TaxTMI 
TaxTMI 
2021 (10) TMI 496
X X X X Extracts X X X X
X X X X Extracts X X X X
....and 148 of the 1961 Act for ay: 2005-06 and 2007-08 respectively, by learned Assessing Officer(hereinafter called " the AO") . We have heard both the appeals through video conferencing mode through Virtual Court. We will deal with both the appeals separately in this common order. First, we shall deal with Revenue's appeal in ITA no. 147/Alld/2016 for ay:2005-06. ITA No. 147/Alld/2016-Assessment Year 2005-06 2. The grounds of appeals raised by Revenue in memo of appeal filed with Income Tax Appellate Tribunal, Allahabad( hereinafter called " the tribunal") in ITA No. 147/Alld/2016 for ay : 2005-06, reads as under :- " 1. That the ld. CIT(A) has erred on facts & in the circumstances of the case in holding that the sums of Rs. 96,26,000/- and Rs. 29,02,000/- lacs paid to the BPCL Employees Provident fund Trust to make good the deficit of interest earnings and interest expenses of the said PF trust for the F.Y.2004-05 & 2003-04 were business expenditure for the assessee and , therefore, deletion of the said both additions is unjustified on facts and in law. 2. That the ld. CIT(A) has erred on facts & in the circumstances of the case in deleting the disallowance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the assessee namely M/s Bharat Pumps & Compressors Limited(hereinafter called "BPCL") has claimed deduction of Rs. 96,26,000/- on account of shortfall of PF Trust Earning (Interest) as per schedule 9.4 of the P & L Account of the assessee for the impugned assessment year under consideration. The AO was of the view that since liability for payment of interest was of the PF Trust fund and not of the assessee company, hence these expenses are not allowable to the assessee company as deduction from income from business , and hence consequently should be disallowed by adding to income of the assessee and brought to income-tax. Further, the Assessing Officer also observed that the assessee has claimed deduction of Rs. 29,02,000/- made on account of shortfall of PF Trust Earning (Interest) which are part of prior period expenses vide schedule 10.1 of the Profit and Loss Account and these expenses are not allowable as deduction from business income and the same ought to be disallowed and added to the income of the assessee and brought to income-tax. The assessee during the course of reassessment proceedings was asked by AO to explain the same. The assessee submitted before the AO during....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ove liability already provided on estimated basis during the financial year 2003-04, It was submitted by assessee before ld. CIT(A) that shortfall of Rs. 96.02 lacs for financial year 2004-05 was provided on estimated basis as the audit of the PF Trust was not completed before the closing of the annual accounts of the assessee company . It was submitted by assessee before ld. CIT(A) that as per Rule 25(v) page 14 of the BPCL Employees PF Rules, if there is any shortfall/deficiency between the interest earning of the trust and interest distributed by the trust to its members as per the Central Government notification, such shortfall/deficiency shall be made good by the company. It was submitted that PF trust is for the employees of the assessee company and in case of any shortfall / deficiency in earning of the PF trust, the same shall be recouped by the assessee company to avoid any ultimate loss to member employees , which was acceptable to the assessee company and hence consequently shortfall was debited to Profit and Loss Account and claimed as business expenditure against income of the assessee. Thus, it was claimed that the aforesaid shortfall/deficiency between interest earne....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (page14 of Rules/ page 43 of paper book). It was submitted by ld. CIT-DR that the AO did not allowed the said deduction as the same were not incurred for business purposes. Our attention was drawn by ld. CIT-DR to the assessment order and appellate order passed by ld. CIT(A). It was submitted that ld. CIT(A) allowed the said deduction u/s 37(1) of the 1961 Act. It was submitted that this amount is part of employers contribution and the amount is to be paid within due date. Our attention was drawn by ld. CIT-DR to provisions of Section 36(1)(iv),36(1)(va) and 43B of the 1961 Act. It was submitted that specific provision of the 1961 Act viz. Section 36(1)(iv) and 36(1)(va) deals with the contribution to PF and hence general provision namely Section 37(1) will not be applicable because once specific provision of the 1961 Act has applicability, it will lead to ouster of applicability of general provision of the Act. The ld. CIT-DR submitted that the assessee is also claiming deduction towards shortfall in PF Trust earnings of the earlier years and the same cannot be allowed as deduction as the same are prior period expenses which cannot be set off against income of the current year un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the liability reflected in the Balance Sheet and hence Section 43B has no applicability. Our attention was drawn by ld. CIT-DR to Annual Report at page 36/Note No. 8 and it was submitted that it was an unascertained liability. It was submitted that it was an old liability and hence the same can not be allowed in this year. It was submitted that it is not clear when the accrual of liability occurred . It was submitted that it is not known when the PF accounts were finalized, and also it was submitted that when the claim was received by PF trust is also not known. 5.4 The ld. Counsel for the assessee rebutted the contentions made by ld. CIT-DR in rejoinder by submitting that the audited accounts of PF Trust for financial year 2003-04 are available and the said accounts were finalized/audited on 25.09.2005, and hence the amounts were claimed in the year under consideration as the accounts for the financial year 2004-05 of the assessee company were finalized on 25.10.2005. 