TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 175
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....de disallowance of Rs. 2,14,549/- for depositing contribution of Provident Fund (PF) amounting to Rs. 1,84,521/- and Employees State Insurance (ESI) amounting to Rs. 30,028/-, after the due date as prescribed in section 36 of the Act. The Ld. CIT-(A), after discussing the various judicial pronouncement on the issue in dispute upheld the disallowance holding that "due date" specified in explanation to section 36(1)(va) of the Act does not refer to the due date fixed for filing the return of income under section 139(1) of the Act. The finding of the Ld. CIT-(A) on the issue in dispute is reproduced as under: "4.1.14. From the above, it clearly emerges that the term "due date" as appearing in Section 36(1 )(va) read with Explanation specifies the due date as the date by which the appellant is required as an employer to credit an employee's contribution under the employees account to the relevant fund, under any Act, rule, order or notification issued there under or under any standing order, award, contract of service or otherwise. As regards deduction for contribution towards a recognized provident fund of an approved superannuation fund by the appellant as an employer, the same is ....
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....'s contributions to PF and ESI have not been credited by the assessee to the employees' accounts on or before the due date prescribed in relevant Acts. She further noted that the assessee company paid the amounts in question in the month of September, 2010 and February, 2011, whereas the return of income was filed on 29/09/2011. The issue-in-dispute involved in the case is whether the employees' contributions to PF and ESI deposited after the due date in the relevant Acts, can be allowed to the assessee as deduction in the return of income. Though the Ld. CIT-(A) has referred various judicial pronouncement, but we find that Hon'ble jurisdictional Delhi High Court in the case of CIT Vs. AIMIL Ltd. (2010) 321 ITR 508 has considered the employee's contribution deposited after due dates prescribed under the relevant acts, and allowed the benefit of the deduction to such contribution, if paid before the return is filed. The relevant finding of the Hon'ble jurisdictional High Court is reproduced as under: "4. In some other appeals preferred by the assessees, the Tribunal has taken contrary view and upheld the addition made by the AOs. Under these circumstances, all these appeals were a....
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....ned only with cl. (b), we reproduce the same for clearer understanding: "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 PF or superannuation fund or gratuity fund or any other fund for the welfare of employees, or,......... shall be allowed irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him only in computing the income referred to in s. 28 of that previous year in which such sum is actually paid by him : Provided that nothing contained in this section shall apply in relation to any sum 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-s. (1) of s. 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." 7. During the period in question with which we are concerned, s.....
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....assessee is required, as an employer, to credit the employees' contribution to the employees account in the relevant fund under any Act, rules, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. 11. Before we delve into this discussion, we may take note of some more provisions of the Act. Sec. 2(24) of the Act enumerates different components of income. It, inter alia, stipulates that income includes any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees'. It is clear from the above that as soon as employees' contribution towards PF or ESI is received by the assessee by way of deduction or otherwise from the salary/wages of the employees, it will be treated as 'income' at the hands of the assessee. It clearly follows therefrom that if the assessee does not deposit this contribution with PF/ESI authorities, it will be taxed as income at the hands of the assessee. However, on making deposit with the concerned authoriti....
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....d by the Department against the High Court order of 26th June, 2006 in IT Appeal No. 2 of 2005 and IT Appeal No. 56 of 2003 and IT Appeal No. 80 of 2003 of the High Court of Guwahati, Assam and it is order dt. 7th March, 2007. A copy of the said order is placed on record. The observations of their Lordships on the issue are as under : 'In the present case we are concerned with the law as it stood prior to the amendment of s. 43B. In the circumstances the assessee was entitled to claim the benefit in s. 43B for that period particularly in view of the fact that he has contributed to PF before filing of the return. The special leave petition is dismissed'." 13. It is clear from the above that in Vinay Cement (supra), the SLP preferred by the Revenue against the judgment of the Guwahati High Court was dismissed making the aforequoted observations. The reasons are given and, thus, it amounts to affirmation of the view taken by the High Court of Guwahati. 14. When we keep that proposition in mind and also take into consideration various judgments where Vinay Cement (supra) is applied and followed, it will not be possible to accept the contention of the Revenue. 15. In CIT vs. ....
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.... taken by the Kerala High Court in the case of CIT vs. South India Corporation Ltd. (1999) 157 CTR (Ker) 422 : (2000) 242 ITR 114 (Ker). After noting the said judgment the fact that the amendments had been made to the provisions of s. 43B of the Act by virtue of Finance Act, 2003 w.e.f 1st April, 2004 it agreed with the submission of the learned counsel for the assessee that by virtue of the omission of the second proviso and the omission of cls. (a), (c), (d), (e) and (f) without any saving clause would mean that the provisions were never in existence. For this purpose, in the said case the assessee had placed reliance on the judgment of a Constitution Bench of the Supreme Court in the case of Kolhapur Canesugar Works Ltd vs. Union of India (2000) 2 SCC 536 and Rayala Corporation (P) Ltd vs. Director of Enforcement (1969) 2 SCC 412 and General Finance Co. & Anr. vs. Asstt. CIT (2002) 176 CTR (SC) 569 : (2002) 257 ITR 338 (SC). The said submissions found favour with the Division Bench of the Guahati High Court and relying on earlier decisions of its own Court in CIT vs. Assam Tribune (2002) 253 ITR 93 (Gau) and CIT vs. Bharat Bamboo & Timber Suppliers (1998) 146 CTR (Gau) 487 : (19....
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....titution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the Court, Tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex Court of the country. But, this does not amount to saying that the order of the Court, Tribunal or authority below has stood merged in the order of the Supreme Court rejecting SLP or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.' 11. Upon noting the observations of the Supreme Court in Kunhayammed & Ors. (supra) the Division Bench of the Madras High Court in the case of Nexus Computer (P) Ltd. (supra) came to the conclusion that the view taken by the Supreme Court in Vinay Cement (supra) would bind the High Court as it was non declared by the Supreme Court under Art. 141 of the Constitution. 12. We are in respectful agreement with the reasoning of the Madras High Court in Nexus Computer (P) Ltd. (supra). Judicial discipline requires us to follow the view of the Supreme Court in Vinay Cement....