AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 1224
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....1391/Del/2021, 1320/Del/2021, 1208/Del/2021, 895/Del/2021, 1487/Del/2021, 1490/Del/2021, 1520/Del/2021 1538/Del/2021, 1624/Del/2021, 1631/Del/2021, 1644/Del/2021, 1651/Del/2021, 1701/Del/2021, 1702/Del/2021, 1202/Del/2021, 1288/Del/2021, 1291/Del/2021, 1388/Del/2021, 1420/Del/2021, 1433/Del/2021, 1445/Del/2021 1485/Del/2021, 1486/Del/2021, 1900/Del/2021, 1899/Del/2021, 1896/Del/2021, 1917/Del/2021, 1982/Del/2021, 1994/Del/2021 2017/Del/2021, 2024/Del/2021, 1918/Del/2021, 1935/Del/2021, 1954/Del/2021, 1979/Del/2021, 1712/Del/2021, 1714/Del/2021, 1717/Del/2021 1722/Del/2021, 1723/Del/2021, 1724/Del/2021, 1758/Del/2021, 1770/Del/2021, 1771/Del/2021 1825/Del/2021, 1517/Del/2021, 1542/Del/2021, 1666/Del/2021, 1665/Del/2021, 1695/Del/2021, 1696/Del/2021, 1729/Del/2021, 1732/Del/2021 1745/Del/2021, 1755/Del/2021, 1761/Del/2021, 1999/Del/2021 Sh. Saktijit Dey, Judicial Member and Dr. B. R. R. Kumar, Accountant Member Revenue by : Shri Umesh Takyar, Sr. DR ORDER Per Dr. B. R. R. Kumar, Accountant Member: All these appeals deals with the issue of allowability of contribution received from Employees towards ESI and EPF. 2. The solitary ground is directed against the disallowance of "....
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....gainst the assessee based on the judgments of Hon'ble High Court of Delhi in the case of CIT Vs. Bharat Hotels Ltd. 410 ITR 417. * Order of ITAT, Delhi in the case of Vedvan Consultants Pvt. Ltd. Vs. DCIT in ITA No. 1312/Del/2020 dated 26.08.2021 wherein the issue has been ruled against the assessee based on the judgments of Hon'ble Madras High Court, Hon'ble Bombay High Court and Hon'ble Kerala High Court. The said orders are examined which are as under: MADRAS HIGH COURT : October 23, 2018 M/S. UNIFAC MANAGEMENT SERVICES (INDIA) PRIVATE LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATION CIRCLE 3 (2) , CHENNAI The scope of Section 43B and Section 36(1)(va) are different and thus, there is no question of reading both provisions together to consider as to whether the assessee is entitled to deduction in respect of the sum belatedly paid towards such contribution, especially when such sum is, admittedly, a sum received by the assessee/employer from his employee. Therefore, for considering such question, application of Section 36(1)(va) r.w.s. 2(24)(x) alone is the proper course and any other interpretation would only defeat the object and scope of both the provis....
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....der section 139(1). Held, yes - assessee State Transport Corporation collected a sum being Provident Fund contribution from its employees. However, it had deposited lesser sum in Provident Fund account. Assessing Officer disallowed same under section 43B. However, Commissioner (Appeals) deleted disallowance on ground that employee's contribution was deposited before filing return. Whether since assessee had not deposited said contribution in respective fund account on date as prescribed in explanation to section 36(1)(va), disallowance made by Assessing Officer as just and proper." 9. Similarly, the judgments of Hon'ble High Court of Delhi in the case of CIT Vs. Bharat Hotels Ltd. 410 ITR 417 held that the amounts were not allowable u/s 36(1)(va). The relevant portion is as under: "7. The issue here concerns the interplay of Section 2(24)(x) of the Act read with Section 36(1)(va) of the Act alongside provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (especially Regulation 38 of the Employees' Provident Funds Scheme, 1952) and the provisions of the Employees' State Insurance Act, 1948. The AO had brought to tax amounts which were deducted by the ....