6. We have considered rival contentions and perused the material on record including case laws cited before us. We have observed that the assessee is a PSU and is in the business of manufacturing of Pumps, comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the year under consideration , firstly on account of shortfall of interest earned by PF trust vis-à-vis rates of interest notified by Central Government for PF , amounting to Rs. 29,02,000/- for ay: 2004-05 and secondly an amount of Rs. 96,26,000/- towards shortfall on account of interest earned by PF trust vis-à-vis rates of interest notified by Central Government for PF , for the year under consideration ay: 2005-06. The assessee has claimed that shortfall of interest earned by PF trust for the ay: 2004- 05 was made in this year as the accounts of PF trust was audited on 25.09.2005 and hence it came to know about this liability after audit of the PF trust and hence the shortfall on interest is accounted for in this year. So far as the impugned ay: 2005-06 is concerned, the assessee has claimed that on estimated basis, the liability for shortfall in interest earned on PF trust is accounted for in this year. It is observed that the AO has disallowed the same on the grounds that these are not regular business expenses, while ld. CIT(A) has allowed the same as business expenses u/s 37(1) of the 1961 Act. In our considered view , the applicability of provision of Section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 139(1) of the 1961 Act , while an amount of Rs. 25,05,265/- + 24,91,415/- , aggregating to Rs. 49,96,680/- were not deposited at all before the due date of filing of return of income u/s 139(1) of the 1961 Act and hence the assessee conceded that an amount of Rs. 49,96,680/- is to be disallowed as the said sum of employee contribution received by it towards PF was not at all deposited even prior to the due date of filing of return of income u/s 139(1) . The AO disallowed the entire amount of Rs. 2,32,95,170/- by invoking provisions of Section 36(1)(va) read with Section 2(24)(x) of the 1961 Act, vide reassessment order dated 31.12.2009. 8. Aggrieved by re-assessment framed by the AO , the assessee filed first appeal before learned CIT(A) and submitted as under.:- "The Ld. A.R. for the appellant has submitted as under- "As per clause (1) of Paragraph 38 of Employee's Provident Fund Scheme, 1952, Employee's contribution deducted is to be deposited together with employer's contribution within 15 days of the close of the month. Following the apex court judgment in the case of CIT vs. M/s Alom Extrusions Limited (2009) 319 ITR 306 (SC) and judgment of All....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Out of this, Rs. 2505256/- and Rs. 2491415/- totaling to Rs. 4996680/- were not deposited before filing of return (this has been deposited on 10.01.2006) and this amount of Rs. 4996680 can only be disallowed instead of Rs. 23295170/- as mentioned in the assessment order." Thus, as could be seen from grounds of appeal raised by assessee before ld. CIT(A), out of total disallowance of Rs. 2,32,95,170/- as was made by AO , the assessee has itself conceded that Rs. 49,96,680/- has to be disallowed because the same were not deposited at all before filing of return of income u/s 139(1). Thus, the issue which survives for our consideration is with respect to disallowance of Rs. 1,82,98,490/- made by AO on account of employees contribution received by the assessee from its employees towards PF contribution , which was admittedly deposited late beyond the time prescribed under the PF Act as stipulated u/s 36(1)(va) of the 1961 Act, but was deposited by assessee within due date prescribed for filing of return of income u/s 139(1) of the 1961 Act , and against which relief was granted by ld. CIT(A) vide its decision as reproduced above by following the decision of Hon'ble Allahabad High C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....j Kumar Singh in ITA no. 480 of 2008 , judgment dated 12.03.2012 4. Delhi ITAT decision in the case of DCIT v. M/s Leaseforces Staffing India , in ITA No. 6266 & 6267/Del/2014 , order dated 06.11.2017, (2017) ITAT Delhi 5. Hon'ble Karnataka High Court judgment in the case of Essae Teraoka Private Limited v. DCIT in ITA No. 480/2013 , judgment dated 04.02.2014 Our attentions was also drawn by ld. counsel for the assessee to amendment made by Finance Act, 2021 to provisions of Section 36(1)(va) of the 1961 Act and it was submitted that the said amendment is prospective from ay:2021-22 and subsequent assessment years. 10. We have considered rival contentions and perused the material on record. We have observed that the issue before us is regarding allowability of employees contribution of Rs. 1,82,98,490/- towards PF received by assessee from its employees , but which was deposited by assessee to the credit of employees with PF trust late beyond the time provided under the relevant PF Act , but albeit the same was admittedly deposited within the due date prescribed for filing of return of income u/s 139(1) of the 1961 Act. This issue was subject matter of diffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(A) who was pleased to delete the addition to the income to the tune of Rs. 6,31,788/- made by AO on account of delayed remission of employee's contribution towards EPF to the credit of employee with relevant fund beyond the time prescribed under relevant PF statute but admittedly the said amount stood deposited by assessee to the credit of employee with relevant fund before the due date prescribed for filing of return of income u/s 139(1) of the 1961 Act , by relying on following judicial decision(s) as stipulated hereunder:- 1. CIT v. Alom Extrusions Ltd., in 319 ITR 306(SC) 2. CIT v. Industrial Security and Intelligence India Pvt. Ltd., (Mad) Tax Case Appeal Nos.585 and 586 of 2015 and M.P No.1 of 2015 , dated 24.07.2015 3. ACIT v. M/s.Easun Products of India (P) Ltd., in I.T.A. No. No.182/Mds./2016 , vide order of Chennai Tribunal dated 19.05.2016, for ay: 2012-13. 10.2 Aggrieved by an appellate order dated 30.08.2017 passed by learned CIT(A), the Revenue has now filed an appeal before the tribunal agitating against the decision of learned CIT(A) granting relief to assessee despite specific provision as is contained in Section 36(1)(va) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eturn of income as is prescribed u/s 139(1) of the 1961 Act . Before proceeding further, it will be profitable to reproduce the relevant provisions of the 1961 Act as were applicable for ay: 2013-14, which are reproduced hereunder: "Definitions. 2. In this Act, unless the context otherwise requires,- * * * * * * (24) "income " includes- * * * * * * (x) 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 ;] " "Other deductions. 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- [(va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation.