,725/- which was added to income of the assessee u/s 36(1)(va) read with Section 2(24)(x) along with relevant paid challans, for verification. We order accordingly. It is also pertinent to mention that Division Bench of Allahabadtribunal in the case of M/s Bharat Pumps and Compressors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann. com 135(Jp-trib.) j) Bangalore-tribunal decision in the case of Shakuntala Agarbathi Company v. The DCIT, in ITA no. 385/ Bang/2021, vide orders dated 21.10.2021 k) Hyderabad-tribunal in the case of NCC Limited v. ACIT in ITA no. 595 596/Hyd/2020, vide common order dated 27.09.2021 l) Delhi-tribunal decision in the case of Indian Geotechnical Services v. ACIT, in ITA No. 622/Del/2018, vide order dated 27.08.2021(in which one of us, being Hon ble Judicial Member was part of Division Bench which pronounced this order) m) Bangalore-tribunal decision in the case of Jana Urban Services for Transformation Private Limited v. DCIT, in ITA No. 307/Bang/2021, order dated 11.10.2021 n) Amritsar-tribunal decision in the case of Vinko Auto Industries Limited v. DCIT, CPC, in ITA no. 63 64/Asr./2021, vide order dated 08.11.2021 o) Bangalore-tribunal decision in the case of Infobell Interactive Solutions v. DCIT, in ITA No. 411/Bang/2021, order dated 03.11.2021 p) Jodhpur-tribunal decision in the case of Mohan Ram Chaudhary v. ITO, in ITA no. 51,54 55/Jodh./2021, vide order dated 28.09.2021 q) Bangalore-tribunal decision in the case of Gopalakr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of Revenue more-so Revenue having been armed with the amendments made by Finance Act, 2021 to Section 36(1)(va) and 43B albeit said amendment was also considered by us while adjudicating appeal for ay: 2018-19 , because as per Revenue these amendments are merely clarificatory in nature and shall have retrospective effect, and as per Revenue the decisions rendered by Hon ble High Court(s) in favour of tax-payers prior to aforesaid amendments by Finance Act, 2021 stood overruled by these amendments made by Finance Act, 2021 . Since , the Revenue is arguing /insisting us to take a view which is an opposite view to our view as taken in assessee s own case for ay: 2018-19, which decision was rendered by us after considering amendments made by Finance Act, 2021 , now, it is squarely on Revenue to show that there was manifest error in our order dated 16.12.2021 in assessee s own case for ay: 2018-19 or our aforesaid order was patently illegal or it was per-incuriam, which will in that situation compel us to take a different view than the view taken by us in our order dated 16.12.2021 for preceding year in assesse s own case, and for which onus/burden is squarely/entirely i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year involving the same issue as an earlier year, the court can differ from the view expressed if the case is distinguishable or per incuriam We have already extracted in preceding para s the crux/gist of Revenues contention to support its stand. Most of the contentions of the Revenue were already considered by us , while adjudicating appeal of the assesse for ay: 2018-19, vide orders dated 16.12.2021, which is a detailed , speaking and reasoned order passed by us. Admittedly, in this case for ay: 2019-20, the assesse has deposited employee share of PF/ESI late beyond the time stipulated under the relevant statute governing PF/ESI, but the same was deposited prior to the due date prescribed for filing of return of income u/s 139(1) , as culled out from tax-audit report. The main contention of Revenue is that the PF/ESI Act are benevolent statute(s) with the social benefits for employees to build retirement corpus for the salaried employees. The contribution to fund is made both by employer and employee. The contention of the Revenue is that the employer deduct employee contribution from his/her salary and holds the same in fiduciary capacity, and thus the employer is un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit of PF/ESI which is fifteen days from the end of the month to which such contribution pertain in case of PF , the same is to be held chargeable to tax and denying the deduction u/s 36(1)(va) forever does not hold merit in the teeth of binding decision of Hon ble jurisdictional High Court in the case of Sagun Foundries(supra) . The Revenue is not able to place on record any contrary decision of Hon ble Apex court and/or Hon ble Allahabad High Court. No doubt, 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 even before amendment by Finance Act, 2021 , the assessee will not be entitled for deduction as the employee contribution towards PF/ESI received by assessee was deposited late beyond the time provided for deposit of said contribution as is stipulated/provided under the relevant