2008 (5) TMI 275

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...., whereby the appeal of the respondent/assessee, was partly allowed. 2. Heard learned counsel for the parties. 3. Brief facts of the case are that assessment in the present case of the respondent/assessee, M/s Desh Rakshak Aushdhalaya Ltd., Kankhal, Haridwar, was completed under section 143(3) of the Income-tax Act, 1961, on October 16, 2000, in which the Assessing Officer (hereinafter referred as "the AO") has made addition of Rs. 2,98,924 as per the provisions of section 2(24) of the Act, on account of delay in depositing the said amount relation to the employees' contribution towards provident fund/employees' provident fund by the employer into the credit of the Central Government account, and denied deduction under section 43B of the ....

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....oper to mention here, the relevant provision of law applicable to the case. Clause (b) of section 43B of the Income-tax Act, 1961, and its second proviso (now deleted), provide as under: "43B. Certain deductions to be only on actual payment. - Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of-... (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 the employees, or..... 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 emp....

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....ue dates under the enactment under which the same were realised from employees and required to be deposited so that that the employer may not earn interest, etc., in his own account and deprive the Government of the same. However, later the Legislature appears to have realized that whenever such amount is deposited under the Government treasury, in any case it cannot be said to be taxable income of the employer/assessee, and has to be deducted. That might be the reason due to which the Legislature omit„Æd the aforementioned second proviso to section 43B through the Finance Act, 2003, which came into force with effect from April 1, 2003. 7. Now, the question before this court is whether, the deletion of the second proviso, made by the Fi....