-For the purposes o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- (a) ** * * * * (b) 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 fund for the welfare of employees, [or] [(c)** ** ** 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 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 referred to in clause (a) [or clause (c)] 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: Provided further th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee according to the method of accounting regularly employed by 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. * * * * * * 10.3.4 It is pertinent at this stage to reproduce the decision of Hon'ble Supreme Court in the case of Alom Extrusions Limited (supra) wherein the amendments made by Finance Act, 2003 w.e.f. 01.04.2004 were held to be curative in nature and applicable retrospectively effective from 01.04.1988, which decision of Hon'ble Supreme Court is reproduced hereunder: "6. The lead matter in this batch of civil appeals is CIT v. Alom Extrusions Ltd. [Civil Appeal arising out of S.L.P. (C) No. 23851 of 2007]. Prior to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. This is the reason why every assessee(s) [employer(s)] was entitled to deduction even prior to 1-4-1984, on Mercantile System of Accounting as a business expenditure by making provision in his Books of Account in that regard. In other words, if an assessee(s)-employer(s) is maintaining his books on Accrual System of Accounting, even after collecting the contribution from his employee(s) and even without remitting the amount to the Regional Provident Fund Commissioner [R.P.F.C.], the assessee(s) would be entitled to deduction as business expense by merely making a provision to that effect in his Books of Account. The same situation arose prior to 1st April, 1984, in the context of assessees collecting sales tax and other indirect taxes from their respective customers and claiming deduction only by making provision in their Books without actually remitting the amount to the exchequer. To curb this practice, section 43B was inserted with effect from 1-4-1984, by which the Mercantile System of Accounting with regard to tax, duty and contribution to welfare funds stood discontinued and, under section 43B, it became mandatory for the assessee(s) to account for the afore- stated items ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....titled to deduction only if the contribution stands credited on or before the due date given in the Provident Fund Act. However, the second proviso once again created further difficulties. In many of the companies, financial year ended on 31st March, which did not coincide with the accounting period of R.P.F.C. For example, in many cases, the time to make contribution to R.P.F.C. ended after due date for filing of returns. Therefore, the industry once again made representation to the Ministry of Finance and, taking cognizance of this difficulty, the Parliament inserted one more amendment vide Finance Act, 2003, which, as stated above, came into force with effect from 1-4-2004. In other words, after 1-4- 2004, two changes were made, namely, deletion of the second proviso and further amendment in the first proviso, quoted above. By the Finance Act, 2003, the amendment made in the first proviso equated in terms of the benefit of deduction of tax, duty, cess and fee on the one hand with contributions to Employees' Provident Fund, superannuation fund and other welfare funds on the other. However, the Finance Act, 2003, bringing about this uniformity came into force with effect from ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 1-4-2004, would become curative in nature, hence, it would apply retrospectively with effect from 1-4- 1988. Secondly, it may be noted that, in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677(SC), 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 under the relevant Sales Tax law should be disallowed under section 43B of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed 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 up to 1-4-2004, and who pays the contribution after 1-4-2004, would get the benefit of deduction under section 43B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1-4-1988, when the first proviso was introdu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duction from the income shall be allowed , by holding as under: "4. In some other appeals preferred by the assessees, the ITAT has taken contrary view and upheld the addition made by the Assessing Officers. Under these circumstances, all these appeals were admitted and heard on the following question of law : - "Whether the ITAT was correct in law in deleting the addition relating to employees' contribution towards Provident Fund and ESI made by the Assessing Officer under section 36( 1)(va) of the Income-tax Act, 1961 ?" 5. Section 36 of the Act deals with certain deductions which shall be allowed in respect of matters dealt with therein, in computing the income referred to in section 28 of the Act. Different types of deductions are provided therein in various clauses of section 36. Clause (iv) of sub-section (1) deals with deductions on account of contribution towards a recognized provident fund or an approved superannuation fund made by the assessee as an employer, subject to certain limits and also subject to certain conditions as the CBDT may think fit to specify. Clause (v) of sub-section (1) of section 36 enables the assessee to seek deduction ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 subsection (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] 7. During the period in question with which we are concerned, section 43B contained second proviso also, which stands omitted by the Finance Act, 2003 with effect from 1 - 4-2004. Since, this provision existed at the relevant time, it also needs to be reproduced : - "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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at 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 provident fund 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 provident fund/ESI authorities, it will be taxed as income at the hands of the assessee. However, on making deposit with the concerned authorities, the assessee becomes entitled to deduction under the provisions of section 36(1)(va) of the Act. Section 43B(b), however, stipulates that such deduction would be permissible only on actual payment. This is the scheme of the Act for making an assessee entitled to get deduction from income insofar as employees' contribution is concerned. It is in this backdrop we have to determine as to at what poi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cerned with the law as it stood prior to the amendment of section 43B. In the circumstances the assessee was entitled to claim the benefit in section 43B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return. The special leave petition is dismissed." 