SRINIVASA FASHINS PVT LTD, CHENNAI V. ITO CORPORATE WARD-6(4), CHENNAI

ITA 1396/CHNY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6031 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 06-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N VIJAY KUMAR
• Keywords: Unexplained cash credit; Business income; Business expenditure; Principle of natural justice; Question of law; Benefit of exemption; Set aside; Liquidation; CHAPTER IV
• Section: 43B; 143(3); 139(1); 43; 9(1); 9(1); 9(1); 13; 119; 22; 68; 12; 28; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , # $ .. &, ) * BEFORE SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER AND SHRI DUVVURU R.L.REDDY , JUDICIAL MEMBER ITA NO.1396/CHNY/2019 )+ + /ASSESSMENT YEAR: 2014-15 HEARD THROUGH VIDEO CONFERENCING M/S.SRINIVASA FASHIONS PVT. LTD., NO.57G, SIDCO INDUSTRIAL ESTATE, AMBATTUR, CHENNAI-600 098. V . THE INCOME TAX OFFICER, CORPORATE WARD-6(4), CHENNAI. [PAN: AAICS 9511 R ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.N.VIJAY KUMAR, CA /0. 1 /RESPONDENT BY : MR.AR.V.SREENIVASAN, JCIT 1 /DATE OF HEARING : 28.09.2020 1 /DATE OF PRONOUNCEMENT : 28.09.2020 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 28.02.2019 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI (HEREINAFTER CALLED THE CIT( A)), IN ITA NO.441/CIT(A)-15/2016-17 FOR ASSESSMENT YEAR (AY) 2 014-15, THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAD ARI SEN FROM ASSESSMENT ORDER DATED 28.12.2016 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ITA NO.1396/CHNY/2019 :- 2 -: CALLED THE ACT). THIS APPEAL WAS HEARD IN OPEN COURT HELD IN VIRTUA L MODE THROUGH VIDEO CONFERENCING MODE USING WEBEX PLATFOR M 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI (HE REINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCO ME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE TO THE EXT ENT PREJUDICIAL TO THE INTEREST OF THE ASSESSEE AND AT ANY RATE IS OPPOSED TO THE PRIN CIPLES OF EQUITY, NATURAL JUSTICE AND FAIR PLAY. 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN UPHOLDING THE DISALLOWANCE OF EMPLOYEES' CONTRIBUTION TO PF & ESI AMOUNTING TO RS.83,08,244/- U/S.36(1)(VA). 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DISALLOWING THE EMPLOYEES' CONTRIBUTION TO PF & ESI FOR THE REASON THAT THE PAYMENTS TO THE RELEVANT FUND WERE NOT MADE WITHIN THE DUE DATE OF THE RELEVANT STATUTE. 4. FOR THAT COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE THAT THE PAYMENT OF EMPLOYEES' CONTRIBUTION TO PF & ESI WITH IN THE DUE DATE FOR FILING THE RETURN OF INCOME IS AN ALLOWABLE EXPENDITURE. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN UPHOLDING THE ADDITION OF RS.18,52,300/- AS UNEXPLAINED CREDIT U/ S.68. 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 68 ARE NOT INVOCABLE IN T HE FACTS AND CIRCUMSTANCES OF THE CASE. 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONCLUDING THAT THE DIFFERENCE ON ACCOUNT OF EXCHANGE FLUCTUATION I N THE FOREIGN LOAN IS IN THE CAPITAL FIELD AND THAT THE SAME IS NOT AN ALLOWABLE DEDUCTION. PRAYER FOR THESE GROUNDS AND SUCH OTHER GROUNDS THAT MAY B E URGED BEFORE OR DURING THE HEARING OF THE APPEAL IT IS MOST HUMBLY PRAYED THAT THE HON'BLE TRIBUNAL MAY BE PLEASED TO (A) DELETE THE DISALLOWANCE U/S.36(1)(VA) OF RS.83, 08,244/-. (B) DELETE THE ADDITION OF RS.18,52,300/- (C) PASS SUCH OTHER ORDERS AS THE HON'BLE TRIBUNAL MAY DEEM FIT. ITA NO.1396/CHNY/2019 :- 3 -: 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NOS.5 TO 7 RAISED