Shore to Shore Merchandise Identification, CHENNAI V. ACIT, CHENNAI

ITA 1247/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64161 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAJAGOPAL JT
• Assessee Lawyers: K SARAVANAN
• Keywords: Business income; Business expenditure; Question of law
• Section: 43B; 260A; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI , ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ] I.T.A.NO. 1247/MDS/2012 ASSESSMENT YEAR : 2008 - 09 M/S SHORE TO SHORE MERCHANDISE IDENTIFICATION SYSTEMS PVT. LTD A1 D, INDUSTRIAL COMPLEX ANNA SALAI, MARAIMALAI NAGAR CHENNAI 603 209 VS THE ACIT COMPANY CIRCLE VI(2) CHENNAI ( APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. SARAVANAN, CA RESPONDENT BY : SHRI K. RAJAGOPAL JT. CIT DATE OF HEARING : 03 - 09 - 2012 DATE OF PRONOUNCEMENT : 05 - 09 - 2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - V, CHENNAI, DATED 29.3.2012. 2 . THE A.R OF THE ASSESSEE SUBMITTED THAT THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL WAS THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN DISALLOWING ` 11,96,198/ - U/S 36(1)(VA) OF THE ACT WITHOUT APPRECIATING T HAT THE I.T.A.NO. 1247/12 : - 2 - : EMPLOYEE S CONTRIBUTION TO ESI AND EPF W AS DEPOSIT ED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME BY THE ASSESSEE. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DISALLOWED DEDUCTION FOR EMPLOYEE S CONTRIBUTION TO ESI AND EPF AMOUNTING TO ` 11,96,198/ - AS THE SAME WAS NOT PAID WITHIN THE DUE DATE PRESCRIBED UNDER THE RESPECTIVE ACTS. 4 . ON APPEAL BEFORE THE CIT(A), THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS VINAY CEMENT LTD, [2009] 31 3 ITR (ST.)1, THE HON'BLE MADRAS HIGH COURT S DECISION IN THE CASE OF CIT VS NEXUS COMPUTER P. LTD, [2009]313 ITR 144(MAD) AND THE HON'BLE DELHI HIGH COURT S DECISION IN THE CASE OF CIT VS P.M. ELECTRONICS LTD, [2009] 313 ITR 161(DELHI) AND SUBMITTED THAT IT HAS BEEN HELD THAT WHERE THE EMPLOYEES CONTRIBUTION TO ESI AND PF WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) BY THE ASSESSEE , THEN THE SAME WAS ALLOWABLE DEDUCTION TO THE ASSESSEE. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY FOLLOWING THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS BENGAL CHEMICALS & PHARMACEUTICALS LTD, IN I.T.A.NO. 1255/KOL/2010, WHERE IT WAS HELD THAT ASSESSEE WAS NOT ENTITLED TO DEDUCTION IN RESPECT OF EMP LOYEES CONTRIBUTION TO PF PAID AFTER THE DUE DATE SPECIFIED IN EXPLANATION TO SECTION 36(1)(VA) OF THE ACT. I.T.A.NO. 1247/12 : - 3 - : 5 . BEFORE US, T HE A.R OF THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE CIT(A) WHEREAS THE DR SUPPORTED THE ORDER OF THE CIT(A). 6 . WE HAVE HE ARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER DISALLOWED DEDUCTION FOR EMPLOYEES CONTRIBUTION MADE TO ESI AND E PF AMOUNTING TO ` 11,96,198/ - AS TH E SAME WAS NOT DEPOSITED BY THE ASSESSEE WITHIN THE DUE DATE PRESCRIBED UNDER THE RESPECTIVE ACTS. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOLLOWING THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS BENGAL CHEMICA LS & PHARMACEUTICALS LTD. 7 . WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD, [2009]319 ITR 306(SC) HAS HELD AS UNDER: PRIOR TO THE FINANCE ACT, 2003, THE SECOND PROVISO TO SECTION 43B OF THE INCOME - TAX ACT, 1961 (FOR SHORT, ' THE ACT' ) RESTRICTED THE DEDUCTION IN RESPECT OF ANY SUM PAYABLE BY AN EMPLOYER BY WAY OF CONTRIBUTION TO PROVIDENT FUND/SUPERANNUATION FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES, UNLESS IT STOOD PAID WITHIN THE SPECIFIED DUE DATE. ACCORDING TO THE SECOND PROVISO, THE PAYMENT MADE BY THE EMPLOYER TOWARDS CONTRI - BUTION TO PROVIDENT FUND OR ANY OTHER WELFARE FUND WAS ALLOWABLE AS DEDUCTION, IF PAID BEFORE THE DATE FOR FILING THE RETURN OF INCOME AND NECESSARY EVIDENCE OF SUCH PAYMENT WAS ENCLOSED WITH THE RETURN OF INCOME. IN OTHER WORDS, IF CONTRIBUTION STOOD PAID AFTER