13. It is clear from the above that in Vinay Cement Ltd.'s case (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 Ltd.'s case (supra) is applied and followed, it will not be possible to accept the contention of the Revenue. 15. In CIT v. Dharmendra Sharma [2008] 297ITR 320, this Court specifically dealt with this issue and relying upon the aforesaid judgment of the Guwahati High Court, as affirmed by the Supreme Court in Vinay Cement Ltd.'s case (supra), the appeal of the Revenue was dismissed. More detailed discussion ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut 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. v. Union of India [2000] 2 SCC 536 and Rayala Corporation (P.) Ltd. v. Director of Enforcement [1969] 2 SCC 412 and General Finance Co. v. Asstt. CIT [2002] 257 ITR 338 (SC). The said submissions found favour with the Division Bench of the Guwahati High Court and relying on earlier decisions of its own Court in CIT v. Assam Tribune [2002] 253 ITR 93 and CIT v. Bharat Bamboo & Timber Suppliers [1996] 219 ITR 212 the Division Bench dismissed the appeal of the revenue. It transpires that the aforesaid matter was taken up in appeal along with other matters including Vinay Cement Ltd.'s case (supra). The order in Vinay Cement Ltd.'s case (supra) was passed by the Supreme Court on 7-3-2007 wherein it observed as follows:- 'Delay condoned. In the present case we are concerned with the law as it stood prior to the amendment of section 43B. In the circumstances, the assessee was entitled to claim the benefit in section 43B for that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecial leave petition 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's case (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 Ltd. 's case (supra) would bind the High Court as it was not declared by the Supreme Court under article 141 of the Constitution. 12. We are in respectful agreement with the reasoning of the Madras High Court in Nexus Computer (P.) Ltd.'s case (supra). Judicial discipline requires us to follow the view of the Supreme Court in Vinay Cement Ltd.'s case (supra) as also the view of the Division Bench of this Court in Dharmendra Sharma's case (supra). 13. In these circumstances, we respectfully disagree with the approach adopted by a Division Bench of the Bombay High Court in Pamwi Tissues Ltd.'s case (supra). 14. In these circumstances indicated above, we are of the opinion that no substantial question of law arises for our ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively , i.e. , with effect from 1.4.1988 i.e. the date of insertion of first proviso . The Delhi High Court in the case of CIT V. Aimil Ltd. reported in 321 ITR 508 held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003. 6. In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the abovesaid decision, we find no reason to differ with the findings of the Tribunal. Accordingly, we find no question of law much less any substantial question of law arises for consideration in these appeals. Accordingly, both the Tax Case(Appeals) stand dismissed. No Costs. Consequently, M. P. N. 1 of 2015 is also dismissed." 10.3.7 We have also observed that Co-ordinate Division Bench of Chennai Tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....raw the original writ petition namely WP No. 5264 of 2018 as well writ appeal no. 2854 of 2018, vide orders dated 09.01.2019. The Revenue has referred before us during the course of hearing , decision of Hon'ble Madras High Court in the case of Orchid Pharma (supra) , wherein the Hon'ble Madras High Court had noted that the assessee did not appear before tribunal and also it is an order passed by Hon'ble Madras High Court ex- parte in the absence of the tax-payer, wherein no notice was issued to the tax-payer as proceedings were pending against the tax-payer before National Company Law Tribunal as the tax-payer was in liquidation. The Hon'ble Madras High Court observed in the case of Orchid Pharma (supra) that tribunal has decided the issue in favour of tax-payer by relying on decision of Hon'ble Madras High Court in the case of Industrial Security and Intelligence Private Limited (supra). The Revenue brought to the notice of the Hon'ble Madras High Court , decision(s) of Hon'ble Kerala High Court in the case of CIT v. Merchem Limited reported in (2015) 378 ITR 443(Ker.) and also decision in the case of Popular Vehicles and Services Private Limited v. CI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eproduced hereunder: "15. In this manner, the amendment provided by Finance Act, 2003 put on par the benefit of deductions of tax, duty, cess and fee on the one hand with contributions to various Employees' Welfare Funds on the other. All this came up for consideration before the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra). The Tribunal in the case at hand relied upon the said judgment. There is no reason to fault the order passed by the Tribunal. We are of the view that the decision of the Supreme Court in Alom Extrusions Ltd. (supra) applies to employees' contribution as well as employers' contribution. Question Nos.2, 3 & 4 are accordingly answered in favour of the assessee and against the revenue." 