BY ASSESSEE IN MEMO OF APPEAL FIL ED WITH TRIBUNAL ARE NOT PRESSED AND PRAYERS WERE MADE BY LEARNED COUNSE L FOR THE ASSESSEE TO DISMISS THE AFORESAID GROUNDS OF APPEAL AS BEING WITHDRAWN. THE ASSESSEE HAS ALSO FILED A LETTER DATED 20.09.2020 W ITH THE REGISTRY STATING THAT GROUND NOS.5 TO 7 ARE TO BE WITHDRAWN. THE SAI D LETTER WAS PLACED BEFORE THE BENCH DURING THE COURSE OF HEARING AND I S NOW PLACED IN FILE . THE LD.DR RAISED NO OBJECTION TO DISMISSAL OF GROUN D NOS.5 TO 7 AS BEING WITHDRAWN. AFTER HEARING BOTH THE RIVAL PARTIES . W E DISMISS GROUND NOS.5 TO 7 RAISED BY ASSESSEE IN MEMO OF APPEAL FILED WIT H THE TRIBUNAL AS BEING WITHDRAWN .WE ORDER ACCORDINGLY. 4. GROUND NO.1 RAISED BY ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL IS GENERAL IN NATURE AND DOES NOT REQUIRE SEPARATE ADJUDICATION AND HENCE THE SAME STANDS DISMISSED. WE ORDER ACCOR DINGLY 5. NOW WE ARE LEFT WITH GROUND NOS.2 TO 4 RAISED B Y ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL, WHICH CONCERNS ITSE LF WITH A SOLITARY ISSUE REGARDING DISALLOWANCE OF EMPLOYEES CONTRIBUTION RE CEIVED BY ASSESSEE TOWARDS PF & ESI AMOUNTING TO RS. 83,08,244/- BY INVOKING PROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF TH E 1961 ACT AS THE SAME WAS DEPOSITED WITH THE PF/ESI AUTHORITIES BEYO ND THE TIME STIPULATED UNDER THE RELEVANT PF AND ESI ACT BUT , WERE DEPOSITED WITHIN THE TIME STIPULATED FOR FILING OF RETURN OF INCOME UNDER THE PROVISIONS OF ITA NO.1396/CHNY/2019 :- 4 -: SECTION 139(1) OF THE 1961 ACT. BOTH THE AUTHORITI ES BELOW HAS DISALLOWED THESE BELATED PAYMENT OF EMPLOYEES CONTRIBUTION TOW ARDS PF & ESI BY INVOKING SEC.36(1)(VA) READ WITH SECTION 2(24)(X) O F THE 1961 ACT , AS THESE CONTRIBUTIONS RECEIVED BY THE ASSESSEE FROM I TS EMPLOYEES WERE DEPOSITED BY ASSESSEE WITH THE PF/ESI AUTHORITIES B EYOND THE TIME PRESCRIBED UNDER PF & ESI ACT , WHILE IT IS AN ADMI TTED POSITION THAT THE SAID EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI WERE DEPOSITED BY ASSESSEE WITH THE AFORESAID AUTHORITIES BEFORE THE DUE DATE AS IS PRESCRIBED FOR FILING OF RETURN OF INCOME U/S.139(1 ) OF THE 1961 ACT. THE LD.CIT(A) VIDE APPELLATE ORDER DATED 28.02.2019 HAS DISALLOWED THE SAME BY HOLDING AS UNDER: 5. I HEARD CONTENTIONS OF THE AR OF THE APPELLANT AND PERUSED THE GROUNDS OF APPEAL, ASSESSMENT ORDER, AR'S SUBMISSION AND MATER IAL AVAILABLE ON RECORD. MY OBSERVATIONS IN RESPECT OF THE GROUNDS RAISED BY TH E APPELLANT ARE AS FOLLOWS: 6. PF&ESI: 6.1 ASSESSING OFFICER NOTICED THAT THE ASSESSEE REM ITTED EMPLOYEE'S CONTRIBUTIONS TO ESI AND PF AMOUNTING TO RS.83,08,244/- AFTER THE DUE DATES PRESCRIBED AND HENCE DISALLOWED THE SAME U/S.36(1)(VA) R.W.S 2(24) (X). 6.2 IN THE GROUNDS OF APPEAL, THE APPELLANT CONTES TED AS UNDER: '2. FOR THAT THE ASSESSING OFFICER ERRED IN DISALLO WING EMPLOYEES CONTRIBUTION TO PF & ESI AMOUNTING TO RS.83,08,244/ - U/S.36(L)(VA). 3. FOR THAT THE ASSESSING OFFICER ERRED IN DISALLOW ING THE EMPLOYEES CONTRIBUTION TO PF & ESI FOR THE REASON THAT THE PA YMENTS TO THE RELEVANT FUND WERE NOT MADE WITHIN THE DUE DATE OF THE RELEV ANT STATUTE. 4. FOR THAT ASSESSING OFFICER FAILED TO APPRECIATE THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION TO P F & ESI WITHIN THE DUE DATE FOR FILING THE RETURN OF INCOME IS AN ALLOWABLE EXPENDITURE.' 