THE DATE FOR FILING OF THE RETURN, IT STOOD DISALLOWED. THIS RESULTED IN GREAT HARDSHIP TO THE EMPLOYERS. THEY REPRESENTED TO THE GOVERNMENT ABOUT THEIR HARDSHIP AND, CONSEQUENTLY, PURSUANT TO THE REPORT OF THE KELKAR COMMITTEE, THE GOVERNMENT INTRODUCED THE FINANCE ACT, 2003, BY WHICH THE SECOND PRO - VISO STOOD DELETED WITH EFFECT FROM APRIL 1, 2004, AND CERTAIN CHANGES WERE ALSO MADE IN THE FIRST PROVISO BY WHICH UNIFORMITY WAS BRO UGHT ABOUT BETWEEN PAYMENT OF FEES, TAXES, CESS, ETC., ON ONE HAND AND CONTRIBUTION MADE TO THE EMPLOYEES' PROVIDENT FUND, ETC., ON THE OTHER. I.T.A.NO. 1247/12 : - 4 - : ACCORDING TO THE DEPARTMENT, THE OMISSION OF THE SECOND PROVISO GIVING RELIEF TO THE ASSESSEE(S) (EMPLOYER(S)) OPERATED ONLY WITH EFFECT FROM APRIL 1, 2004, WHEREAS, ACCORDING TO THE ASSESSEE(S) - EMPLOYER(S), THE SAID FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, OPERATED WITH EFFECT FROM APRIL 1, 1988 (RETROSPECTIVELY). THE LEAD MATTER IN THIS BATCH OF CIVIL A PPEALS IS CIT V. ALOM EXTRUSIONS LTD. (CIVIL APPEAL ARISING OUT OF S. L. P. (C) NO. 23851 OF 2007). PRIOR TO THE AMENDMENT OF SECTION 43B OF THE ACT, VIDE THE FINANCE ACT, 2003, THE TWO PROVISOS TO SECTION 43B OF THE ACT READ AS UNDER : ' PROVIDED THAT N OTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM REFERRED TO IN CLAUSE (A) OR CLAUSE (C) OR CLAUSE (D) OR CLAUSE (E) OR CLAUSE (F), WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING TH E RETURN OF INCOME UNDER SUB7F SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN : PROVIDED FURT HER THAT NO DEDUCTION SHALL, IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAU SE (VA) OF SUB - SECTION (1) OF SECTION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE OTHERWISE THAN IN CASH, THE SUM HAS BEEN REALISED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' BY THE FINANCE ACT, 2003, THE SECOND PROVISO TO SECTION 43B OF THE ACT NOT ONLY GOT DE LETED BUT THE SAID FINANCE ACT, 2003, ALSO AMENDED THE FIRST PROVISO WITH EFFECT FROM THE ASSESSMENT YEAR 2004 - 05. WE QUOTE HEREIN - BELOW THE FIRST PROVISO TO SECTION 43B OF THE ACT, AFTER ITS AMENDMENT BY THE FINANCE ACT, 2003, WHICH READS AS UNDER : ' PR OVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB7F SECTION (1) OF SECTION 139 IN RESPECT O F THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN.' TO ANSWER THE ABOVE CONTROVERSY, WE NEED TO UNDERSTAND THE SCHEME OF THE INCOME - TA X ACT, 1961, AS IT EXISTED PRIOR TO APRIL 1, 1984, AND AS IT STOOD AFTER APRIL 1, 1984. ' INCOME' HAS BEEN DEFINED UNDER SECTION 2(24) OF THE ACT TO INCLUDE PROFITS AND GAINS. UNDER SECTION 2(24)(X), ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND/SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE EMPLOYEES' STATE INSURANCE ACT, 1948, OR ANY OTHER FUND FOR WELFARE OF SUCH EMPLOYEES CONSTITUTED INCOME. THIS IS THE REASON WHY EVERY ASSESSEE(S) (EMPLOYER(S)) WAS ENTI TLED TO DEDUCTION EVEN PRIOR TO APRIL I.T.A.NO. 1247/12 : - 5 - : 1, 1984, ON THE MERCANTILE SYSTEM OF ACCOUNTING AS A BUSINESS EXPENDITURE BY MAKING PROVISION IN HIS BOOKS OF ACCOUNT IN THAT REGARD. IN OTHER WORDS, IF AN ASSESSEE(S) - EMPLOYER(S) IS MAINTAINING HIS BOOKS ON THE ACCRUA L SYSTEM OF ACCOUNTING, EVEN AFTER COLLECTING THE CONTRIBUTION FROM HIS EMPLOYEE(S) AND EVEN WITHOUT REMITTING THE AMOUNT TO THE REGIONAL PROVIDENT FUND COMMISSIONER (RPFC), THE ASSESSEE(S) WOULD BE ENTITLED TO DEDUCTION AS BUSINESS EXPENSE BY MERELY MAKI NG A PROVISION TO THAT EFFECT IN HIS BOOKS OF ACCOUNT. THE SAME SITUATION AROSE PRIOR TO APRIL 1, 1984, IN THE CONTEXT OF ASSESSEES COLLECTING SALES TAX AND OTHER INDIRECT TAXES FROM THEIR RESPECTIVE CUSTOMERS AND CLAIMING DEDUCTION ONLY BY MAKING PROVISIO N IN THEIR BOOKS WITHOUT ACTUALLY REMITTING THE AMOUNT TO THE EXCHEQUER. TO CURB THIS PRACTICE, SECTION 43B WAS INSERTED WITH EFFECT FROM APRIL 1, 1984, BY WHICH THE MERCANTILE SYSTEM OF ACCOUNT - ING WITH REGARD