statute governing PF/ESI. But, it is equally true that the Constitutional Courts viz. Hon'ble 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. This issue was subject matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the tax-payer. The Hon ble Jurisdictional High Court has in para 29 has taken a view that the law laid down by Hon ble High Court of Karnataka , Hon ble High Court of Rajasthan, Hon ble High Court of Punjab and Haryana , Hon ble High Court of Delhi, Hon ble High Court of Bombay and Hon ble High Court of Himachal Pradesh have rightly applied Section 43B in respect of both contributions i.e. employers and employees . The Hon ble Jurisdictional High Court has with great respect dissented with the view taken by Hon ble Gujarat High Court and Hon ble High Court of Kerala, which view on the issue was decided by Hon ble Gujarat High Court and Hon ble High Court of Kerala in favour of Revenue. Thus, the applicable provision as is contained in Section 36(1)(va) is read down by most of the Constitutional Courts including 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 forever 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 applied. Although, on perusal of the above amendment by Finance Act, 2021, it transpires that the said Explanations were inserted in Section 36(1)(va) and 43B by way of removal of doubt to clarify the law as existed on the statute so far as employee contribution received by employer from employee which is to be deposited to the credit of employee with PF/ESI fund on or before the due date as provided in statute governing PF/ESI, to enable the employer to claim deduction u/s 36(1)(va) of the 1961 Act read with Section 2(24)(x) of the Act, and no deduction shall be allowed by virtue of Section 36(1)(va) as Section 43B has no applicability in case of employee contribution to PF/ESI , in case of delayed deposit beyond the time stipulated for deposit under relevant statute governing PF by virtue of being hit by Section u/s 36(1)(va) of the Act as it is stated in the Explanations that provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the due date under this clause so far as employee contribution to PF/ESI, although the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 welfare laws. Hence, it needs to be stressed that the employer s contribution towards welfare funds such as ESI and PF needs to be clearly distinguished from the employee s contribution towards welfare funds. Employee s contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , until assessment year 2020-21 and the Parliament chose to apply the said amendments w.e.f. 01st April , 2021 and made applicable effective from assessment year 2021-22 and subsequent assessment years. Thus, it is clear that the Parliament chose not to litigate this issue prior to assessment year 2021-22 and to close all disputes on this issue , prior to assessment year 2021-22 , and made these stringent provisions applicable to employee contribution to PF/ESI effective from assessment year 2021-22 and subsequent assessment years. There is a cherished objective behind this not raising the dispute(s) on this issue prior to assessment year 2021-22 and accepting the position as laid down by Constitutional Courts up-till 2020-21, which is on consonance with the Policy of Government of India to reduce litigations and to increase efficiency. Reference is drawn to recent statement given by Hon ble Union Minister of Law and Justice in Lok Sabha on 17.12.2021, which clearly indicates that Government of India wants to minimise disputes and to maximise efficiency. This statement refers that formulation of National Litigation Policy which is under consideration of Government of India with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be filed merely because the tax effect in a particular case exceeds the prescribed monetary limits and the filing of an appeal should be decided strictly on the merits of the case. Similarly, the field formations under the CBIC have been instructed to withdraw appeals pending in High Courts/Customs Excise and Service Tax Appellate Tribunal, where the Supreme Court has decided on identical matter. Besides, CBIC has also instructed its field formations not to contest further in appeal where the issue has been lost in two stages of appeals. It has been decided, however, that in cases where it is felt that the issue is fit for further appeal, then on proper justification and approval of the Zonal Chief Commissioner, an appeal can be filed for the third time. Also, the field formation have been instructed to forward only those SLP proposals where in the issue involves substantial question of law or gross perversity or illegality in the appreciation of evidence. In this direction, both the CBDT and the CBIC have also enhanced