6.3 IN M/S. UNIFAC MANAGEMENT SERVICES (INDIA) PRIV ATE LTD VS DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI (W.P.NO.5264 OF 2018 AND WMP NO.6461 OF 2018) DELIVERED ON 23.10.20 18, HON'BLE HIGH COURT OF MADRAS - DISTINGUISHED ASSESSEE'S RELIANCE ON ALOM EXTRUSION LTD STATING THAT SC DID NOT HAVE OCCASION TO CONSIDER SCOPE OF SECTION 36(1)(VA), AGREES WITH GUJARAT HC RULING IN GUJARAT STATE ROAD TRANSPORT CORPORATI ON AND KERALA HC IN MERCHAM LTD AND HELD THAT - BELATED EMPLOYEES' CONTRIBUTION TO PF/ESI IS NOT DEDUCTIBLE ITA NO.1396/CHNY/2019 :- 5 -: 6.4 HENCE RESPECTFULLY FOLLOWING THE ABOVE STATED L ATEST DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF MADRAS THE DISALLOWANC E OF EMPLOYEE'S CONTRIBUTION TO EPF AND ESI AMOUNTING TO RS 83,08,244/- THAT WAS RE MITTED AFTER PRESCRIBED DUE DATE BUT BEFORE THE DUE DATE OF FILING THE RETURN U NDER SECTION 139(1) IS UPHELD. 6. THE ASSESSEE BEING AGGRIEVED BY APPELLATE ORDER DATED 28.02.2019 PASSED BY LEARNED CIT(A) HAS FILED AN SECOND APPEAL WITH TRIBUNAL AND HAS AGITATED THIS ISSUE OF DISALLOWANCE OF EMPLOYEES CO NTRIBUTION RECEIVED BY ASSESSEE FROM ITS EMPLOYEES TOWARDS PF/ESI WHICH WA S DEPOSITED WITH PF/ESI AUTHORITIES BEYOND THE TIME STIPULATED UNDER THE RELEVANT PF/ESI ACT , BUT WERE DEPOSITED WITHIN THE TIME STIPULATED FOR FILING OF RETURN OF INCOME UNDER THE PROVISIONS OF SECTION 139(1) OF TH E 1961 ACT , BY RAISING GROUND NUMBER 2 TO 4 IN MEMO OF APPEAL FILED WITH T HE TRIBUNAL. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT HON BLE MADRAS HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL SECURITY & INTELLI GENCE INDIA PVT. LTD. [2015] (7) TMI 1063 (MAD) HAS DECIDED THIS ISSUE IN FAVOUR OF TAX-PAYER. THE LD.COUNSEL FOR THE ASSESSEE ALSO RELIED UPON TH E DECISION OF CO- ORDINATE BENCHES OF CHENNAI TRIBUNAL IN THE CASE OF DCIT V. M/S.AUTO TECH INDUSTRIES INDIA PVT. LTD., IN ITA NO.2848/CHNY/20 17 ORDER DATED 19.09.2018, IN WHICH, ONE OF US NAMELY JUDICIAL MEM BER WAS PART OF THE DIVISION BENCH WHO PRONOUNCED THE SAID ORDER, WHERE IN THE TRIBUNAL HELD THAT DEDUCTION U/S 36(1)(VA) READ WITH SECTION 2(24 )(X) OF THE 1961 ACT IS TO BE ALLOWED IF THE EMPLOYEE CONTRIBUTION TO PF/ES I RECEIVED BY THE TAXPAYER IS DEPOSITED BEFORE THE DUE DATE AS IS PRE SCRIBED FOR FILING OF RETURN OF INCOME UNDER THE PROVISIONS OF SECTION 13 9(1) OF THE 1961 ACT, ALBEIT THE SAME WAS DEPOSITED BEYOND THE TIME STIPU LATED UNDER THE ITA NO.1396/CHNY/2019 :- 6 -: PROVISIONS OF STATUTE GOVERNING PF/ESI . THE LD.COU NSEL FOR THE ASSESSEE ALSO RELIED UPON DECISION OF THE CO-ORDINATE BENCHE S OF CHENNAI TRIBUNAL IN THE CASE OF M/S SELVA GOLD COVERING PVT. LTD. V. DCIT IN ITA NO.693/CHNY/2017 DATED 25.11.2019, IN WHICH, ONE OF US NAMELY ACCOUNTANT MEMBER WAS PART OF THE DIVISION BENCH WH O PRONOUNCED THE SAID ORDER WHEREIN TRIBUNAL HAS ALSO ALLOWED THE DE DUCTION WITH RESPECT TO EMPLOYEE CONTRIBUTION TOWARDS PF/ESI RECEIVED BY TA XPAYER WHICH WAS DEPOSITED BEYOND THE TIME PRESCRIBED UNDER THE RELE VANT STATUTE GOVERNING PF/ESI BUT WAS DEPOSITED BEFORE THE DUE D ATE OF FILING OF RETURN OF INCOME AS IS PRESCRIBED UNDER SECTION 139(1) OF THE 1961 ACT. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UPON R ECENT DECISION OF CO- ORDINATE BENCHES OF CHENNAI-TRIBUNAL IN THE CASE OF DCIT V. M/S.REPCO HOME FINANCE PVT. LTD., IN ITA NO.2885/CHNY/2017 , VIDE ORDER DATED 17.06.2020 ( REPORTED IN (2020) 183 ITD 782(CHENNAI -TRIB.), IN WHICH, ONE OF US NAMELY ACCOUNTANT MEMBER WAS PART OF THE DIVISION BENCH WHO HAS PRONOUNCED THE SAID ORDER, IN WHICH THE CHENNAI TRIBUNAL HAS CONSIDERED THE AFORESAID ISSUE IN DETAIL AND THEREA FTER ADJUDICATED THE SAME IN FAVOUR OF THE ASSESSEE. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE APPELLATE ORDER DATED 28.02.2019 PASSED BY LD.CIT(A). 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING CITED CASE LAWS BEFORE US. WE HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G IN TEXTILES. WE HAVE OBSERVED THAT SOLITARY ISSUE NOW BEFORE US VIDE GRO UND NUMBER 2 TO 4 ITA NO.1396/CHNY/2019 :- 7 -: RAISED IN MEMO OF APPEAL FILED WITH TRIBUNAL IN THI S APPEAL IS WITH RESPECT TO DELAY IN DEPOSIT OF EMPLOYEES CONTRIBUTION TOWAR DS PF & ESI WITH THE RELEVANT AUTHORITIES BEYOND THE TIME STIPULATED UND ER THE STATUTE GOVERNING PF/ESI BUT THE SAME WERE UNDISPUTEDLY DE POSITED WITH RELEVANT AUTHORITIES BY ASSESSEE BEFORE THE DUE DATE OF FILI NG OF RETURN OF INCOME AS IS PRESCRIBED UNDER THE PROVISIONS OF SECTION 139(1 ) OF THE 1961 ACT. WE HAVE OBSERVED THAT CO-ORDINATE BENCHES OF CHENNAI T RIBUNAL IN THE CASE OF DCIT V. M/S.AUTO TECH INDUSTRIES INDIA PVT. LTD., IN ITA NO.2848/CHNY/2017 ORDER DATED 19.09.2018, IN WHICH, ONE OF US NAMELY JUDICIAL MEMBER WAS PART OF THE DIVISION BENCH WHO PRONOUNCED THE SAID ORDER, WHEREIN THE TRIBUNAL HELD THAT DEDUCTION U/S 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE 1961 ACT IS TO BE ALLOWED I F THE EMPLOYEE CONTRIBUTION TO PF/ESI RECEIVED BY THE TAXPAYER IS DEPOSITED BEFORE THE DUE DATE AS IS PRESCRIBED FOR FILING OF RETURN OF I NCOME UNDER THE PROVISIONS OF SECTION 139(1) OF THE 1961 ACT, ALBEIT THE SAME WAS DEPOSITED BEYOND THE TIME STIPULATED UNDER THE PROVISIONS OF STATUTE GOVERNING PF/ESI . WE HAVE OBSERVED THAT LEARNED CIT(A) HAS MAINLY RELIED UPON SINGLE JUDGE DECISION OF HONBLE MADRAS HIGH COURT IN WRIT PETIT ION IN THE CASE OF M/S.UNIFAC MANAGEMENT SERVICES (INDIA) PVT. LTD. V. DCIT IN WP NO. 5264 OF 2020, WMP N. 6461 OF 2018 , VIDE ORDER DATED 23. 10.2018 REPORTED IN (2018) 409 ITR 225(MAD.). HOWEVER, SUBSEQUENTLY, TH E SAID DECISION OF SINGLE JUDGE OF HONBLE MADRAS HIGH COURT WAS CHALL ENGED BY THE TAX- PAYER BEFORE THE DIVISION BENCH OF HONBLE MADRAS H IGH COURT BY FILING WRIT APPEAL NO. 2854 OF 2018 AND CMP NO. 23727 OF 2 018 AND THE ITA NO.1396/CHNY/2019 :- 8 -: DIVISION BENCH OF HONBLE MADRAS HIGH COURT WAS PLE ASED TO GRANT PERMISSION TO THE TAX-PAYER TO WITHDRAW THE ORIGINA L WRIT PETITION NAMELY WP NO. 5264 OF 2018 AS WELL WRIT APPEAL NO. 2854 OF 2018, VIDE ORDERS DATED 09.01.2019. WE HAVE ALSO OBSERVED THAT IN THE CASE OF M/S.REPCO HOME FINANCE PVT. LTD.(SUPRA) IN WHICH ONE OF US NA MELY ACCOUNTANT MEMBER WAS PART OF THE DIVISION BENCH WHO PRONOUNCE D THE SAID ORDER, THE CHENNAI TRIBUNAL HAS ELABORATELY DISCUSSED THIS ISSUE INCLUDING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF M/S.UNIFAC MANAGEMENT SERVICES (INDIA) PVT. LTD.(SUPRA), AND AFTER CONSIDERING THE VARIOUS DECISIONS PASSED BY SUPERIOR COURTS HAVE DE CIDED THE ISSUE IN FAVOUR OF THE TAXPAYER. THE DECISION OF THE ITAT, CHENNAI, IN THE CASE OF REPCO HOME FINANCE PRIVATE LIMITED (SUPRA) IS REPRO DUCED HEREUNDER: 10. THE NEXT EFFECTIVE ISSUE, WHICH IS AGITATED B Y REVENUE BEFORE TRIBUNAL , IS WITH RESPECT OF DISALLOWANCE OF RS. 6,31,788/- MADE UNDER SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) BY A.O BEING EMPLOYEE CONTRIBUTION TO P.F. WHICH IS DEPOSITED BY ASSESSEE TO THE CREDIT OF EMPLOYEE WITH RELEVANT FUND BEYOND THE TIME STIPULA TED UNDER THE RELEVANT P.F.ACT , BUT ADMITTEDLY THE SAID AMOUNT STOOD DEPOSITED BEFORE THE DUE DATE PRESCRIBED FOR FILING OF RETURN OF INC OME U/S 139(1) OF THE 1961 ACT , AGAINST WHICH THE ASSESSEE FILED FILES F IRST APPEAL WITH LEARNED