TaxTMI 
TaxTMI 
2017 (8) TMI 1427
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....6 ITR 170 (Guj) and CIT v. Merchem Ltd. [2015] 378 ITR 443 (Ker), is that the deduction qua the deposit of the employee's contribution to the relevant employee welfare funds is governed by s. 36(1)(va), which stands contravened, and not by s. 43B. The relevant details, viz. the due date of the deposit and the actual date of the deposit of the employee's contribution by the assesseeemployer, separately for each contribution, are listed at para 3.1 (pg.2) of the assessment order. The disallowance being confirmed in first appeal for the same reason, aggrieved, the assessee is in second appeal. 3. Before us, while the assessee relied on the decision in the case of CIT v. Nexus Computers (P.) Ltd. [2009] 313 ITR 144 (Mad), the Revenue did on the decision in CIT v. Madras Radiators & Pressings Ltd. [2003] 264 ITR 620 (Mad). 4. We have heard the parties, and perused the material on record, giving our careful consideration to the matter. The employees' contribution (to a fund for their welfare) is deemed as the income as the assessee-employer u/s. 2(24)(x) of the Act, which reads as under: 'Definitions. S. 2(24) (x) any sum received by the assessee from his em....
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....y him) only in computing the income referred to in section 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-section (1) of section 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.' [emphasis, supplied] The facts are admitted and the payment in each case is made beyond the 'due date' as defined in Explanation to s. 36(1)(va). The assessee's case is that s. 43B, being a non obstante clause, shall prevail, so that where the deposit of the contribution is made by the due date of filing the return for the relevant year, as is admittedly so in the present case, no disallowance can ensue in-as-much as it becomes allowable there-under. The argument is, in our view, misconceived. Section 43B is not a deduction provision. It only seeks to regulate the deduction of sums, specified therein, by providing an addition....
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....yee cost (to the assessee employer) and, as afore-noted, deduction in its respect is sought only as it is, on account of the deeming fiction of section 2(24)(x), included as the employers' income in the first place. Being, in fact, a liability, deduction in its respect is simultaneously provided u/s. 36(1)(va). The language of the two provisions, which is clearly different, is plain, clear and unambiguous. Another provision of the Act exhibiting the distinction between the employers' and employees' contribution (to an employee welfare fund) is s. 36(1)(v), the immediately preceding provision. The same, in contrast to s. 36(1)(va), speaks of contribution by the assessee as an employer (to an approved gratuity fund). However, being covered by s. 43B(b), a deduction in its respect shall have to satisfy the mandate of sec. 43B, being a non obstante provision, i.e., apart from s. 36(1)(v), for its allowability. That is, the two are clearly separate and distinct. Why, one is a trade liability, and the other, on the other hand, income, representing a receipt by the assessee, and paid/deposited to the fund only for that reason. This clear position of law stands succinctly explained by t....
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....viso to s. 43B, carving an exception for sums specified in s.43B(b), i.e., as against the sums specified in the other clauses of s. 43B, covered by the first proviso to s. 43B, reads as under: 'Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realized within fifteen days from the due date.' Simultaneously, the words 'referred to in clause (a) or clause (c) or clause (d) or clause (e) or clause (f)', occurring after the words 'any sum' in the first proviso (which, therefore, after amendment, becomes the only proviso - refer pgs. 2-3 of this order), were deleted. Sec. 43B, thus, itself referring to s. 36(1)(va), the due date specified in Explanation to s. 36(1)(va) shall apply in respect of the employer's contribution to the employees' welfare funds, covered by s. 43B(b) (refer the discussion at pgs. 625-626 of the decision). Thus, even f....
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....ith. Merely because the second proviso to section 43B which provided that even with respect to the employer's contribution (section 43B(b) ), the assessee was required to credit the amount in the relevant fund under the Provident Funds Act or any other fund for the welfare of the employees on or before the due date under the relevant Act is deleted. It cannot be said that section 36(1)(va) is also amended or the Explanation to section 36(1)(va) has been deleted or amended. Therefore, if the assessee has not credit the employees' contribution 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 deduction of such amount in computing the income referred to in section 28.' In doing so, the Hon'ble Court considered the assessee-respondent's reliance on a number of decisions by different High Court's, observing that there was no ambiguity in the language of the relevant provisions, i.e., in law, and which therefore did not admit of any other view, also meeting the argument advanced, on that basis, that where the predominant judicial review is in favour of a particular....
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....onal High Court had said earlier in Nexus Computers (P.) Ltd. (supra), referring to the dismissal of the Departments' SLP in CIT v. Vinay Cements Ltd. [2009] 313 ITR (St.) 1. The same being in relation to sec. 43B, could have no bearing or relevance to the deduction of the employees' contribution covered by s. 36(1)(va). We may next consider the decision by the Hon'ble jurisdictional High Court in Industrial Security and Intelligence India Pvt. Ltd. (in TCA Nos. 585 & 586/2015 dated 24.07.2015/copy on record). The said decision, though not relied upon, has come to our notice, so that we are nevertheless bound to consider the same. The decision follows the decision in CIT v. Aimil Ltd. [2010] 321 ITR 508 (Del), holding that the employee's contribution is also covered by s. 43B(b), so that where deposited by the due date for filing the return of income u/s. 139(1), as an instant case, would stand to be allowed. The decision, however, does not advert to the relevant provisions for us to be able to know its basis, the ratio of the decision, which alone is binding. This assumes all the more relevance in view of the clear language of the relevant provisions, which have to be given eff....
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....(supra) as being the final arbiter in the matter, that is, as far as the Chennai Benches of this tribunal are concerned. That is, by considering, for the sake of argument, the employer's contribution as being covered by s. 43B, i.e., by regarding it as a part of the employee's contribution (for which there is though no mandate in law). Now all that the decision says is that the deduction of the employee's contribution shall be governed by s. 43B inasmuch as it is a non obstante provision. Even so, the employee contribution shall have to be first deductible u/s. 36(1)(va) before the additional condition of s. 43B could be applied for its deductibility. We have already discussed that s. 43B is not an enabling but a disabling provision, applicable to sums specified therein, otherwise allowable, prescribing an additional condition of actual payment for their deductibility. Unless, therefore, a sum is 'otherwise allowable', s. 43B cannot be applied in its respect. The stage and the need for imposing the said condition (of s. 43B) would arise only where the relevant sum is otherwise allowable. Where not, the question of travelling to s. 43B does not arise, nor does the same become operat....