TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 1045
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.... 143(3) of the Act dated 31/08/2017, by which some disallowance of expenses have been made and income of the Assessee was assessed at Rs. 69,85,470/- Later on, ld. Pr.CIT while perusing the record, noticed that employees contributions to the Provident Fund (PF) to the tune of Rs. 1,34,401/- were not paid as per the due dates prescribed in the Provident Fund Act, 1925. Consequently, ld. Pr.CIT issued show-cause notice dated 27/08/2019 In response to the said notice, the Assessee while relying upon the orders passed by the co-ordinate bench of the tribunal in the case of DCIT Vs. EPDCL of AP Ltd. (ITA No. 609/VIZ/2014), ACIT Vs. UFC Pvt. Ltd. (ITA No. 484/VIZ/2018) and ACIT Vs. Arinana David Raj (ITA No. 285/VIZ/2019), has claimed that if the employees contribution qua PF has been deposited on or before the due date of filing of return u/sec. 139(1) of the Act, then no disallowance is attracted. The ld. Pr.CIT did not accept the claim of the Assessee and without taking into consideration the judgments in favour of the Assessee, held the assessment order dated 31/08/2017 as erroneous and prejudicial to the interest of the revenue and accordingly directed the AO to make the addition ....
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....ns of section 36(1)(va) of the Act, if the same is paid on or before the due date specified under the provident fund Act. The A.O. further was of the opinion that in view of the clear provisions of section 2(24)(x) r.w.s. 36(1)(va) of the Act, any recovery from employees towards provident fund contribution is deemed to be income of the assessee, if the employer not paid the same to the provident fund account of the employee within due date specified under the provisions of PF Act. It is the contention of the assessee that second proviso to section 43B of the Act provides that no deduction shall be allowed unless such sum is actually been paid on or before due date as specified in explanation to 36(1)(va) of the Act which was omitted by the Finance Act, 2003 w.e.f. 1.4.2004 and accordingly, there was no special provision regarding employees' contribution to PF. It is further contended that as per the amended provisions of section 43B of the Act, any sum payable by the assessee as an employer by way of contribution to PF shall be allowed, if the same is paid on or before the due date of filing of return of income u/s 139(1) of the Act. 6. The only issue to be resolved is whether th....
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....llowed only on actual payment basis. Sub clause (b) of section 43B of the Act covers 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 the employees. The proviso to section provides that any sum paid by the assessee on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made under the provisions of section 43B of the Act. A careful consideration of section 43B of the Act, it is clear that an extension is granted to the assessee to make the payment of PF contributions or any other fund till the due date of furnishing return of income u/s 139(1) of the Act. Therefore, in our opinion, there is no difference between employees and employer contribution to PF and if such contribution is made on or before the due date of furnishing return of income u/s 139(1) of the Act, then deduction is to be allowed under the provisions of section 43B of the Act. 8. The Hon'ble Karnataka High Court, in the case of Essae Teraoka (P) Ltd. Vs. DCIT 366 ITR 408 took the view that the word contribution occurring in section 43B of the Ac....
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....s prescribed in explanation to section 36(1)(va) of the Act, disallowance made by the A.O. was just and proper. Though, the D.R. relied upon certain judicial precedents which are in favour of the revenue, in view of the decision of Hon'ble Supreme Court, in the case of CIT Vs. M/s. Vegetables Products Ltd. reported in 88 ITR 192, wherein the Hon'ble Supreme Court held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted, therefore, by respectfully following the decision of Supreme Court, when divergent views are expressed by different judicial forums, we prefer to follow the views expressed by the Courts which are in favour of the assessee. 10. Considering the facts and circumstances of this case and also following the judicial precedents as discussed above, we are of the view that there is no distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees' contribution to provident fund. The CIT(A) after considering the relevant ....