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....ing provisions and notifications. We also clarify that the assessee would be entitled to deduction in terms of Section 36(1)(va) of the Act." 10. We have also examined the decision of the Hon'ble Allahabad High Court in the case of Sagun Foundry Pvt. Ltd. Vs CIT 145 DTR 265 wherein it was held that as the payments have been made before the due date specified u/s 139(1) and as such are fully allowable. The Hon'ble High Court of Allahabad has considered the case of Gujarat State Road Transport Corporation and held as under: "17. We find that with respect to employees contribution to Provident Fund, as to whether disallowable or not with reference to Section 36(1)(va) read with Section 43B, a similar question came up for consideration before Gujarat High Court in Commissioner of Income-Tax v. Gujarat State Road Transport Corporation, (2014) 366 ITR 170. Therein Assessee collected Rs. 51,06,02,712/- from its employees towards provident fund contribution but deposited Rs. 21,16,61,582/- with provident fund trust. Thus there was a short fall of Rs. 24,89,41,130/-. This amount of short fall was treated by Assessing Officer as income of Assessee vide Section 2(24)(x) read with Section ....
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....rned fund. Court also noticed that Section 43B is ¡n respect to certain deductions and applies only on actual payment. It held that amendment was made by deletion of Second Proviso of Section 43B only, but no corresponding amendment was made under Section 36(1)(va). It said: "It is required to be noted that as such there is no amendment in Section 36(1)(va) and even the Explanation to Section 36(1) (va) is not deleted and is still on the statute and is required to be complied with. Merely because with respect to the employers contribution the second proviso to Section 438 which provided that even with respect to the employers contribution (Section 43B(b)), the Assessee was required to credit the amount in the relevant fund under the PF 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) has been deleted and/or amended." 19. That is how Gujarat High Court held that Section 43B would not be attracted in a case where dispute relates to employees contribution only. Section 438 would be confined only to employers contribution. It further said: "Therefore, with respect to t....
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....as not made by appellant in accordance with the provisions of Section 36(1)(va) of Act 1961." The Assessees counsel relied on earlier judgment of Karnataka High Court in Commissioner of Income-Tax v. Spectrum Consultants P. Ltd., (2014) 2 ITROL 622 while counsel for Revenue attempted to pursue to take a different view following decision of Gujarat High Court. The Division Bench judgment delivered by Honble Dilip B. Bhosale, (as his lordship then was) held, if the contribution of employees fund is deposited within due date the Assessee is straightaway entitled for deduction under Section 36(1)(va). However Section 43B provides for certain deductions allowable only on actual payment. It gives an extension to the employer to make payment of contribution to provident fund or any other fund, till due date applicable for furnishing of Return under Section 139(1) of Act 1961, in respect of previous year in which liability to pay such sum was incurred, and evidence of such payment is furnished by Assessee along with such Return. Court then said: "In short, this provision states, notwithstanding anything contained in any other provision contained in this Act, a deduction otherwise allowab....
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....ourt considered the intent, purpose and object in the historical back drop of insertion of Section 438 and its progress by way of various amendments. Referring Section 2(24)(x) it said, income is defined under Section 2(24) which includes profits and gains. Further in clause (x) of Section 2(24) any sum received by Assessee from employees as contributions to any provident fund/superannuation fund or any fund set up under Act 1948, or any other fund for welfare of such employees constitute income. This is the reason why every Assessee/Employer was entitled to deduction even prior to April, 1, 1984, keeping books on mercantile system of accounting, as a business expenditure, by making provision ¡n his books of account in that regard. Assessee was capable of keeping money with him and just by mentioning in accounts, was able to claim deduction as business expenses. Section 43B was inserted to check this practise and it resulted in discontinuing mercantile system of accounting with regard to tax, contributions etc. With induction of Section 43B an Assessee could claim deduction on actual payment basis. By Finance Act, 1988 Parliament inserted first proviso w.e.f. 01.04.1988 which....