10.3.9 The Hon'ble Bombay High Court has consistently held this issue in favour of the tax-payer in its other decisions also such as Geekay Security Services Private Limited v. DCIT reported in (2019) 101 taxmann.com 192(Bom.), CIT v. Hindustan Organics Chemicals Limited (2014) 366 ITR 1(Bom.). The Hon'ble Delhi High Court in AIMIL Limited (supra) held that if employees contribution is not deposited by the due date presc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... specified in PF/ESI Act or other welfare funds , keeping in view provisions of Section 36(1)(va) read with Explanation 1 and Section 2(24)(x) of the 1961 Act. Similarly, Hon'ble Kerala High Court has also decided this issue in favour of Revenue in the case of CIT v. Merchem Limited reported in (2015) 378 ITR 443(Ker. HC) and also in Popular Vehicles and Services Private Limited v. CIT (2018) 406 ITR 150 (Ker.HC). While deciding the appeal in the case of Merchem Limited (supra) in favour of Revenue on this issue, the Hon'ble Kerala High Court held that deduction on account of employees contribution towards PF/ESI can only be allowed if the said amount is deposited to the credit of employee with relevant funds within the due date as prescribed under the statute governing PF/ESI keeping in view provisions of Section 36(1)(va) read with Explanation 1 and provisions of Section 2(24)(x) of the 1961 Act, thus applying strict interpretation and holding that otherwise Section 36(1)(va) read with Explanation 1 will become otiose which was not the intention of legislature. It further went on to hold that the issue before Hon'ble Supreme Court while adjudicating appeal in the case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion distinctly. Sub-clause (v) of Section 36(1) speaks of a gratuity fund, wherein the employee does not contribute at all. Section 36(1)(va) speaks of the employee's contribution to a welfare fund for the benefit of employees alone, by virtue of the specific reference to Section 2 (24). Section 2 (24) includes as income, any contribution received by the employer from the employee for the purpose of remittance to a fund created for the welfare of the employees; including inter alia a provident fund and that under the ESI Act. When the same is remitted on the due date as prescribed in the statute or order creating such fund, then it is eligible for deduction under Section 36. Section 43B(b) refers to "a sum payable by the assessee as an employer", to an employees welfare fund which is the employer's contribution. 9. We have carefully gone through the decisions of the Hon'ble Supreme Court as also of the Division Bench. The primary question to be considered is whether there should be a reconsideration of Merchem Ltd.'s case (supra). Alom Extrusions Ltd.'s case (supra)and Merchem Ltd.'s case (supra) applied in two different fields; the former with refe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....book entry made with respect to an assessee following the mercantile system of accounting, making a provision for the payment of contributions towards EPF and ESI could be claimed as a deduction. By introduction of Section 43B in the Finance Act, 1983, the object was to "disallow deductions claimed merely by making a book entry based on the mercantile system of accounting" (sic - para 16). Section 43B made it mandatory for the department to grant deduction in computing the income under Section 28 in the year in which the tax, duty, cess, etc. were paid. However, the due dates under the various enactments, i.e.; the welfare and tax legislation would not have the due date before the date of filing of return as provided in the Income Tax Act. On account of this the first proviso was introduced to grant a relief by way of deduction insofar as the tax, duties, cess or fee paid before the filing of the return under the IT Act though after the previous year; the liabilities having accrued in that previous year. This relaxation, however, was restricted to tax, duties, cess and fee and not applied to contributions to labour welfare funds. The reason also stated by the Hon'ble Supreme Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accordance with the statute, which created the fund. The 2nd proviso to Section 43B then underwent a cosmetic change and later was deleted. There was also a new proviso added under Section 43B for permitting deduction on contributions paid before the returns are filed. This took in only the employer's contribution especially since Section 2(24) and sub-clause (va) were retained. The employee's contributions, as Merchem Ltd.'s case (supra) noticed, stands on a different footing, since it is collected from the employee as a deduction in their salary itself. This would in effect be income of the assessee, as has been specifically indicated in the definition of "income" under Section 2(24)(x), which provision was introduced w.e.f 01.04.1988 as per Finance Act, 1987. 14. We are of the opinion that the question with respect to employee's contribution is regulated by clause (x) of Section 2(24) and sub-clause (va) of Section 36(1) and would not be affected by Section 43B. Section 43B though a non-obstante clause, makes deductions to be allowable only on actual payment; when such deductions are otherwise allowable. Primarily it is to be noticed that it is a restric....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e proviso thereto only with regard to the portion of the amount paid by the employer to the contributory fund. Such an understanding of Sec. 43B is further exemplified by the phraseology used in the proviso, which reads thus: "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 Subsection (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. " Further, in Explanation 1 to Sec. 43B also, the phraseology used persuade us to think that Sec. 43B can be applied to the contribution payable by the assessee as an employer, which reads thus: "For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hence, in the present case if the employer's contribution under the EPF or ESI for the financial year 2007-08 is paid after the said year but before the date of filing of the return for that year, then necessarily it would be allowable as a deduction in the assessment year, de hors the fact that it was paid in the subsequent year. 18. Sub-clause (va) of Section 36(1) takes care of the employee's contribution, which stands unaffected by Section 43B as the restriction available in Section 43B is already available under the Explanation to the said clause, with a qualification of the payment being before the due date, as stipulated by the statute or order creating the fund. We would also observe that, as the Hon'ble Supreme Court noticed, the legislature took a different approach with respect to the contributions deducted from the salary of the employees which had to be paid to the welfare fund within the due date; as provided under the statute which created the welfare fund. The contributions which are deducted at the time of payment of salary is received by the employer- Company and is treated as income under Section 2(24). On remittance of this contribution, wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the 1961 Act has a heading that certain deductions to be allowed only on actual payment basis and it starts with a non obstante clause that 'notwithstanding anything contained in any other provisions of this Act, a deduction otherwise allowable under this Act in respect of...'