CIT(A) WHO WAS PLEASED TO ALLOWED DEDUCTION U/S 36 (1)(VA) READ WITH SECTION 2(24)(X) OF THE 1961 ACT, WHICH ISSUE IS RA ISED BY THE REVENUE IN GROUND NOS.4.1. TO 4.5 IN MEMO OF APPEAL FILED WITH THE TRIBUNAL. ADMITTEDLY , THE ASSESSEE HAS NOT DEPOSITED A SUM OF 6,31,788/- BEING EMPLOYEES CONTRIBUTION TOWARDS PF TO THE CREDIT OF EMPLOYEE WITH RELEVANT FUND WITHIN DUE DATE AS WAS PRESCRIBED UNDER THE S TATUTE GOVERNING PROVIDENT FUND , AS IS REQUIRED UNDER SECTION 36(1) (VA) READ WITH EXPLANATION 1 AND SECTION 2(24)(X) OF THE 1961 AC T, WHICH LED AO TO DISALLOW THE SAID AMOUNT BY INVOKING EXPLANATION 1 TO SECTION 36(1)(VA) OF THE 1961 ACT BUT THE SAID AMOUNT ADMITTEDLY STOO D DEPOSITED BY ASSESSEE TO THE CREDIT OF EMPLOYEE WITH RELEVANT FU ND BEFORE THE TIME PRESCRIBED FOR FILING OF RETURN OF INCOME U/S 139(1 ) OF THE 1961 ACT. AGGRIEVED BY AN ASSESSMENT FRAMED BY AO U/S 143(3) OF THE ACT, THE ASSESSEE FILED FIRST APPEAL WITH LEARNED CIT(A) WHO WAS PLEASED TO DELETE THE ADDITION TO THE INCOME TO THE TUNE OF 6,31,788 /- MADE BY AO ON ACCOUNT OF DELAYED REMISSION OF EMPLOYEES CONTRIBU TION TOWARDS EPF TO THE CREDIT OF EMPLOYEE WITH RELEVANT FUND BEYOND THE TI ME PRESCRIBED UNDER RELEVANT PF STATUTE BUT ADMITTEDLY THE SAID AMOUNT STOOD DEPOSITED BY ASSESSEE TO THE CREDIT OF EMPLOYEE WITH RELEVANT FU ND BEFORE THE DUE DATE ITA NO.1396/CHNY/2019 :- 9 -: PRESCRIBED FOR FILING OF RETURN OF INCOME U/S 139(1 ) OF THE 1961 ACT , BY RELYING ON FOLLOWING JUDICIAL DECISION(S) AS STIPUL ATED HEREUNDER:- 1. CIT V. ALOM EXTRUSIONS LTD., IN 319 ITR 306(SC) 2. CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE IND IA PVT. LTD., (MAD) TAX CASE APPEAL NOS.585 AND 586 OF 2015 AND M.P NO.1 OF 2015 , DATED 24.07.2015 3. ACIT V. M/S.EASUN PRODUCTS OF INDIA (P) LTD., IN I.T.A. NO. NO.182/MDS./2016 , VIDE ORDER OF CHENNAI TRIBUNAL D ATED 19.05.2016, FOR AY: 2012-13. 10.2 AGGRIEVED BY AN APPELLATE ORDER DATED 30.08.20 17 PASSED BY LEARNED CIT(A), THE REVENUE HAS NOW FILED AN APPEAL BEFORE THE TRIBUNAL AGITATING AGAINST THE DECISION OF LEARNED CIT(A) GRANTING REL IEF TO ASSESSEE DESPITE SPECIFIC PROVISION AS IS CONTAINED IN SECTION 36(1) (VA) READ WITH EXPLANATION 1 OF THE 1961 ACT THAT DEDUCTION TOWARD S EMPLOYEES CONTRIBUTION TO PF CAN BE ALLOWED ONLY WHEN THE EMP LOYER REMITS THE SAID EMPLOYEE CONTRIBUTION TO THE CREDIT OF EMPLOYEE WIT H RELEVANT FUND ON OR BEFORE THE DUE DATE SPECIFIED IN STATUTE GOVERNING PF, WHICH ADMITTEDLY WAS NOT COMPLIED BY THE ASSESSEE . BEFORE US, THE LD. D.R. SUBMITTED THAT SECTION 36(1)(VA) READ WITH EXPLANATION 1 OF THE 19 61 ACT CLEARLY PROVIDES THAT EMPLOYEE CONTRIBUTION TO PROVIDENT FUND AMOUNT SHOULD HAVE BEEN DEPOSITED BEFORE THE DUE DATE AS PRESCRIBED UNDER T HE STATUTE GOVERNING PROVIDENT FUND. BY RELYING ON THE PROVISIONS OF SEC TION 36(1)(VA) OF THE ACT SO FAR AS EMPLOYEES CONTRIBUTION IS CONCERNED, THE LEARNED DR RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CA SE OF THE PRINCIPAL C.I.T. V. M/S.ORCHID PHARMA LTD., IN TAX CASE APPEA L NOS.430 & 421 OF 2019 & CMP NO.13978 OF 2019 FOR AY:2013-14 AND 2014 -15, JUDGMENT DATED 08.07.2019 AND PRAYERS WERE MADE BY LD. D.R. TO RESTORE THE MATTER BACK TO THE FILE OF LEARNED CIT(A) FOR FRESH ADJUDICATION AFTER CONSIDERING AFORESAID DECISION OF HONBLE MADRAS HI GH COURT IN THE CASE OF ORCHID PHARMA(CITED SUPRA). THE LD. COUNSEL FOR TH E ASSESSEE ON THE OTHER HAND SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY DECISION OF HONBLE MADRAS HIGH COURT IN THE CAS E OF CIT