TO TAX, DUTY AND CONTRIBUTION TO WELFARE FUND S STOOD DIS - CONTINUED AND, UNDER SECTION 43B, IT BECAME MANDATORY FOR THE ASSESSEE(S) TO ACCOUNT FOR THE AFORESTATED ITEMS NOT ON MERCANTILE BASIS BUT ON CASH BASIS. THIS SITUATION CONTINUED BETWEEN APRIL 1, 1984, AND APRIL 1, 1988, WHEN PARLIAMENT AMENDED SECTION 43B AND INSERTED THE FIRST PROVISO TO SECTION 43B. BY THIS FIRST PROVISO, IT WAS, INTER ALIA, LAID DOWN, IN THE CONTEXT OF ANY SUM PAYABLE BY THE ASSESSEE(S) BY WAY OF TAX, DUTY, CESS OR FEE, THAT IF AN ASSESSEE(S) PAYS SUCH TAX, DUTY, CESS OR FEE EVEN AFTER THE CLOSING OF THE ACCOUNTING YEAR BUT BEFORE THE DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT, THE ASSESSEE(S) WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 43B ON ACTUAL PAYMENT BASIS AND SUCH DEDUCTION WOULD BE ADMIS SIBLE FOR THE ACCOUNTING YEAR. THIS PROVISO, HOWEVER, DID NOT APPLY TO THE CONTRIBUTION MADE BY THE ASSESSEE(S) TO THE LABOUR WELFARE FUNDS. TO THIS EFFECT, THE FIRST PROVISO STOOD INTRODUCED WITH EFFECT FROM APRIL 1, 1988. VIDE THE FINANCE ACT, 1988, THE SECOND PROVISO CAME TO BE INSERTED. IT READS AS FOLLOWS : ' PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH SUM HAS ACTUALLY BEEN PAID DURING THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB - SECTION (1) OF SECTION 36.' AT THIS STAGE, WE ALSO QUOTE HEREINBELOW THE EXPLANATION BELOW CLAUSE (VA) OF SUB - SECTION (1) OF SECTION 36 : ' EXPLANATION. - FOR THE PURPOSES OF THIS CLAUSE, ` DUE DATE' ME ANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEE' S CONTRIBUTION TO THE EMPLOYEE' S ACCOUNT IN THE RELEVANT FUND UNDER ANY ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE.' HOWEVER, THE SECOND PROVISO STOOD FURTHER AMENDED, VIDE THE FINANCE ACT, 1989, WITH EFFECT FROM APRIL 1, 1989, WHICH READS AS UNDER : ' PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) I.T.A.NO. 1247/12 : - 6 - : OF SUB - SECTION (1) OF SECTION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE OT HERWISE THAN IN CASH, THE SUM HAS BEEN REALISED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' ON READING THE ABOVE PROVISIONS, IT BECOMES CLEAR THAT THE ASSESSEE(S) - EMPLOYER(S) WOULD BE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STANDS CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PROVIDENT FUND ACT. HOW - EVER, THE SECOND PROVISO ONCE AGAIN CREATED FURTHER DIFFICULTIES. IN MANY OF THE COMPANIES, THE FINANCIAL YEAR ENDED ON MARCH 31, WHICH DID NOT COIN - CIDE WITH THE ACCOUNTING PERIOD OF THE R. P. F. C. FOR E XAMPLE, IN MANY CASES, THE TIME TO MAKE CONTRIBUTION TO THE R. P. F. C. ENDED AFTER THE DUE DATE FOR FILING OF RETURNS. THEREFORE, THE INDUSTRY ONCE AGAIN MADE REPRE - SENTATION TO THE MINISTRY OF FINANCE AND TAKING COGNISANCE OF THIS DIFFICULTY, PARLIAMENT INSERTED ONE MORE AMENDMENT, VIDE FINANCE ACT, 2003, WHICH, AS STATED ABOVE, CAME INTO FORCE WITH EFFECT FROM APRIL 1, 2004. IN OTHER WORDS, AFTER APRIL 1, 2004, TWO CHANGES WERE MADE, NAMELY, DELETION OF THE SECOND PROVISO AND FURTHER AMENDMENT IN THE FIR ST PROVISO, QUOTED ABOVE. BY THE FINANCE ACT, 2003, THE AMENDMENT MADE IN THE FIRST PROVISO EQUATED IN TERMS OF THE BENEFIT OF DEDUCTION OF TAX, DUTY, CESS AND FEE ON THE ONE HAND WITH CONTRIBUTIONS TO THE EMPLOYEES' PROVIDENT FUND, SUPERANNUA - TION FUND A ND OTHER WELFARE FUNDS ON THE OTHER. HOWEVER, THE FINANCE ACT, 2003, BRINGING ABOUT THIS UNIFORMITY CAME INTO FORCE WITH EFFECT FROM APRIL 1, 2004. THEREFORE, THE ARGUMENT OF THE ASSESSEE(S) IS THAT THE FINANCE ACT, 2003, WAS CURATIVE IN NATURE, IT WAS NOT AMENDATORY AND, THEREFORE, IT APPLIED RETROSPECTIVELY FROM APRIL 1, 1988, WHEREAS THE ARGUMENT OF THE DEPARTMENT WAS THAT THE FINANCE ACT, 2003, WAS AMENDATORY AND IT APPLIED PROSPECTIVELY, PARTICULARLY WHEN PARLIAMENT HAD EXPRESSLY MADE THE FINANCE ACT, 2003, APPLICABLE ONLY WITH EFFECT FROM APRIL 1, 2004. IT WAS ALSO ARGUED ON BEHALF OF THE DEPARTMENT