. Thus, it stipulates that deduction shall be allowed only on actual payment basis in the year of payment of deduction which otherwise is allowable under the 1961 Act. Thus, if the deduction is not otherwise allowable under the 1961 Act owing to provision in statute, then recourse to Section 43B of the 1961 Act cannot be made at threshold. Section 43B of the 1961 Act creates further embargo on deductions which are otherwise allowable under the provision of the 1961 Act, but owing to Section 43B it can only be allowed only on actual payment basis and not otherwise . Then Section 43B of the 1961 Act , by a proviso stipulates 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 u/s 139(1) of the 1961 Act . So , what is important for entering into provisions of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e case of Commissioner of Customs (Imports) v. Dilip Kumar & Co. reported in (2018) 9 SCC 1 and decision of Hon'ble Supreme Court in the case of Ramnath & Co. v. CIT reported in (2020) 116 taxmann.com 885(SC)(refer para 17 to 20) are relavant . Admittedly , in the instant case the aforesaid sum of Rs. 6,31,788/- being employee contribution towards PF was not deposited by assessee to the credit of employees with PF Funds within due date prescribed under statute governing PF which at threshold was hit by provisions of Section 36(1)(va) read with Explanation 1 and Section 2(24)(x) of the 1961 Act and deduction is not allowable going by strict and literal interpretation of provisions of the statute. Thus, once the deduction is found to be not allowable otherwise under the 1961 Act being hit by infringement of Section 36(1)(va) of the 1961 Act on account of employees share of PF contribution being deposited to the credit of employee with relevant fund by assesseeITA employer beyond the time stipulated as due date under PF Act , there is no question of entering into provisions of Section 43B of the 1961 Act which deals with allowing deduction on payment basis provided the deduction i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with all clarity. This Court noted the enunciations in Wood Paper Ltd. with total approval as could be noticed in the following:- "46. In the judgment of the two learned Judges in Union of India v. Wood Papers Ltd.: [1990] 4 SCC 256 (hereinafter referred to as "Wood Papers Ltd. case", for brevity), a distinction between stage of finding out the eligibility to seek exemption and stage of applying the nature of exemption was made. Relying on the decision in CCE v. Parle Exports (P) Ltd. : [1989] 1 SCC 345, it was held: (Wood Papers Ltd. case, SCC p. 262, para 6) "6. ... Do not extend or widen the ambit at the stage of applicability. But once that hurdle is crossed, construe it liberally." The reasoning for arriving at such conclusion is found in para 4 of Wood Papers Ltd. case, which reads: (SCC p. 260) "4. ... Literally exemption is freedom from liability, tax or duty. Fiscally, it may assume varying shapes, specially, in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective, etc. That is why its construction, unlike charging provision, has to be tes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ility. But once that hurdle is crossed construe it liberally. Since the respondent did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit." 59. The above decision, which is also a decision of a two- Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports case deduced as follows: (Wood Papers Ltd. case, SCC p. 262, para 6) "6. ... Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally." 60. We do not find any strong and compelling reasons to differ, taking a contra vie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exceptions depending upon the settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption. * * * * * * " (emphasis in bold supplied) 17.3. In view of above and with reference to several other decisions, in Dilip Kumar & Co., the Constitution Bench summed up the principles as follows:- "66. To sum up, we answer the reference holding as under: 66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. 66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tax incentives given by the Government to incite or encourage or support any particular activity16. 20. The principles laid down by the Constitution Bench, when applied to incentive provisions like those for deduction, would also be that the burden lies on the assessee to prove its applicability to his case; and if there be any ambiguity in the deduction clause, the same is subject to strict interpretation with the result that the benefit of such ambiguity cannot be claimed by the assessee, rather it would be interpreted in favour of the revenue. In view of the Constitution Bench decision in Dilip Kumar & Co. (supra), the generalised observations in Baby Marine Exports (supra) with reference to a few other decisions, that a tax incentive provision must receive liberal interpretation, cannot be considered to be a sound statement of law; rather the applicable principles would be those enunciated in Wood Papers Ltd. (supra), which have been precisely approved by the Constitution Bench. Thus, at and until the stage of finding out eligibility to claim deduction, the ambit and scope of the provision for the purpose of its applicability cannot be expanded or widened and remains ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....if the same is deposited beyond the time stipulated as due date as prescribed under the provisions of Statute governing PF/ESI Act. Thus, the applicable provision as is contained in Section 36(1)(va) is read down by most of the Constitutional Courts including our Jurisdictional High Court (barring Hon'ble Gujarat High Court and Hon'ble Kerala High Court) to make it workable as otherwise the tax-payer will lose the deduction for ever if the employee contribution is not deposited within due date as prescribed under relevant statute , although the said contribution stood deposited by employer belatedly before the due date for filing of return of income u/s 139(1) of the 1961 