CIT, FARIDABAD V. M/S LAKHANI INDIA LTD. FARIDABAD

ITA/325/2009

AI Insights

The case revolves around the dispute concerning the deductibility of provident fund contributions made by M/s Lakhani India Ltd. to its employees, which were paid beyond the prescribed due dates. The Income Tax Department challenged the decision of the Income Tax Appellate Tribunal, which had upheld the CIT(A)'s decision allowing the deductions. The Tribunal's decision was based on the interpretation of relevant sections of the Income Tax Act, 1961, particularly Section 43B, and the grace period provisions under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The High Court of Punjab and Haryana dismissed the appeal, agreeing with the lower authorities' interpretations and applications of the law.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 720684 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 16-11-2009
• Assessment Year: misc
• Other Referred Cases: CIT vs. Pamwi Tissues Limited, CIT v. Selan Spg. Mills Ltd., Commissioner of Income Tax v. George Williamson (Assam) Ltd., Commissioner of Income Tax v. Dharmendra Sharma
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Due dates; Employees Contribution; Employer's contribution; Provident fund; Tax Deduction
• Section: 43B; 260A; 2(24)(x); 36(va)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.325 of 2009 (O&M) Date of decision: 16.11.2009 Commissioner of Income Tax -----Appellant Vs. M/s Lakhani India Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present:- Ms. Urvashi Dhugga, Standing Counsel for the revenue. ----- ORDER: 1. The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 3.10.2008 of the Income Tax Appellate Tribunal, Chandigarh Bench ‘D’ in I.T.A. No.2860/DEL/2007 for the assessment year 2003-04, proposing to raise following substantial question of law:- “I. Whether, on the facts and in the circumstances of the case, the Ld. ITAT is right in law in upholding the order of the Ld. CIT(A) in deleting the addition of Rs.69,10,329/- made by the Assessing Officer, inter alia, on account of employees’ contribution to PF & EC, ITA No.325 of 2009 disregarding the fact that the payments were made beyond the due dates and were to be treated as Income u/s 2(24)x) as they were not allowable u/s 36(va) of the Income Tax Act, 1961 in contravention of the decision in the case of CIT vs. Pamwi Tissues Limited 215 CTR 150 (Bom.)?” II. “Whether, on the facts and in the circumstances of the case, the Ld. ITAT is right in law in upholding the order of the Ld. CIT(A) in deleting the addition of Rs.69,89,302/- made by the Assessing Officer on account of employer’s contribution to PF, EPF & EPF without appreciating the fact that payments were not made by the assessee within the prescribed “due dates” by which the assessee was required to make payments in contravention of the decision in the case of CIT vs. Pamwi Tissues Limited 215 CTR 150 (Bom.)?” 2. The assessee claimed deduction in respect of payment of contribution towards provident fund, which was disallowed on the ground that payment was beyond the stipulated date. The CIT(A) upheld that claim of the assessee by referring to explanation to Section 43B, read with Explanation to Section 36(1) (va) and Section 2(24)(x) of the Act with further observation that the payment was within the due date, as per circular issued under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. This view has been upheld by the Tribunal. 2 ITA No.325 of 2009 3. We have heard learned counsel for the appellant who submits that the payment having been made beyond the due date, could not be allowed as deduction in view of judgment of Bombay High Court in CIT v. Pamwi Tissues Limited 215 CTR 150. 4. We are unable to accept the submission. Observations of the Tribunal in the regard are as under:- “..... We find that all the payments were made by the assessee within grace period of five days allowed under the PF Act and hence we are of the considered opinion that no interference is called for in the order of Ld CIT(A) because this addition was deleted by the Ld CIT(A) by following the judgment of Hon’ble Madras High Court rendered in the case of CIT v. Selan Spg. Mills Ltd. As reported 258 ITR 360 wherein it has been held that PF contribution paid within the grace period are deductible.” 5. Learned counsel for the appellant submitted that there was no power to condone the delay and in such situation, payment made beyond stipulated period could not be taken into account. Reliance has been placed on judgment of the Orissa High Court in Roland Education and Charitable Trust v. Chief Commissioner of Income Tax and others (2009)309 ITR 50, wherein in absence of power of condonation of delay, entertaining of application under Section 10(23C)(vi) was held not to be maintainable beyond stipulated period. 3 ITA No.325 of 2009 6. This submission has no merit. It is not a case of condonation of delay for entertaining application beyond stipulated period, but taking into account the payment made to meet the liability which had accrued, consistent with the provisions of Section 43B of the Act. View of the Tribunal is consistent with the view of judgment of Gauhati High Court in Commissioner of Income Tax v. George Williamson (Assam) Ltd. [2006] 284 ITR 619 against which SLP was dismissed and which was followed in judgment of Delhi High Court in Commissioner of Income Tax v. Dharmendra Sharma. [2008] 297 ITR 320 with which we respectfully agree. No substantial question of law arises. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE November 16, 2009 ( GURDEV SINGH ) ashwani JUDGE 4 "