V. M/S.INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD., (TAX CASE APPEAL NO. 585 AND 586 OF 2015 DATED 24.07.2015, FOR AY: 2 003-04 AND 2004-05) AND IT IS ALSO SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE CHENNAI TRIBUNAL IN I.T.A. NO. NO.3263/CHNY/2018 FO R AY: 2013-14 IN THE CASE OF THE ACIT V. M/S.SPEL SEMOCONDUCTOR LTD., VI DE ORDER DATED 23.07.2019 HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE, TO WHICH ONE OF US NAMELY HONBLE JUDICIAL MEMBER WAS PART OF DI VISION BENCH WHO PRONOUNCED THE SAID ORDER IN ITA NO. 3263/CHNY/2018 . 10.3 WE HAVE HEARD RIVAL CONTENTIONS THROUGH VIDEO CONFERENCING AND PERUSED THE MATERIAL ON RECORD INCLUDING CITED CASE LAWS. WE HAVE OBSERVED THAT THE ASSESSEE HAS DEPOSITED EMPLOYEES SHARE OF PROVIDENT FUND CONTRIBUTION AMOUNTING TO 6,31,788/- TO THE C REDIT OF EMPLOYEES WITH RESPECTIVE PF FUND BEYOND THE DUE DATE PRESCRI BED UNDER THE RELEVANT STATUTE GOVERNING PROVIDENT FUND , BUT THE SAME W AS ADMITTEDLY DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME AS IS PRESCRIBED U/S 139(1) OF THE 1961 ACT . BEFORE PROCEEDING FURT HER, IT WILL BE PROFITABLE TO REPRODUCE THE RELEVANT PROVISIONS OF THE 1961 AC T AS WERE APPLICABLE FOR AY: 2013-14, WHICH ARE REPRODUCED HEREUNDER: ITA NO.1396/CHNY/2019 :- 10 -: DEFINITIONS. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIR ES, *** *** (24) 'INCOME' INCLUDES *** *** (X) ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPL OYEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE PROVISIONS OF THE EMPLOYEES' STATE INSURANCE ACT, 1 948 (34 OF 1948), OR ANY OTHER FUND FOR THE WELFARE OF SUCH EMPLOYEES ;] OTHER DEDUCTIONS. 36. (1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWIN G CLAUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THEREI N, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 *** *** [(VA) ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (2 4) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYE E'S ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEE'S CONTRIBUTION TO THE EMPLOYEE'S ACCOUNT IN THE RELEV ANT FUND UNDER ANY ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UN DER ANY STANDING ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE;] CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT. 43B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN R ESPECT OF *** (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES, *** *** 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 EMPLOYED BY HIM) ONLY IN COMPU TING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM : ITA NO.1396/CHNY/2019 :- 11 -: [PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON O R BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-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 EVID ENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN . 10.3.2 IT IS BY VIRTUE OF FINANCE ACT, 1987 W.E.F. 01.04.1988 , THE PROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2 (24)(X) OF THE 1961 ACT WERE INSERTED, WHICH CONSIDERED EMPLOYEE CONTRIBUTI ON TOWARDS PF/ESI AND OTHER EMPLOYEES WELFARE FUNDS RECEIVED BY EMPLOYER AS INCOME OF THE ASSESSEE BY VIRTUE OF SECTION 2(24)(X) OF THE 1961 ACT AND DEDUCTION THEREOF THE EMPLOYEE CONTRIBUTION SHALL BE ALLOWED BY VIRTUE OF SECTION 36(1)(VA) OF THE 1961 ACT PROVIDED THE SAID AMOUNT STOOD DEPOSITED BY EMPLOYER TO THE CREDIT OF EMPLOYEE WITH RELEVANT FU ND ON OR BEFORE THE DUE DATE AS PRESCRIBED UNDER RELEVANT STATUTE GOVERNING PF/ESI AND OTHER EMPLOYEES WELFARE