Act and the amount will stood brought to tax as income keeping in view provisions of Section 2(24)(x) of the 1961 Act so far employee share of contribution towards PF ,ESI and other employees welfare funds is concerned. No doubt it is well cherished objective that there should not be an unjust enrichment of the employer of the amount which it collects from its employees towards employees share of PF , ESI and other employees welfare funds and in the ideal situation , the said amounts ought to have been dep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....applicable to both employer and employee contribution and thus in case employee contribution towards PF received by employer is deposited to the credit of employees with the PF trust prior to due date of filing of return of income u/s 139(1), the tax-employer shall be entitled for deduction u/s 36(1)(va) read with Section 2(24)(x) and 43B of the 1961 Act. The Hon'ble Jurisdictional High Court has in para 29 has taken a view that the law laid down by Hon'ble High Court of Karnataka , Hon'ble High Court of Rajasthan, Hon'ble High Court of Punjab and Haryana , Hon'ble High Court of Delhi, Hon'ble High Court of Bombay and Hon'ble High Court of Himachal Pradesh have rightly applied Section 43B in respect of both contributions i.e. employers and employees . The Hon'ble Jurisdictional High Court has with great respect dissented with the view taken by Hon'ble Gujarat High Court and Hon'ble High Court of Kerala, which view on the issue was decided by Hon'ble Gujarat High Court and Hon'ble High Court of Kerala in favour of Revenue. It will be relevant to refer at this stage to the Constitution Bench decision of Hon'ble Supreme Court in the case of Commissioner of Customs (Imports) v. Dil....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court noted the enunciations in Wood Paper Ltd. with total approval as could be noticed in the following:- "46. In the judgment of the two learned Judges in Union of India v. Wood Papers Ltd.: [1990] 4 SCC 256 (hereinafter referred to as "Wood Papers Ltd. case", for brevity), a distinction between stage of finding out the eligibility to seek exemption and stage of applying the nature of exemption was made. Relying on the decision in CCE v. Parle Exports (P) Ltd. : [1989] 1 SCC 345, it was held: (Wood Papers Ltd. case, SCC p. 262, para 6) "6. ... Do not extend or widen the ambit at the stage of applicability. But once that hurdle is crossed, construe it liberally." The reasoning for arriving at such conclusion is found in para 4 of Wood Papers Ltd. case, which reads: (SCC p. 260) "4. ... Literally exemption is freedom from liability, tax or duty. Fiscally, it may assume varying shapes, specially, in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective, etc. That is why its construction, unlike charging provision, has to be tested on different touch....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... crossed construe it liberally. Since the respondent did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit." 59. The above decision, which is also a decision of a two- Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports case deduced as follows: (Wood Papers Ltd. case, SCC p. 262, para 6) "6. ... Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally." 60. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the noncompliance of which would not affect the essence or substance of the notification granting exemption. * * * * * * " (emphasis in bold supplied) 17.3. In view of above and with reference to several other decisions, in Dilip Kumar & Co., the Constitution Bench summed up the principles as follows:- "66. To sum up, we answer the reference holding as under: 66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. 66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overnment to incite or encourage or support any particular activity^16. 20. The principles laid down by the Constitution Bench, when applied to incentive provisions like those for deduction, would also be that the burden lies on the assessee to prove its applicability to his case; and if there be any ambiguity in the deduction clause, the same is subject to strict interpretation with the result that the benefit of such ambiguity cannot be claimed by the assessee, rather it would be interpreted in favour of the revenue. In view of the Constitution Bench decision in Dilip Kumar & Co. (supra), the generalised observations in Baby Marine Exports (supra) with reference to a few other decisions, that a tax incentive provision must receive liberal interpretation, cannot be considered to be a sound statement of law; rather the applicable principles would be those enunciated in Wood Papers Ltd. (supra), which have been precisely approved by the Constitution Bench. Thus, at and until the stage of finding out eligibility to claim deduction, the ambit and scope of the provision for the purpose of its applicability cannot be expanded or widened and remains subject to strict interpretat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tipulated as due date as prescribed under the provisions of Statute governing PF/ESI Act. The Hon'ble jurisdictional High Court in the case of Sagun Foundry Private Limited v. CIT, Kanpur in ITA No. 87 of 2006, vide judgment dated 21.12.2016 has decided this issue in favour of the tax-payer, by holding that Section 43B is applicable to both employer and employee contribution and thus in case employee contribution towards PF received by employer is deposited to the credit of employees with the PF trust prior to due date of filing of return of income u/s 139(1), the tax-employer shall be entitled for deduction u/s 36(1)(va) read with Section 2(24)(x) and 43B of the 1961 Act. The Hon'ble Jurisdictional High Court has in para 29 has taken a view that the law laid down by Hon'ble High Court of Karnataka , Hon'ble High Court of Rajasthan, Hon'ble High Court of Punjab and Haryana , Hon'ble High Court of Delhi, Hon'ble High Court of Bombay and Hon'ble High Court of Himachal Pradesh have rightly applied Section 43B in respect of both contributions i.e. employers and employees . The Hon'ble Jurisdictional High Court has with great respect dissented with the view taken by Hon'ble Gujarat High....