THAT EVEN BETWEEN APRIL 1, 1988, AND APRIL 1, 2004, PARLIAMENT HAD MAINTAINED A CLEAR DICHOTOMY BETWEEN PAY - MENT OF TAX, DUTY, CESS OR FEE ON ONE HAND AND PAYMENT OF CONTRIBUTIONS TO THE WELFARE FUNDS ON THE OTHER. ACCORDING TO THE DEPARTMENT, THAT DICHOTOMY CONTINUED UP TO APRIL 1, 2004, HENCE, LOOKING TO THIS ASPECT, PARLIAMENT CONSCIOUSLY KEPT THAT DICHOTOMY ALIVE UP TO APRIL 1, 2004, BY MAKING THE FINANC E ACT, 2003, COME INTO FORCE ONLY WITH EFFECT FROM APRIL 1, 2004. HENCE, ACCORDING TO THE DEPARTMENT, THE FINANCE ACT, 2003, SHOULD BE READ AS AMENDATORY AND NOT AS CURATIVE (RETROSPECTIVE) WITH EFFECT FROM APRIL 1, 1988. WE FIND NO MERIT IN THESE CIVIL A PPEALS FILED BY THE DEPARTMENT FOR THE FOLLOWING REASONS : FIRSTLY, AS STATED ABOVE, SECTION 43B (MAIN SECTION), WHICH STOOD INSERTED BY THE FINANCE ACT, 1983, WITH EFFECT FROM APRIL 1, 1984, EXPRESSLY COMMENCES WITH A NON OBSTANTE CLAUSE, THE UNDERLYING O BJECT BEING TO DISALLOW DEDUCTIONS CLAIMED MERELY BY MAKING A BOOK ENTRY BASED ON THE MERCANTILE SYSTEM OF ACCOUNTING. AT THE SAME TIME, SECTION 43B (MAIN SECTION) MADE IT MANDATORY FOR THE DEPARTMENT TO GRANT DEDUC - TION IN COMPUTING THE INCOME UNDER SECT ION 28 IN THE YEAR IN WHICH TAX, DUTY, CESS, ETC., IS ACTUALLY PAID. HOWEVER, PARLIAMENT TOOK COGNISANCE OF THE FACT THAT THE ACCOUNTING YEAR OF A COMPANY DID NOT ALWAYS TALLY WITH THE DUE DATES UNDER THE PROVIDENT FUND ACT, MUNICIPAL CORPORATION ACT (OCTR OI) AND OTHER TAX LAWS. THEREFORE, BY WAY OF THE FIRST PROVISO, AN INCEN - TIVE/RELAXATION WAS SOUGHT TO BE GIVEN IN RESPECT OF TAX, DUTY, CESS OR FEE BY EXPLICITLY I.T.A.NO. 1247/12 : - 7 - : STATING THAT IF SUCH TAX, DUTY, CESS OR FEE IS PAID BEFORE THE DATE OF FILING OF THE RETURN U NDER THE INCOME - TAX ACT (DUE DATE), THE ASSESSEE(S) THEN WOULD BE ENTITLED TO DEDUCTION. HOWEVER, THIS RELAXATION/INCENTIVE WAS RESTRICTED ONLY TO TAX, DUTY, CESS AND FEE. IT DID NOT APPLY TO CONTRI - BUTIONS TO LABOUR WELFARE FUNDS. THE REASON APPEARS TO BE THAT THE EMPLOYER(S) SHOULD NOT SIT ON THE COLLECTED CONTRIBUTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTFUL BENEFITS UNDER SOCIAL WELFARE LEGISLATIONS BY DELAY - ING PAYMENT OF CONTRIBUTIONS TO THE WELFARE FUNDS. HOWEVER, AS STATED ABOVE, THE SECOND PROVISO RESULTED IN IMPLEMENTATION PROBLEMS, WHICH HAVE BEEN MENTIONED HEREINABOVE, AND WHICH RESULTED IN THE ENACTMENT OF THE FINANCE ACT, 2003, DELETING THE SECOND PROVISO AND BRINGING ABOUT UNIFORMITY IN THE FIRST PROVISO BY EQUATING TAX, DUTY, CESS, AND FEE WI TH CON - TRIBUTIONS TO WELFARE FUNDS. ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PROVISO, THEN, IN OUR VIEW, THE FINANCE ACT, 2003, WHICH IS MADE APPLI - CABLE BY PARLIAMENT ONLY WITH EFFECT FROM APRIL 1, 2004, WOULD BECOME CURATIVE IN NATURE, HENCE, I T WOULD APPLY, RETROSPECTIVELY, WITH EFFECT FROM APRIL 1, 1988. SECONDLY, IT MAY BE NOTED THAT, IN THE CASE OF ALLIED MOTORS P. LTD. V. CIT REPORTED IN [1997] 224 ITR 677 (SC), THE SCHEME OF SECTION 43B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUE STION WHICH AROSE FOR DETERMINATION WAS, WHETHER SALES TAX COLLECTED BY THE ASSESSEE AND PAID AFTER THE END OF THE RELEVANT PREVIOUS YEAR BUT WITHIN THE TIME ALLOWED UNDER THE RELEVANT SALES TAX LAW SHOULD BE DISALLOWED UNDER SECTION 43B OF THE ACT WHILE C OMPUTING THE BUSINESS INCOME OF THE PREVIOUS YEAR ? THAT WAS A CASE WHICH RELATED TO THE ASSESSMENT YEAR 1984 - 85. THE RELEVANT ACCOUNTING PERIOD ENDED ON JUNE 30, 1983. THE INCOME - TAX OFFICER DIS - ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE WHICH WAS ON A CCOUNT OF SALES TAX COLLECTED BY THE ASSESSEE FOR THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEAR. THE DEDUCTION WAS DISALLOWED UNDER SECTION 43B WHICH, AS STATED ABOVE, WAS INSERTED WITH EFFECT FROM APRIL 1, 1984. IT IS ALSO RELEVANT TO NOTE THAT THE FI RST PROVISO WHICH CAME INTO FORCE WITH EFFECT FROM APRIL 1, 1988, WAS NOT ON THE