FUNDS. THE PROVISION OF SECTION 4 3B OF THE 1961 ACT WERE ALSO AMENDED BY FINANCE ACT, 1987 W.E.F. 1.4.1 988 AND AS IT STOOD AT THAT TIME IS REPRODUCED HEREUNDER: CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT. 43B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN R ESPECT OF (A) **** (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES, [OR ] [(C) *** 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 EMPLOYED BY HIM) ONLY IN COMPU TING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM. [PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM REFERRED TO IN CLAUSE (A) [OR CLAUSE (C)] W HICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE I N HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SU M WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNI SHED BY THE ASSESSEE ALONG WITH SUCH RETURN: PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPEC T OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH SUM HAS ACTUA LLY 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. ] *** *** ITA NO.1396/CHNY/2019 :- 12 -: THUS, SECTION 43B OF THE 1961 ACT AS IT STOOD VIDE AMENDMENT MADE BY FINANCE ACT, 1987 W.E.F. 01.04.1988 , INTER-ALIA, P ROVIDED THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISION OF THE 1961 ACT, A DEDUCTION WHICH IS OTHERWISE ALLOWABLE UNDER THE 1961 ACT SHALL BE ALLOWED OF ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES PROV IDED THE SAID SUM IS ACTUALLY 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 VIZ. THE DATE PRESCRIBED UNDER THE RELEVANT STATUTE GOVE RNING PF/ESI AND OTHER EMPLOYEE WELFARE FUNDS FOR DEPOSIT OF THE CONTRIBUT ION PAYABLE BY ASSESSEE AS AN EMPLOYER TO AN PROVIDENT FUND OR SUPERANNUATI ON FUND OR GRATUITY FUND OR ANY OTHER FUND FOR WELFARE OF EMPLOYEES. 10.3.3. THEN CAME THE AMENDMENT BY FINANCE ACT, 200 3 W.E.F 01.04.2004, WHEREIN THE SECOND PROVISO TO SECTION 43B STOOD DEL ETED AND FIRST POVISO TO SECTION 43B WAS AMENDED SO THAT NOW EVEN ANY SUM PA YABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO A NY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER F UND FOR THE WELFARE OF EMPLOYEES PROVIDED THE SAID SUM IS ACTUALLY PAID DU RING THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE AS PRESCRIBED UNDER SECTI ON 139(1) FOR FILING OF RETURN OF INCOME SHALL BE ALLOWED. THE AMENDED SECT ION 43B , AS AMENDED BY FINANCE ACT, 2003 WEF 01.04.2004 , IS REPRODUCED HERERUNDER: [CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT. 43B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN R ESPECT OF *** *** (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF 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 EMPLOYED BY HIM) ONLY IN COMPU TING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM : PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BE FORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-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 EVID ENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN . *** *** ITA NO.1396/CHNY/2019 :- 13 -: 10.3.4 IT IS PERTINENT AT THIS STAGE TO REPRODUCE T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LIMITE D(SUPRA) WHEREIN THE AMENDMENTS MADE BY FINANCE ACT, 2003 W.E.F. 01.04.2 004 WERE HELD TO BE CURATIVE IN NATURE AND APPLICABLE RETROSPECTIVELY E FFECTIVE FROM 01.04.1988, WHICH DECISION OF HONBLE SUPREME COURT IS REPRODUC ED HEREUNDER: 6. THE LEAD MATTER IN THIS BATCH OF CIVIL APPEALS I S CIT V. ALOM EXTRUSIONS LTD. [CIVIL APPEAL ARISING OUT OF S.L.P. (C) NO. 23 