the threshold monetary limit for filing appeals, the details of which are as follows: CBDT: For filing appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal and Appellate Tribunal for Electricity have provided API linkage to their database with LIMBS Ver.2. Further, the fast track integration of database of cases of Railway Claims Tribunal, Income Tax Appellate Tribunal, National Green Tribunal, National Company Law Tribunal and National Company Law Appellate Tribunal with LIMBS is envisioned. The alternative mechanism for the resolution of Inter-Ministerial/Departmental disputes also provide for an institutionalized mechanism for resolution of such disputes, namely, Administrative Mechanism for Resolution of Disputes (AMRD). This was framed by the Department of Legal Affairs and circulated vide O.M. dated 31.03.2020. This mechanism, applicable to disputes other than taxation disputes, will reduce litigations in courts and resolve the cases outside the court system, where both parties are Govt. Department or where one party is Govt. Department and other is its instrumentalities, (CPSEs/Boards/ Authorities, etc.). To resolve the commercial disputes between Central Public Sector Enterprises interse and CentralPublic Sector Enterprises and Government Departments/ Organizations in place of the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by Finance Act, 2021 is made specifically applicable retrospectively from the date of insertion of the provision or any other specified earlier date in the Finance Act, rather on the other hand , the Memorandum to Finance Bill, 2021 has specifically made this amendment applicable from 01.04.2021 and specified that the same shall be made applicable from assessment year 2021-22 and subsequent assessment years. Thus, the Parliament was fully aware that Some courts have decided this issue in favour of tax-payers by reading down the existing provisions of Section 36(1)(va) read with Section 2(24)(x) by applying provisions of Section 43B of the 1961 Act , but still the Parliament has made amendments to Section 36(1)(va) and 43B and made it applicable from ay: 2021-22 and subsequent assessment years, which we have already discussed in this order earlier that it was with an object to end dispute and litigation with respect to this issue for assessment years prior to assessment year 2021-22. We are presently concerned with ay: 2019-20. It is also claimed that there is a CBDT circular No. 22/2015 dated 17.12.025 which has clarified that Section 43B has applicability so far as employer con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aipur-tribunal decision in the case of Bhivaram Pannalal Kumawat v. DCIT in ITA no. 76/JP/2021, order dated 12.10.2021 f) Hyderabad-tribunal decision in the case of Value Momentum Software Services Private Limited v. DCIT, in ITA no. 2197/Hyd/2017, order dated 19.05.2021 g) Hyderabad-tribunal decision in the case of Vijay Electricals Limited v. DCIT, in ITA no. 1533 1534/Hyd/2017, order dated 27.05.2021 h) Hyderabad-tribunal SMC decision in the case of Salzgitter Hydraulics Private Limited v. ITO, reported in (2021) 128 taxmann.com 192(hyd.-trib.SMC) i) Jaipur-tribunal decision in the case of Dhabryia Plywood Limited v. ADIT, CPC, reported in (2021) 133 taxmann. com 135(Jp-trib.) j) Bangalore-tribunal decision in the case of Shakuntala Agarbathi Company v. The DCIT, in ITA no. 385/ Bang/2021, vide orders dated 21.10.2021 k) Hyderabad-tribunal in the case of NCC Limited v. ACIT in ITA no. 595 596/Hyd/2020, vide common order dated 27.09.2021 l) Delhi-tribunal decision in the case of Indian Geotechnical Services v. ACIT, in ITA No. 622/Del/2018, vide order dated 27.08.2021(in which one of us, being Hon ble Judicial Member was part of Division Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the aforesaid decision of Allahabadtribunal in assessee s own case for ay:2018-19 in ITA no. 13/Alld/2021 , vide orders dated 16.12.2021 in which both of us were part of the Division Bench who pronounced the order, we hold that in the instant appeal for ay: 2019-20 if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va) of the 1961 Act. The assessee s counsel has filed tax-audit report in which detail/ bifurcations of employee share of PF/ESI along with date of payment is mentioned(page 66/pb), but challans are not filed. The said tax-audit report is placed on record in file. Thus for limited purposes , we are directing AO to verify the challans evidencing deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing claim of deduction u/s 36(1)(va) of the 1961 Act. The assessee is directed to file before AO complete details/bifurcation of employees share of PF/ESI , to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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