STATUTE BOOK WHEN THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIED MOTORS P. LTD. [1997] 224 ITR 677. HOW - EVER, THE ASSESSEE CONTENDED THAT EVEN THOUGH THE FIRST PROVISO CAME T O BE INSERTED WITH EFFECT FROM APRIL 1, 1988, IT WAS ENTITLED TO THE BENEFIT OF THAT PROVISO BECAUSE IT OPERATED RETROSPECTIVELY FROM APRIL 1, 1984, WHEN SEC - TION 43B STOOD INSERTED. THIS IS HOW THE QUESTION OF RETROSPECTIVITY AROSE IN ALLIED MOTORS P. LTD . [1997] 224 ITR 677. THIS COURT, IN ALLIED MOTORS P. LTD. [1997] 224 ITR 677 HELD THAT WHEN A PROVISO IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND WHICH PRO VISO IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTER - PRETATION, IT COULD BE READ AS RETROSPECTIVE IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. ACCORDINGLY, THIS COURT, IN ALLIED MOTORS P. LTD. [1997] 2 24 ITR 677, HELD THAT THE FIRST PROVISO WAS CURATIVE IN NATURE, HENCE, RETROSPECTIVE IN OPERATION WITH EFFECT FROM APRIL 1, 1988. IT IS IMPOR - TANT TO NOTE ONCE AGAIN THAT, BY THE FINANCE ACT, 2003, NOT ONLY THE SECOND PROVISO IS DELETED BUT EVEN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRINGING ABOUT UNIFORMITY IN TAX, DUTY, CESS AND FEE ON THE ONE HAND, VIS - A - VIS CONTRIBUTIONS TO WELFARE FUNDS OF EMPLOYEE(S) ON THE OTHER. THIS IS ONE MORE REASON WHY WE HOLD THAT THE FINANCE ACT, 2003, IS RETROSPECTIVE IN OPERATION. MOREOVER, THE JUDGMENT IN ALLIED MOTORS P. LTD. (SUPRA) IS DELIVERED BY A BENCH OF THREE LEARNED JUDGES, WHICH IS BINDING ON US. ACCORDINGLY, I.T.A.NO. 1247/12 : - 8 - : WE HOLD THAT THE FINANCE ACT, 2003, WILL OPERATE RETROSPEC - TIVELY WITH EFFECT FROM APRIL 1, 1988 (WH EN THE FIRST PROVISO STOOD INSERTED). LASTLY, WE MAY POINT OUT THE HARDSHIP AND THE INVIDIOUS DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSEE(S) IF THE CONTENTION OF THE DEPART - MENT IS TO BE ACCEPTED THAT THE FINANCE ACT, 2003, TO THE ABOVE EXTENT, OP ERATED PROSPECTIVELY. TAKE AN EXAMPLE - IN THE PRESENT CASE, THE RESPONDENTS HAVE DEPOSITED THE CONTRIBUTIONS WITH THE R. P. F. C. AFTER MARCH, 31 (END OF THE ACCOUNTING YEAR) BUT BEFORE FILING OF THE RETURNS UNDER THE INCOME - TAX ACT AND THE DATE OF PAYMENT FALLS AFTER THE DUE DATE UNDER THE EMPLOYEES' PROVIDENT FUND ACT, THEY WILL BE DENIED DEDUCTION FOR ALL TIMES. IN VIEW OF THE SECOND PROVISO, WHICH STOOD ON THE STATUTE BOOK AT THE RELEVANT TIME, EACH OF SUCH ASSESSEE(S) WOULD NOT BE ENTITLED TO DEDUCTION UNDER SECTION 43B OF THE ACT FOR ALL TIMES. THEY WOULD LOSE THE BENEFIT OF DEDUCTION EVEN IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE CON - TRIBUTIONS TO THE WELFARE FUNDS, WHEREAS A DEFAULTER, WHO FAILS TO PAY THE CONTRIBUTION TO THE WELFARE FUND RIGHT UP TO APRIL 1, 2004, AND WHO PAYS THE CONTRIBUTION AFTER APRIL 1, 2004, WOULD GET THE BENEFIT OF DEDUCTION UNDER SECTION 43B OF THE ACT. IN OUR VIEW, THEREFORE, THE FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, SHOULD BE READ AS RETROSPECTIVE. IT WOUL D, THEREFORE, OPERATE FROM APRIL 1, 1988, WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE THAT PARLIAMENT HAS EXPLICITLY STATED THAT THE FINANCE ACT, 2003, WILL OPERATE WITH EFFECT FROM APRIL 1, 2004. HOWEVER, THE MATTER BEFORE US INVOLVES THE PRINCI PLE OF CONSTRUCTION TO BE PLACED ON THE PROVISIONS OF THE FINANCE ACT, 2003. BEFORE CONCLUDING, WE EXTRACT HEREINBELOW THE RELEVANT OBSERVATIONS OF THIS COURT IN THE CASE OF CIT V. J. H. GOTLA REPORTED IN [1985] 156 ITR 323, WHICH READS AS UNDER (PAG E 339) : ' . . . WE SHOULD FIND OUT THE INTENTION FROM THE LANGUAGE USED BY THE LEGISLATURE AND IF STRICT LITERAL CONSTRUCTION LEADS TO AN ABSURD RESULT, I.E., A RESULT NOT INTENDED TO BE SUBSERVED BY THE OBJECT OF THE LEGISLATION FOUND IN THE MANNER INDICATED BEFORE, THEN IF ANOTHER CON - STRUCTION 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 T HAT 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 AFORESTATED REASONS, WE