TMI Blog2018 (5) TMI 2116X X X X Extracts X X X X X X X X Extracts X X X X ..... A SARATHI CHAUDHURY, JUDICIAL MEMBER For the Appellant : Shri Vikas Garg, FCA For the Respondent : Shri R. K. Vishwakarma, D. R. ORDER PER T. S. KAPOOR, A.M. This is an appeal filed by the assessee against the order of learned CIT(A) dated 03/10/2016. 2. The only ground of appeal taken by the assessee is the action of learned CIT(A) by which he has confirmed the addition of ₹ 2,73,172/- which the Assessing Officer had made on account of payment of employee s contribution to provident fund beyond the due date stipulated under that Act. 3. At the outset, Learned A. R. submitted that this is an undisputed fact that the employee s contribution to provident fund was deposited in certain month beyond the due date of payment however, the payment was deposited in the financial year itself and before the filing of return of income u/s 139(1) of the Act and in this respect our attention was invited to learned CIT(A) order page 3 where he has narrated various payments made during the year along with actual date of payment and due date of payment. Learned A. R. stated that Hon'ble Allahabad High Court in the case of Sagun Foundry (P.) Ltd. vs. CIT [201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a short fall of ₹ 24,89,41,130/-. This amount of short fall was treated by Assessing Officer as income of Assessee vide Section 2(24)(X) read with Section 36(1)(va) of Act 1961. Assessing Officer also added ₹ 1,93,55,580/- being the amount of short fall towards employers contributory provident fund and disallowed the same under Section 43B of Act 1961. He also disallowed the said amount of ₹ 1,93,55,580/- from expenses claimed by Assessee for the A.Y. in question i.e. 2005-06 as per provisions under Section 43B. Dissatisfied with assessment order, Assessee preferred appeal before CIT(A) who vide order dated 25.06.2009 partly allowed the same and deleted disallowance of ₹ 24,89,41,130/- (short fall in employees contribution to provident fund) and ₹ 1,93,55,580/- (short fall in employers contribution to provident fund) observing that employees contribution7emplovers contribution was deposited before filing Return under Section 139(1) of Act 1961 for the relevant period. Revenue, in its turn, preferred appeal before Tribunal. Relying on judgment in Alom Extrusions Ltd. (supra), Tribunal dismissed appeal and confirmed order passed by CIT(A). That is how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute relates to employees contribution only. Section 43B would be confined only to employers contribution. It further said: Therefore, with respect to the employees contribution received by the assessee if the assessee has not credited the said sum to the employees' account in the relevant fund or funds on or before the due date mentioned in the Explanation to Section 36(l)(va), the assessee shall not be entitled to deductions of such amount in computing the income referred to in Section 28 of the Act. 20. Gujrat High Court distinguished judgment of Alom Extrusions Ltd (supra) on the ground that therein actual dispute relates to employers' contribution and whether amendment in Section 43B by Finance Act, 2003 would operate retrospective or not, Supreme Court had no occasion to consider deduction with reference to Section 36(1 )(va). For the same reason Gujrat High Court dissented with the judgments of Rajasthan High Court in CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd [20141 366 ITR 163/12013] 217 Taxman 64 (Mag.V35 taxmann.com 616, Punjab Haryana High Court in CIT\. Hernia Embroidery Mills (P.) Ltd [20141 366 ITR 167/[20131217 Taxman 207/37 taxmann.com 160 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en said: In short, this provision states, notwithstanding anything contained in any other provision contained in this Act, a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution to any fund such as provident fund shall be allowed if it is paid on or before the due date as contemplated under Section 139(1) of the Income-Tax Act. This provision has nothing to do with the consequences, provided for under the PF Act/PF Scheme/ESI Act, for not depositing the contribution on or before the due dates therein. (Emphasis added) 22. It also said that the word contribution used in clause (6) of Section 43B of Act 1961 means the contribution of employer and employee, both, and that being so, if contribution is deposited on or before due date for furnishing Return of income under sub-section (1) of Section 139 of Act 1961, employer is entitled for deduction. 23. Though in a short judgment, but Punjab Haryana High Court in Hernia Embroidery Mills (P.) Ltd. (supra) not only followed Alom Extrusions Ltd. (supra) but also its own earlier judgment in CIT v. Rai Agro Industries Ltd. [2011] 334 ITR 122/[2012] 20 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By Finance Act, 1988 Parliament inserted first proviso w.e.f. 01.04.1988 which inter alia provides that any sum payable by Assessee by way of tax, duty, cess or fee, if payment is made after closing of accounting year but before date of filing of Return under Section 139(1), Assessee would be entitled to deduction on actual payment basis. This proviso did not include within its ambit, contributions under labour welfare statutes. By Finance Act, 1988, Second Proviso thus Second proviso was further amended by Finance Act, 1989 w.e.f. 01.04.1989. 27. Court held that Assessee/employer thus would be entitled to deduction only if contribution stands credited on or before due date given in the Act 1952 or Act 1948. Second proviso created difficulties, inasmuch as under Act, 1981, due date was after the date of filing of returns and thus industries made representations to the Ministry of Finance. Court, looking to the history of amendments held, it is evident that Section 43B, when enacted in 1984, commences with a non obstante clause. The underlying object being to disallow deductions claimed merely by making a book entry based on the mercantile system of accounting. At the same time, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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