TMI Blog2022 (6) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the grounds of appeal, taken in both the appeals are similar, except change in figures a consolidated order is being passed. The grounds taken by the assessee in I.T.A. No. 138 are reproduced below: 1. Because the CIT(A) has erred on facts and in law in dismissing the appeal without appreciating the facts and circumstances of the case merely on the basis of delay caused in filing the appeal. 2. Because the CIT(A) has failed to appreciate, that intimation under section 143(1) dated 25.10.2019 was received, against which petition under section 154 of the Act was moved, and which petition in spite of being moved in time was not decided, the appeal filed thereafter, the assessee was prevented by sufficient and reasonable cause, the action of the CIT(A) in dismissing the appeal on account of delay is totally unjustified and unwarranted. 3. Because the CIT(A) should ought to have considered the facts that the delay in filing the appeal was purely on account of the delay in non disposal of the petition moved under section 154 of the Act, there being no deliberate intention, the delay being beyond the control of the assessee, the CIT(A) was not justified in not condoning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 21.2.2020 against which again appeal could not be filed within prescribed time. Learned counsel for the assessee further submitted that the issue involved in the present appeals is duly covered in favour of the assessee by the order of SMC Bench of Lucknow Tribunal in the case of S.K. Shoes and Boots Private Limited, I.T.A. No. 110/Lkw/2021, order dated 08/03/2022 and in the case of Sangrila Nutri Food Products, I.T.A. No. 99/Lkw/2021, order dated 08/03/2022 and therefore it was prayed that the appeals filed by assessee may be allowed. 3. Learned D. R. even though relied on the orders of the authorities below but did not disagree that the issue is not covered in favour of the assessee by the order of Lucknow Bench of the Tribunal. However, he submitted that since learned CIT(A) has not decided the issue on merits, the matter should go back to him to decide the issue afresh on merits. 4. Learned counsel for the assessee, in his rejoinder relied on the judgment of Hon'ble Madras High Court in the case of Commissioner of Wealth-Tax vs. M.K.S. Vanavarayar [1980] 122 ITR 184 (Mad) and submitted that where necessary facts for disposal of the appeals on merits are available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal ought not to have allowed the appeals and remanded the matter to the AAC for disposal on merits. 4.1. I noted that the only issue involved in the present appeal is the disallowance of ESI/PF which has been deposited after the due date as prescribed under the relevant acts but admittedly before the due date of filing of returns under the Income Tax Act for AY 2018-19. The CPC had disallowed the claim of ESI/PF against which rectification application u/s. 154 was filed by the assessee which again was dismissed by CPC. On appeal the learned CIT(A) also dismissed the appeal by holding that no mistake is apparent from record. For Assessment Year 2019-20 the assessee had preferred appeal against the order passed by CPC u/s. 143(1) of the Act. I find that the issue involved in these files is duly covered in favour of the assessee by the order of SMC Bench of Lucknow Tribunal in the case of S.K. Shoes and Boots Private Limited, I.T.A. No. 110/Lkw/2021, order dated 08/03/2022 and in the case of Sangrila Nutri Food Products, I.T.A. No. 99/Lkw/2021, order dated 08/03/2022. While dealing with the similar issue, the Tribunal in I.T.A. No. 99/Lkw/2021, vide para 4 to 6 has held as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer as income of Assessee vide Section 2(24)(x) read with Section 36(1)(va) of Act 1961. Assessing Officer also added Rs. 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 Rs. 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 Rs. 24,89,41,130/(short fall in employees contribution to provident fund) and Rs. 1,93,55,580/(short fall in employers contribution to provident fund) observing that employees contribution/employers contribution was deposited before filing Return under Section 139 of Act 1961 for the relevant period. Revenue, in its turn, preferred appeal before Tribunal. Relying on judgment in Commissioner of Income Tax Vs Alom Extrusions Ltd. (supra), Tribunal dismissed appeal and confirmed order passed by CIT(A). That is how matter came before High Court in appeal. Court considered following question, posed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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(1)(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 Commissioner of Income Tax Vs 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 Commissioner of Income Tax Vs Udaipur Dugdh Utpadak Sahakari Sangh Ltd., (2014) 366 ITR 163, Punjab Haryana High Court in Commissioner of Income Tax Vs Hemla Embroidery Mills P. Ltd., (2014) 366 ITR 167, Himachal Pradesh High Court in Commissioner of Income Tax Vs Nipso Polyfabriks Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 (b) 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 Commissioner of Income Tax Vs Hemla Embroidery Mills (P.) Ltd., (supra) not only followed Commissioner of Income Tax Vs Alom Extrusions Ltd. (supra) but also its own earlier judgment in Commissioner of Income Tax Vs Rai Agro Industries Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 43B an Assessee could claim deduction on actual payment basis. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee. Otherwise view taken by Gujrat High Court and followed by Kerala High Court, with great respect, we find expedient to dissent therewith. 30. In view of above all the questions formulated above are answered against Revenue and in favour of Assessee. 5. I find that in this judgment, delivered by Hon'ble Jurisdictional High Court, the Hon'ble court has dealt with the case laws, as relied on by learned CIT(A) and after taking into account these judgments, which are in favour of the Revenue, has again decided the issue in favour of the assessee. The Lucknow Bench of the Tribunal, in the case of Tirubala International Pvt. Ltd. vs. DCIT in I.T.A. No. 726/Lkw/2016, vide order dated 17/05/2018, has followed the judgment in the case of Sagun Foundry (supra) and again vide order dated 31/07/2019, the Lucknow Bench of the Tribunal in the case of Axis Motors Pvt. Ltd. vs. DCIT in I.T.A. No. 289/Lkw/2019 has again followed the same judgment of Hon'ble High Court. The Allahabad Bench of the Tribunal, in the case of JCIT, Circle-2, Allahabad vs. Bharat Pumps and Compressors Ltd. in I.T.A. No. 147 148/Alld/2016, after taking into account the amendment brought out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 already been allowed the deduction towards employee contribution received by employer which was deposited late by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 welfare laws. Hence, it needs to be stressed that the employer's contribution towar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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