HOLD THAT THE FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, IS CURATIVE IN NATURE, HENCE, IT IS RETROSPECTIVE AND IT WOULD OPERATE WITH EFFECT FROM APRIL 1, 1988 (WHEN THE FIRST PROVISO CAME TO BE INSERTED). FOR THE ABOVE REASONS, WE FIND NO MERIT IN THIS BATCH OF CIVIL APPEALS FILED BY THE DEP ARTMENT WHICH ARE HEREBY DISMISSED WITH NO ORDER AS TO COSTS. CIVIL APPEAL NO. 7755 OF 2009 AT S. L. P. (C). NO. 20581 OF 2008 AND CIVIL APPEAL NO. 7757 OF 2009 AT S. L. P. (C). NO. 18380 OF 2009 : LEAVE GRANTED. IN VIEW OF OUR JUDGMENT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. (CIVIL APPEAL ARISING OUT OF S. L. P. (C). NO. 23851 OF 2007), WE SET ASIDE THE IMPUGNED JUDGMENT AND ORDER OF THE BOMBAY HIGH COURT AND ALLOW THESE CIVIL APPEALS FILED BY THE ASSESSEES WITH NO ORDER AS TO COSTS. I.T.A.NO. 1247/12 : - 9 - : 8 . FURTHER, WE FIND THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS P.M. ELECTRONICS LTD [2009] 313 ITR 161(DELHI), HAS HELD AS UNDER: THIS IS AN APPEAL UNDER SECTION 260A OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO IN SHORT AS ' THE ACT' ), AGAINS T THE JUDGMENT DATED AUGUST 12, 2005 IN I. T. A. NO. 1585/DELHI/2002 IN RESPECT OF THE ASSESSMENT YEAR 1998 - 99. THE ONLY ISSUE WHICH ARISES FOR CONSIDERATION IS THE ALLOWABILITY OF DEDUCTION UNDER SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) AND SECTIO N 43B TO THE ASSESSEE IN RESPECT OF EMPLOYER` S/EMPLOYEES` CONTRIBUTIONS TOWARDS PROVIDENT FUND PAYMENTS WHICH WERE MADE AFTER THE DUE DATE PRESCRIBED UNDER THE EMPLOYEES` PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952, AND THE RULES MADE THE REUNDER BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139. THE REVENUE BEING AGGRIEVED BY THE IMPUGNED JUDGMENT ON ACCOUNT OF THE FACT THAT THE TRIBUNAL, BASED ON ITS OWN DECISION IN THE CASE OF ADDL. CIT V. V ESTAS RRB (INDIA) LTD. [2005] 275 ITR (AT) 81 (DELHI) ; [2005] 92 ITD 1 DELHI, HAS TAKEN THE VIEW THAT THE AMENDMENT BROUGHT ABOUT IN SEC - TION 43B BY VIRTUE OF THE FINANCE ACT, 2003, WAS CURATIVE IN NATURE AND HENCE APPLICABLE RETROSPECTIVELY. IN OTHER WORDS, THE TRIBUNAL HELD THAT THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION IN RESPECT OF SUCH PAYMENTS MADE BEFORE THE DUE DATE OF FILING OF RETURN. THE REVENUE HAS CONTESTED THIS POSITION BEFORE US. TOWARDS THIS END, THE REVENUE HAS PROPOSED THE FOLLO WING QUESTIONS OF LAW WHICH, ACCORDING TO THEM, ARE SUBSTANTIAL QUES TIONS OF LAW : ' (A) WHETHER AMOUNTS PAID ON ACCOUNT OF PF/ESI AFTER `DUE DATE` ARE ALLOWABLE IN VIEW OF SECTION 43B READ WITH SECTION 36(1)(VA) OF THE ACT ? (B) WHETHER THE DELETION OF THE SECOND PROVISO TO SECTION 43B BY WAY OF AMENDMENT BY THE FINANCE ACT, 2003, IS RETROSPECTIVE IN NATURE ?' IN ORDER TO ADJUDICATE UPON THE PRESENT APPEAL, THE FOLLOWING FACTS REQUIRE TO BE NOTED. ON NOVEMBER 27, 1998, THE ASSESSEE HAD FILED A RETURN OF INCOME DECLAR - ING A LOSS OF RS. 8,92,888. ON MAY 11, 1999, THE RETURN WAS PROCESSED UNDER SECTION 143(1)(B) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRU - TINY. ACCORDINGLY, A NOTICE DATED SEPTEMBER 27, 1999, UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE AND ON EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE WITH RESPECT TO PRO - VIDENT FUND PAYMENTS MADE BOTH ON ACCOUNT OF THE EMPLOYER` S AND EMPLOYEES` SHARE REVEALED THAT PAYMENTS I N THE SUM OF RS. 17,94,042 WERE LATE AS PER THE PROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) AND SECTION 43B. CONSEQUENTLY, THE ASSESSING OFFICER DISALLOWED THE DEDUCTION AND ADDED A SUM OF RS. 17,94,042 TOWARDS EPF CONTRIBUTION. BEING AG GRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS) (HEREINAFTER REFERRED TO IN SHORT AS ' THE CIT(A)' ). THE COMMISSIONER OF INCOME - TAX (APPEALS), AFTER CONSIDERING THE MATTER, WHILE ACCEPTING THE VIEW OF THE ASSESSING OFFICER ON THE INTERPRETATION OF THE RELEVANT PROVISIONS OF THE ACT, ON I.T.A.NO. 