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nance Act, 2021, wherein Explanation 5 was inserted , which reads as under: "43B**** **** Explanation5- For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply and shall be deemed never to have been applied to a sum received by the assesse from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 applied." Although, on perusal of the above amendment by Finance Act, 2021 , it transpires that the said explanation was inserted by way of removal of doubt to clarify the law as existed on the statute so far as employee contribution received by employer from employee which is to be deposited to the credit of employee with PF fund on or before the due date as provided in statute governing PF, to enable the employer to claim deduction u/s 36(1)(va) of the 1961 Act read with Section 2(24)(x) of the Act, and no deduction shall be allowed by virtue of Section 43B in case of delayed deposit beyond the time stipulated for deposit under relevant statute governing PF by virtue of being hit by Section u/s 36(1)(va) of the Act as it is stated in the explanation that provisions of section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e are presently concerned with ay: 2005-06. The relevant clause to Memorandum to Finance Bill , 2021 is reproduced hereunder: "Rationalisation of various Provisions Payment by employer of employee contribution to a fund on or before due date Clause (24) of section 2 of the Act provides an inclusive definition of the income. Sub-clause (x) to the said clause provide that income to include any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employees. Section 36 of the Act pertains to the other deductions. Sub-section (1) of the said section provides for various deductions allowed while computing the income under the head "Profits and gains of business or profession'. Clause (va) of the said sub-section provides for deduction of any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on to the said clause to clarify that the provision of section 43B does not apply and deemed to never have been applied for the purposes of determining the ―due date‖ under this clause; and (ii) amend section 43B of the Act by inserting Explanation 5 to the said section to clarify that the provisions of the said section do not apply and deemed to never have been applied to a sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 applies. These amendments will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years. [Clauses 8 and 9]" We have also noted that Hyderabad Bench(SMC Bench) of tribunal has decided this issue in favour of tax-payer in the case of Salzgitter Hydraulics Private Limited v. ITO reported in (2021) 128 taxmann.com 192(Hyd. Trib.) after considering the amendment made in Section 36(1)(va) and 43B by Finance Act, 2021, by holding as under: "2. Coming to the sole substantive issue of ESI/PF disallowance of Rs. 1,09,343/- and Rs. 3,52,622/-, the assessee's and revenue's stand is that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing PF , but the same stood deposited to the credit of employees with relevant fund before the due date for filing of return of income as prescribed u/s 139(1) of the 1961 Act. The assesse has , however, itself conceded that the assesse has not deposited Rs. 49,96,680/- received towards employee contribution to PF before the due date for filing of return of income u/s 139(1) of the 1961 Act and hence the said amount was rightly disallowed by authorities below. The Revenue fails on this issue for the reasons cited above . We order accordingly. 11. In the result, the appeal filed by Revenue in ITA no. 147/Alld/2016, for ay: 2005- 06 stood partly allowed for statistical purposes. We order accordingly. ITA no. 148/Alld/2016 for the Assessment Year: 2007-08 12. The grounds of appeals raised by Revenue in memo of appeal filed with the tribunal in ITA No. 148/Alld/2016 for ay : 2007-08, reads as under :- "1. That the ld. CIT (A) has erred on facts and in law in deleting the addition of Rs. 1,47,36,408/- made by the A.O. on account of estimated undisclosed investment in fixed deposits corresponding to the admitted interest income of Rs. 9,65,908/-, as the source of invest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he F.Y 2006-07, total interest receipts was Rs. 73.93 lacs. Out of which, we have already provided evidences of interest receipt amounting to Rs. 64.27 lacs which includes interest received from Andhra bank for the financial year 2007-08 amounting to Rs. 2.08 lacs. Hence, net interest pertaining to the current year i.e. F.Y. 2006-08 amounts to Rs. 62.19 lacs, for which we have already provided evidences during the assessment proceedings. We have provided interest amounting to Rs. 0.90 lacs on interest bearing security deposits with UPSEB for which no evidence is being provided by UPSEB. Considering the above mentioned facts, summary of interest receipts during the year, supported by evidences, are as under: Particulars Amount (in lacs) Interest receipt as per assessment under 64.27 Less: interest for F.Y. 2007-08 consider in assessment order 2.08 Sub Total 62.19 Add: Interest received from Canara Bank 10.49 Add: Interest received from Andhra Bank 0.35 Sub Total 73.03 Add: Provision of interest accrued on Electricity security Deposit 0.90 Total Interest Income 73.93 Further, not a single case of interest bearing deposit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alling for remand report/comments from AO. So far as second addition which was deleted by ld. CIT(A), the ld. CIT-DR submitted that ld. CIT(A) has restored the matter to the file of Assessing Officer to reconcile the difference in Form No. 26AS and the amount credited in the P&L Account amounting to Rs. 1,16,62,230/- and only addition to the tune of Rs. 11,61,000/- was confirmed by ld. CIT(A). The ld. Counsel for the assessee supported the appellate order passed by ld. CIT(A). 15. We have considered rival contentions and perused the material on record. We have observed that the Assessing Officer has made addition on account of income from undisclosed sources of deposits/ investments to the tune of Rs. 1,47,36,408/- based on yield @8% on unexplained interest income to the tune of Rs. 9,65,908/- against which no evidences of interest bearing investments/deposits could be produced by the assessee and also taking into effect other differences in disclosed investment/deposits. The assessee filed reconciliation statement before ld. CIT(A) to explain the difference which was accepted by ld CIT(A) and the additions to the tune of Rs. 1,47,36,408/- were deleted by ld. CIT(A), but, howeve....