TaxTMI 
TaxTMI 
2007 (12) TMI 245
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....posited late to Government account. It would be apparent from the said chart that even cheques have been deposited in the bank account well after due date. Therefore, the assessee was asked to explain as to why the payment deposited late into Government account be not disallowed under s. 43B of the Act and added to the total income of the assessee. The assessee filed its reply to the said show-cause notice. The AO, however, did not find any merits in the said reply and observed that there was obligation on the part of the assessee to deposit the amount of EPF within due dates as defined in Explanation to s. 36(1)(va) of the Act. The due date for deposit of EPF is 15th of the following months. In the instant case, even cheques in most of the months have been deposited after the due date. Since the assessee had defaulted in depositing the EPF in treasury by due date AO disallowed the claim of deduction under s. 43B of the Act and added an amount of Rs. 6,10,794 to the income of the assessee. For the same reason, the AO made a disallowance of Rs. 83,196 in respect of late payment of ESI under s. 43B of the Act. 3. On appeal, before the CIT(A), the assessee has submitted that most o....
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....or the months of August, 1999 and November, 2000, the payments have been tendered and the cheques have been cleared even beyond the grace period permitted. The details are as under: ------------------------------------------------------- Month Extended Date of Date of Amount due date tendering clearing the cheque of cheque ------------------------------------------------------- EPF ------------------------------------------------------- August 20.9.2000 12.10.2000 19.10.2000 51,191 ------------------------------------------------------- November 21.12.2000 23.12.2000 30.12.2000 51,984 ------------------------------------------------------- ESI ------------------------------------------------------- ....
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....of Madras High Court in the case of CIT vs. Synergy Financial Exchange Ltd. (2006) 205 CTR (Mad) 481 : (2007) 288 ITR 366 (Mad) against the assessee. However, since there is divergence of opinion on this issue, the view which is in favour of the assessee may be followed keeping in View the decision of Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd.,. 1973 CTR (SC) 177 : (1973) 88 ITR 192 (SC). 6. On the other hand, the learned Departmental Representative has relied upon the order passed by the authorities below as well as the decision in the case of Synergy Financial Exchange Ltd. 7. We have heard the parties and perused the record of the case as well as the case law referred to above. In terms of the provisions of s. 43B of the Act certain deductions are allowable only on actual payments. For the purpose of the present appeal. we are concerned only with the deduction claimed by the assessee towards payment of PF and ESI under s. 43B of the Act. Sec. 43B(b) of the Act provides that 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 provident fund for the welfare ....
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.... in the Finance Act, 2003, from the language used and from the object indicated that the legislature intended expressly or by implication that the second proviso to s. 43B was deleted to cure an acknowledged evil for the benefit of the community as a whole or to remove any such hardship or any express provision in the statute that such deletion of the second proviso to s. 43B of the Act would have any retrospective effect. Nor it is possible to hold that without the aid of the subsequent Finance Act, 2003, by which the second proviso to s. 43B was omitted, the unamended provision of s. 43B would allow the deduction of payments to provident funds, etc., when such payment was made by the assessee on or before the due date applicable for filing return. There is no material to hold that the deletion is either clarificatory or declaratory or intended for the removal of doubts to give a consequential retrospective effect to the deletion so as to make it applicable to earlier assessment years. 12. It may be mentioned that in the case of CIT vs. Godaveri (Mannar) Sahakari Sakhar Karkhana Ltd. (2007) 212 CTR (Bom) 384, the Hon'ble Bombay High Court has held that the deletion of second pr....
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.... efficiency and also integrate such tax proposals as the system can at present absorb and acceptance of the representation made by trade and industry that they should not be denied the benefits of deductions on account of delayed payment of taxes and interest. The law as it stood earlier was that the employer's contribution to PF if not paid within the due date the employer was not entitled to deduction. Right from the introduction of s. 43B, apart from the amendment carried out by 1989, the law was that if the employer did not pay the contribution by the due date then it was not liable for deduction. This position has been remedied and the remedial measure made applicable from the asst. yr. 2004-05. Having noted the history of the legislation, the Memorandum Explaining the Provision in the Finance Bill, 2003, the Notes on Clauses and the language of the amendment itself it is clear that the omission of the second proviso was not curative and consequently it cannot be said that the amendment is retrospective. Thus, the Tribunal was not right in law in direction to allow the claim in respect of delayed payment of PF, which has been paid upto the date of filing of return of income ig....