1247/12 : - 10 - : FACTS DIRECTED THE DELETION OF AN ADDITION OF RS. 4,83,251 BEING PAYMENTS MADE TOWARDS PROVIDENT FUND IN RESPECT OF DECEMBER, 1997, JANUARY, 1998, AND FEBRUARY, 1998, ON THE GROUND THAT THEY WERE WITHIN THE TIME PRESCRIBED UNDER THE RELEVANT PRO - VISIONS OF THE ACT. AS A RESULT, THE COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRMED THE ADDITION TO THE INCOME OF THE ASSESSEE ONLY A SUM OF RS.13,10,791 AS AGAINST RS. 17,94,042 ADDED BY THE ASSESSING OFFICER. THE ASSESSEE BEING AGGRIEVED PREFERRED AN APPEAL TO THE TRIBUNAL. THE TRIBUNAL, AS INDICATED HEREINABOVE, ALLOWED THE APPEAL OF THE ASSESSEE. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENUE AS WELL AS THE ASSES - SEE, WE ARE OF T HE VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVES TO BE SUSTAINED AS IT IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 WHICH HAS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. DHARMENDRA SHARMA [2008] 297 ITR 320. DESPITE THE AFORESAID JUDGMENTS, THE LEARNED COUNSEL FOR THE REVENUE HAS CONTENDED THAT IN VIEW OF THE JUDGMENT OF THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. SYNERGY FINANCIAL EXCHANGE LTD. [2007] 288 ITR 366 AND THAT OF THE DIVISION BENCH OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V. PAMWI TISSUES LTD. [2009] 313 ITR 137, THE ISSUE REQUIRES CONSIDERATION. ACCORDING TO US, IN VIEW OF THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF VINAY CEMENT LTD. [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 BY THE SUPREME COURT BY A SPEAKING ORDER, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE HAS TO BE REJECTED AT THE VERY THRESHO LD. THE REASON FOR THE SAME IS AS FOLLOWS : THE GAUHATI HIGH COURT IN THE CASE OF CIT V. GEORGE WILLIAMSON (ASSAM) LTD. [2006] 284 ITR 619 DEALT WITH THE VERY SAME ISSUE. IN THE SAID JUDGMENT, THE DIVISION BENCH OF THE GAUHATI HIGH COURT NOTED A CONTRAR Y VIEW TAKEN BY THE KERALA HIGH COURT IN THE CASE OF CIT V. SOUTH INDIA COR - PORATION LTD. [2000] 242 ITR 114. AFTER NOTING THE SAID JUDGMENT THE FACT THAT THE AMENDMENTS HAD BEEN MADE TO THE PROVISIONS OF SECTION 43B OF THE ACT BY VIRTUE OF THE FINANCE ACT, 2003, WITH EFFECT FROM APRIL 1, 2004, IT AGREED WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT BY VIRTUE OF THE OMISSION OF THE SECOND PROVISO AND THE OMISSION OF CLAUSES (A), (C), (D), (E) AND (F) WITHOUT ANY SAVING CLAUSE WOULD MEAN THAT THE PRO - VISIONS WERE NEVER IN EXISTENCE. FOR THIS PURPOSE, IN THE SAID CASE, THE ASSESSEE HAD PLACED RELIANCE ON THE JUDGMENT OF A CONSTITUTION BENCH OF THE SUPREME COURT IN THE CASE OF KOLHAPUR CANESUGAR WORKS LTD. V. UNION OF INDIA [2000] 2 SCC 536 AND RAYALA CORPORATION P. LTD. V. DIRECTOR OF ENFORCEMENT [1969] 2 SCC 412 AND GENERAL FINANCE CO. V. ASST. CIT [2002] 257 ITR 338 (SC). THE SAID SUBMISSIONS FOUND FAVOUR WITH THE DIVISION BENCH OF THE GAUHATI HIGH COURT AND RELYING ON EARLIER DECISIONS OF ITS OWN COURT IN CIT V. ASSAM TRIBUNE [2002] 253 ITR 93 AND CIT V. BHARAT BAMBOO AND TIMBER SUPPLIERS [1996] 219 ITR 212 (GAUHATI) THE DIVISION BENCH DISMISSED THE APPEAL OF THE REVENUE. IT TRANSPIRES THAT THE AFORESAID MATTER WAS TAKEN U P IN APPEAL ALONG WITH OTHER MATTERS INCLUDING VINAY CEMENT LTD.` S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1. THE ORDER IN VINAY CEMENT LTD.` S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 WAS PASSED BY THE SUPREME COURT ON MARCH 7, 2007, WH EREIN IT OBSERVED AS FOLLOWS : ' DELAY CONDONED. I.T.A.NO. 1247/12 : - 11 - : IN THE PRESENT CASE, WE ARE CONCERNED WITH THE LAW AS IT 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. SPECIAL LEAVE PETITION IS DISMISSED.' IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER A ND WHILE DOING SO THE SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFORE IT PERTAINS TO A PERIOD PRIOR TO THE AMENDMENT BROUGHT ABOUT IN SECTION 43B OF THE ACT. THE AFORE - SAID POSITION AS REGARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO SECTION 43B HAS BEEN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA [2008] 297 ITR 320 (DELHI). APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT LTD.