TaxTMI 
TaxTMI 
2022 (2) TMI 1217
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue. This appeal is taken as the lead appeal. It is admitted position that the adjudication in this appeal would equally apply to all the other bunched appeals also. 2. Though the assessee has raised multiple grounds of appeal, however, Ld. AR (appearing for assessee) has submitted that all the grounds including legal grounds, except for grounds on merits, are not being pressed in the appeal. Accordingly, all these ground stands dismissed as not pressed. The Ld. AR also made a statement at bar that though there was late remittance of ESI and PF dues under the relevant statutes, however, the dues were remitted by the assessee well before due date of filing of return of income u/s 139(1). The Ld. AR submitted that the issue, on merits, is covered by various decisions of Hon'ble High Courts. The same has briefly been referred before us during the course of hearing. It was also submitted that the amendment made in Sec.36(1)(va) as well as in Sec.43B by Finance Act, 2021 would have prospective application only as held by the coordinate bench of this Tribunal in recent decision titled as Adyar Anand Bhawan Sweets India Pvt. Ltd. V/s ACIT (134 Taxmann.com 56; 08.12.2021). 3.1 The Ld. J....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... inserted which start with the expression "for the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the 'due date' under this clause". The Ld. DR submitted that the wordings like 'for the removal of doubts', "provisions of section 43B shall not apply ", "shall be deemed never to have been applied for the purposes of determining the 'due date' under this clause" would unambiguously clarify that the 'due date' as mentioned under Section 43B was never intended to have been applied for determining the 'due date' under the provisions of Section 36(l)(va). 3.3 The Ld. DR submitted that the cited decision of the Tribunal has completely ignored this legislative intent as well as the use of language in the explanation introduced and simply concluded that the clarificatory explanation introduced into the section would cause undue hardship to the assessee if held to be effective retrospectively. The same reasoning is based on the assumption that there was an ambiguity in the interpretation of law or the language usage in the law and hence, the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gislature and if strict literal construction leads to an absurd result, i.e., a result not intended to be sub served by the object of the legislation found in the manner indicated before, then if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction." For the afore-stated reasons, we hold that Finance Act, 2003, to the extent indicated above, is curative in nature, hence, it is retrospective and it would operate with effect from 1st April, 1988 [when the first proviso came to be inserted]. Relying on the same, Ld. DR submitted that the cited decision of Tribunal fails to address as to how the language used by the legislature could be implemented prospectively. It failed to appreciate that the stringent provision of section 36(1)(va) was introduced by the legislation to protect the interest of crores of low-paid salaried employees being explo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are funds, though treated as income u/s 2(24)(x), would be allowed as deduction u/s 36(1)(va) provided the same is remitted to the concerned funds before due date as specified in statute governing those funds. Any payment made beyond that date would result into denial of deduction to the assessee. 5. We find that even though the provisions of Sec.43B only covers the Employer's contribution and not employees' contribution, still the higher courts have held that the provisions of Sec.43B would be applicable to employees' contribution as well. In other words, if the employees' contribution has been paid by the assessee before due date of filing of return of income as per Sec.139(1), the deduction would still be available to the assessee notwithstanding the fact that the payment was made beyond the due date as per the applicable Acts & Rules governing the welfare funds. 6. One of such case is the decision of Hon'ble Karnataka High Court in the case of Essae Teraoka (P.) Ltd. (43 Taxmann.com 33: 04.02.2014). In this decision, the Hon'ble Court distinguished the case law of Hon'ble Gujarat High Court in the case of CIT V/s Gujarat State Road Transport Corpn. (41 Taxmann.com 100; 26.1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word 'contribution' used in clause (b) of section 43B means the contribution of the employer as well as the contribution of the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income u/s 139(1), the employer is entitled for deduction. 7. Similar is the ratio of decision of Hon'ble Rajasthan High Court in the case of Pr. CIT V/s Rajasthan State Beverages Corpn. Ltd. (84 Taxmann.com 173; 04.08.2016) which followed the earlier decision in CIT V/s State Bank of Bikaner & Jaipur (43 Taxmann.com 411; 06.01.2014). The Hon'ble Court, in the case of CIT V/s State Bank of Bikaner & Jaipur (supra) held that the provisions of Sec.43B starts with a notwithstanding clause & would thus override Sec.36(1)(va) and if read in isolation, Sec. 43B would become obsolete. The Hon'ble Court further held that these provisions were brought i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rat State Road Transport Corpn. (supra). In these cases, the view of Hon'ble Courts is that the provisions of Sec.36(1)(va) and Sec.43B operate differently and therefore, any late remittance of Employees' Contribution beyond due date as specified in relevant statutes governing those funds, would result into denial of deduction to the assessee in terms of Sec.36(1)(va) r.w.s. 2(24)(x). 10. So far as the decision of jurisdictional High Court of Madras is concerned, the coordinate bench of Hon'ble Court has rendered similar decision favoring assessee in CIT v. Industrial Security & Intelligence India (P.) Ltd. [TCA No. 585 of 2015, dated 24-7-2015] and held as under: - 5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, whereby, the Supreme Court held that omission of second proviso to Section 43B and 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. Amil Ltd. reported in 321 ITR 508 held that if the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hon'ble Rajasthan High Court favoring assessee has already been dismissed by Hon'ble Supreme Court (para-8), we are inclined to take a view favoring the assessee. Accordingly, we would hold that the provisions of Sec.43B would override the provisions of Sec.36(1)(va) and accordingly, the employees' contribution as paid by the assessee before due date of filing of return u/s 139(1) would still be an allowable deduction notwithstanding the fact that the payment was made beyond due date as specified in the relevant statute governing those welfare funds. 12. So far as the effect of amendment brought in by Finance Act, 2021 is concerned, we find that Finance Act, 2021 has proposed amendment to Sec.36(1)(va) and Sec.43B to clarify the position that Sec.43B would never apply to such contributions. For the same, an explanation-2 has been inserted in Sec. 36(1)(va) which state that Section 43B would not apply and is presumed never to have been applied to establish the due date under this sub-section. Similarly, Explanation-5 has been inserted to Section 43B to explain that the rules of that section do not apply and are never regarded to have applied to any funds received by the assessee f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts which are usually relied upon by appellants to advance the proposition that the provisions of section 43B encompass within its scope the employees' Contribution as well and therefore any such contribution though not remitted by the employer within due date specified by the PF/ESI Acts, will still be permissible deduction if the same is actually paid in pursuance of sec. 43B. The CIT(A) further noted the decisions in favour of assessee in para 7.7, and the same are as under: 1. CIT v. Alom Extrusions Ltd. [2009] 185 Taxman 416/319 ITR 306 (SC) 2. Aimil Ltd. (supra) 3. CIT v. Nispo Polyfabriks [2013] 350 ITR 327/213 Taxman 376/30 taxmann.com 90 (HP); 4. CIT v. Alembic Glass Industries Ltd. [2015] 279 ITR 331/149 Taxman 15 (Guj.); 5. CIT v. Sabari Enterprises [2008] 298 ITR 141 (Kar); 6. CIT v. Pamwi Tissues Ltd. [2009] 313 ITR 137 (Bom.); 7. Spectrum Consultants India (P.) Ltd. v. CIT [2013] 34 taxmann.com 20/215 Taxman 597 (Kar.); 8. CIT v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. [2013] 35 taxmann.com 616/217 Taxman 64 (Mag.)/[2014] 366 ITR 163 (Raj.) and 9. CIT v. Hemla Embroidery Mills (P.) Ltd. [2013] 37 taxmann.com 160/217 Taxman 207 (Mag.)/[....