TaxTMI 
TaxTMI 
2017 (8) TMI 1421
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtly allowed the appeal of the assessee. 3. At the time of admission of the appeals, following questions were framed: D.B. Income Tax Appeal No. 172 / 2010 "Whether, contribution made by employer to Superannuation Fund upto Rs. 1,00,000/- for each employee not liable to Fringe Benefit Tax, u/s 115WB(1)(c) is exempted retrospectively or prospectively vis-a-vis amendment made by Finance Act 2007?" D.B. Income Tax Appeal No. 79 / 2012 "Whether in the facts and circumstances of the case and in law the ITAT was justified in deleting addition made on account of depositing the PF payment beyond the prescribed time despite the fact that as per Section 36(1)(va) employees contribution should have been deposited in time a prescribed in the relevant law. Section 43B permits delayed payment if paid before filing of ROI as per Section 139(1) in case of employer's contribution not in the case of employee's contribution?" D.B. Income Tax Appeal No. 159 / 2011 "Whether, contribution made by employer to Superannuation Fund upto Rs. 1,00,000/- for each employee not liable to Fringe Benefit Tax, u/s 115WB(1)(c) is exempted retrospectively or pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ers of commerce. I propose to make the following changes in Chapter XII H of the Income Tax Act (relevant para only). Prescribe a threshold of Rs. 1,00,000/- under Section 115 WB(1)(c) so that only a contribution by an employer to an approved superannuation fund in excess of Rs. 1,00,000/- per year per employee will attract FBT. Under section 80C, there is already an exemption upto Rs. 1,00,000/- for contribution by an employee to an approved superannuation fund. Hon'ble Members will not that under these two provisions, there can not be a tax exempt contribution upto Rs. 2,00,000/- per year for the benefit of employee. This allowance, I believe is generous enough in the case of an overwhelming majority of employees." With these changes, I am confident that the debate on FBT will draw to a close. Let me remind everyone concerned once again that FBT is justified on the principle of equity." In the superannuation explaining the provisions of Finance Bill 2006 reported in 281 ITR 213-214 (Statute) it is explained as under (relevant para): "Clause (b) of sub section (1) of section 115WC provides that the actual amount of contribution by the employer t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l construction should be avoided if it defeats the manifest object and purpose of the Act. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section, to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole." Again the Hon'ble Supreme Court in the case of CIT Vs. Suresh N. Gupta (supra) while interpreting the provisions to section 113 inserted w.e.f 1.6.2002 has been pleased to hold the same as having retrospective effect. Hon'ble Court in para 24 to 26 held that the said proviso was clarificatory in nature. In taxation, the legislation of the type indicated by the proviso has to be read strictly. There is no question of retrospective effect. The proviso only clarifies that out of the four dates, Parliament has opted for the date, namely the year in which the search is initiated, which date would be relevant for applicability of particular Finance Act. Therefore, one has to read the proviso as it stands. Prior to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case being less than Rs. 1 Lac per employee, is not liable for fringe benefit tax. In the result this ground of the assessee is allowed." 7. He contended that the Tribunal has seriously committed an error in allowing the appeal of the assessee and he relied on the decision of the Supreme Court as under:- 1. State of Jharkhand and Ors. vs. Ambay Cements and Anr. 2004 (178) E.L.T. 55 (S.C.) 21. It is a matter of fact that the respondent has set up its establishment in the year 2000 and started its commercial production from 2.4.2001 only. It is seen from the Bihar Industrial Policy Resolution, 1995 and the statutory Notification issued by the Commercial Tax Department, the new industrial units was defined as those industrial units which went into production between 1.9.1995 and 31.8.2000 and which have been granted license/memorandum/letter of intent or registration certificate from the competent industries Department or Industrial Area Development Authority or Directorate of Industry or competent authority of the Government of India. As already noticed, the statutory notifications were amended retrospectively vide S.O. 57 and 58 dated 2.3.2000. It will thus be s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. However, as stated above, the second proviso resulted in implementation problems, which have been mentioned hereinabove, and which resulted in the enactment of Finance Act, 2003, deleting the second proviso and bringing about uniformity in the first proviso by equating tax, duty, cess and fee with contributions to welfare funds. Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only with effect from 1st April, 2004, would become curative in nature, hence, it would apply retrospectively with effect from 1st April, 1988. Secondly, it may be noted that, in the case of Allied Motors (P) Limited v. Commissioner of Income Tax reported in MANU/SC/0317/1997 : [1997] 224 I.T.R. 677, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nserted] Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, to the above extent, operated prospectively. Take an example - in the present case, the respondents have deposited the contributions with the R.P.F.C. after 31st March [end of accounting year] but before filing of the Returns under the Income Tax Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under Section 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 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, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le interpretation. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. 11. This view has been accepted by a number of High Courts. In the case of Commissioner of Income-Tax v. Chandulal Venichand MANU/GJ/0074/1994 : [1994]209ITR7(Guj) , the Gujarat High Court has held that the first proviso to Section 43B is retrospective and sales-tax for the last quarter paid before the filing of the return for the assessment year is deductible. This decision deals with assessment year 1984-85. The Calcutta High Court in the case of Commissioner of Income-Tax v. Sri Jagannath Steel Corporation MANU/WB/0138/1990 : [1991]191ITR676(Cal) , has taken a similar view holding that the statutory liability for sales-tax actually discharged after the expiry of the accounting year in compliance with the relevant statute is entitled to deduction under Section 43B. The High Court....