` S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 A DIVISION BENCH OF THIS COURT DISMISSED THE APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. NEXUS COMPUTER P. LTD. BY A JUDGMENT DATED AUGUST 18, 2008, PASSED IN TAX CASE (A) NO. 1192 OF 2008 [2009] 313 ITR 144 (MAD) DISCUSSED THE IMPACT OF BOTH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. [2006] 284 ITR 619 (GAUHATI) AND VINAY CEMENT LTD.` S CASE [2007] 213 CTR 268 ; [ 2009] 313 ITR (ST.) 1 AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINANCIAL EXCHANGE [2007] 288 ITR 366 (MAD). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF THE DISMISSAL OF A SPECIAL LEAVE PETI TION BY A SPEAKING ORDER BY RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED V. STATE OF KERALA [2000] 245 ITR 360 (SC) ; 119 STC 505 AT PAGE 526 IN PARAGRAPH 40 AND NOTED THE FOLLOWING OBSERVATIONS (PAGE 382) : 'IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKING ORDER, I.E., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE ORDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAINED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING O F ARTICLE 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLARATION OF LAW, WHATEVER IS STATED IN THE ORDER ARE THE FINDINGS RECORDED BY THE SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT, TRIBUNAL OR AUTHORITY IN ANY PROCEED INGS SUBSEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY. BUT, THIS DOES NOT AMOUNT TO SAYING THAT THE ORDER OF THE COURT, TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF THE SUPREME COUR T REJECTING SPECIAL LEAVE PETITION OR THAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUB - SEQUENT PROCEEDINGS BETWEEN THE PARTIES.' UPON NOTING THE OBSERVATIONS OF THE SUPREME COURT IN KUNHAYAMMED [2000] 245 ITR 360 TH E DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF NEXUS COMPUTER (P.) LTD. T. C. A. NO. 1192/2008 ([2009] 313 ITR 144 (MAD)) CAME TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT LTD.` S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 WOULD BIND THE HIGH COURT AS IT WAS THE LAW DECLARED BY THE SUPREME COURT UNDER ARTICLE 141 OF THE CONSTITUTION. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONING OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P.) LTD. T. C. A. NO. 1192/20 08 ([2009] 313 ITR 144 (MAD)). THE JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMENT I.T.A.NO. 1247/12 : - 12 - : LTD.` S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1, AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN DHAR - MENDRA SHA RMA` S CASE [2008] 297 ITR 320 (DELHI). IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGREE WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COURT IN CIT V. PAMWI TISSUES LTD. [2008] 215 CTR 150 ; [2009] 313 ITR 137. IN THESE CIRCUMSTANCE S INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED. 9 . THUS, IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT AND DELHI HIGH COURT THAT IF THE EMPLOY EES CONTRIBUTION TO ESI AND PF WAS DEPOSITED BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN BY THE ASSESSEE U/S 139(1) OF THE ACT, THEN THE SAME WAS ALLOWABLE DEDUCTION TO THE ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE SET ASID E THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION OF ` 11,96,198/ - BEING EMPLOYEES CONTRIBUTION TO ESI AND PF U/S 36(1)(VA) OF THE ACT TO THE ASSESSEE AFTER VERIFYING THAT THE PAYMENT HAD BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 05 TH DA Y OF SEPTEMBER , 2012, AT CHENNAI. SD/ - SD/ - (VIKAS AWASTHY) JUDICI AL MEMBER ( N.S.SAINI ) ACCOUNTANT MEMBER DATED: 05 TH SEPTEMBER , 2012 RD COPY TO: APPELLANT / RESPONDENT / CIT(A) /CIT/ DR