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....he result when contribution had been paid, prior to filing of return under Section 139(1), Assessee/employer would be entitled for deduction and since deletion of Second Proviso and amendment of First Proviso is curative and apply retrospectively w.e.f. 01.04.1988. 28. From the aforesaid judgment, we find that irrespective of the fact that deduction in respect of sum payable by employer contribution was involved, but Court did not restrict observations, findings and declaration of law to that context but looking to the objective and purpose of insertion of Section 43B applied it to both the contributions. It also observed clearly that Section 43B is with a non-obstante clause and therefore over ride even if, anything otherwise is contained in Section 36 or any provision of Act 1961. 29. Therefore, we are clearly of the view that law laid down by High Courts of Karnataka, Rajasthan, Punjab and Haryana, Delhi, Bombay and Himachal Pradesh have rightly applied Section 43B in respect to both contributions i.e. employer and employee. Otherwise view taken by Gujarat High Court and followed by Kerala High Court, with great respect, we find expedient to dissent therewith." 11. Thus, we....
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....observed that when an order is passed by a higher authority, the lower authority is bound thereby keeping in view the principles of judicial discipline. 17. The High Courts are Court of record under Article 215 of the Constitution. By virtue of the provisions of Article 227, the High Courts have power of superintendence over all Courts and tribunals in their respective jurisdiction. Thus, it is implied that all Courts and Tribunals in the respective State will be bound by the decisions of the High Court. 18. In order to have fixity, finality and conclusiveness of the judicial proceedings, the 'precedents' have a remarkable role in the formation of judicial opinions, judicial orders and dispensation of justice. The concept of "Stare decisis et non quieta movere", which translates as 'to stand by things decided and not disturb settled points'. The doctrine of stare decisis, or binding precedent, is the principle by which judges are bound by decisions of superior courts. The principal abet in predictability, uniformity and judicial fairness. 19. We have also given considerable thought to the words of the Hon'ble Judges of the Supreme Court in the case of Distributors (Baroda) Pvt. ....
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....posit with some delays, subject to the aforesaid consequences. Insofar as the Income-tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Hon'ble Supreme Court in the case of Vinay Cement Ltd. 26. The brief facts of such case are as under: "2. The case relates to the assessment year 2002-03. The had filed its return on 30-10-2002 7,95,430. During the assessment Officer (AO) found that the assessee contribution as well as employees' dent fund and ESI after the due date, relevant Act/Rules. Accordingly, Rs. 42,58,574 being employees' contribution of the Act and Rs. 30,68,583 being under section 43B of the Act. Felt assessment order, the assessee preferred who decided the same vide orders dated 15-7-2005. Though the CIT(A) accepted the contention of the assessee that if the payment is made before the due date of filing of return, no disallowance could be made in view of the provisions of section 43B, as amended vide Finance Act, 2003, he still confirmed the addition made by the Assessing Officer on the ground that no documentary proof was given to support that payment was in fact made ....
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....me before Hon'ble Supreme Court in the case of CIT v. Vinay Cement Ltd. which was a special leave petition filed by the department against the High Court Order of 26th June, 2006 in ITA No. 2/05 and ITA No. 56/03 and ITA No. 80/03 of the High Court of Guwahati, Assam and it is order dated 7th March, 2007. A copy of the said order is placed on record. The observations of their Lordships on the issue are as under .- 'In the present case we are concerned with the law as ¡t 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 ¡s dismissed." 29. Thus, we find that the Co-ordinate bench of ITAT and Hon'ble Jurisdictional high Court of Delhi have relied on judgment of Vinay Cements Ltd. (supra). 30. Further, the Hon'ble Jurisdictional High Court of Delhi in the case of PCIT Vs. Pro Interactive Services (India) Pvt. Ltd. in ITA 983/2018 dated 10.09.2018 while dismissing the appeal of the Revenue held that "the legislative intent was/is to ensure that the....
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....ce Bill, 2021. Under the head "Provision relating to Direct Taxes" with to rationalization of various provisions, the issue of clause (24) of Section 2 sub-clause (x), Section 36(1) clause (va), Section 435 with regard to provisions of sub-Section (1) of Section 139 have been dealt at length. The gist is as under: "Rationalization of various Provisions Payment by employer of employee contribution to a fund on ':Dr 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 claus....