851 OF 2007]. PRIOR TO THE AMENDMENT OF SECTION 43B OF THE ACT, V IDE FINANCE ACT, 2003, THE TWO PROVISOS TO SECTION 43B OF THE ACT READ AS UNDER : 'PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL 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 ASSESS EE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETU RN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIO US 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 WIT H SUCH RETURN : PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPEC T OF ANY SUM REFERRED TO IN CLAUSE (B) , BE ALLOWED UNLESS SUCH SUM HAS ACTU ALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MO DE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA ) OF SUB-SECTION (1) OF SECTION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE OT HERWISE THAN IN CASH, THE SUM HAS BEEN REALIZED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' 7. BY FINANCE ACT, 2003, THE SECOND PROVISO TO SECT ION 43B OF THE ACT NOT ONLY GOT DELETED BUT THE SAID FINANCE ACT, 2003, AL SO AMENDED THE FIRST PROVISO WITH EFFECT FROM ASSESSMENT YEAR 2004-05. W E QUOTE HEREINBELOW THE FIRST PROVISO TO SECTION 43B OF THE ACT AFTER I TS AMENDMENT BY FINANCE ACT, 2003, WHICH READS AS UNDER: 'PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON O R BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-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 EVID ENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN .' TO ANSWER THE ABOVE CONTROVERSY, WE NEED TO UNDERST AND THE SCHEME OF THE INCOME-TAX ACT, 1961, AS IT EXISTED PRIOR TO 1S T APRIL, 1984, AND AS IT STOOD AFTER 1-4-1984. 'INCOME' HAS BEEN DEFINED UNDER SECTION 2(24) OF TH E ACT TO INCLUDE PROFITS AND GAINS. UNDER SECTION 2(24)( X), ANY SUM RECEIVE D BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO PROVIDENT FUND/SU PERANNUATION FUND OR ANY FUND SET UP UNDER EMPLOYEES' STATE INSURANCE AC T, 1948, OR ANY OTHER FUND FOR WELFARE OF SUCH EMPLOYEES CONSTITUTED INCO ME. THIS IS THE REASON WHY EVERY ASSESSEE(S) [EMPLOYER(S)] WAS ENTITLED TO DEDUCTION EVEN PRIOR TO 1-4-1984, ON MERCANTILE SYSTEM OF ACCOUNTING AS A BUSINESS EXPENDITURE BY MAKING PROVISION IN HIS BOOKS OF ACC OUNT IN THAT REGARD. IN OTHER WORDS, IF AN ASSESSEE(S)-EMPLOYER(S) IS MAINT AINING HIS BOOKS ON ACCRUAL SYSTEM OF ACCOUNTING, EVEN AFTER COLLECTING THE CONTRIBUTION FROM HIS EMPLOYEE(S) AND EVEN WITHOUT REMITTING THE AMOU NT TO THE REGIONAL PROVIDENT FUND COMMISSIONER [R.P.F.C.], THE ASSESSE E(S) WOULD BE ENTITLED ITA NO.1396/CHNY/2019 :- 14 -: TO DEDUCTION AS BUSINESS EXPENSE BY MERELY MAKING A PROVISION TO THAT EFFECT IN HIS BOOKS OF ACCOUNT. THE SAME SITUATION AROSE PRIOR TO 1ST APRIL, 1984, IN THE CONTEXT OF ASSESSEES COLLECTING SALES TAX AND OTHER INDIRECT TAXES FROM THEIR RESPECTIVE CUSTOMERS AND CLAIMING DEDUCTION ONLY BY MAKING PROVISION IN THEIR BOOKS WITHOUT ACTUALLY RE MITTING THE AMOUNT TO THE EXCHEQUER. TO CURB THIS PRACTICE, SECTION 43B W AS INSERTED WITH EFFECT FROM 1-4-1984, BY WHICH THE MERCANTILE SYSTEM OF AC COUNTING WITH REGARD TO TAX, DUTY AND CONTRIBUTION TO WELFARE FUNDS STOO D DISCONTINUED AND, UNDER SECTION 43B, IT BECAME MANDATORY FOR THE ASSE SSEE(S) TO ACCOUNT FOR THE AFORE-STATED ITEMS NOT ON MERCANTILE BASIS BUT ON CASH BASIS. THIS SITUATION CONTINUED BETWEEN 1-4-1984 AND 1-4-1988, WHEN THE PARLIAMENT AMENDED SECTION 43B AND INSERTED FIRST PROVISO TO S ECTION 43B. BY THIS FIRST PROVISO, IT WAS, INTER ALIA, LAID DOWN, IN THE CONT EXT OF ANY SUM PAYABLE BY THE ASSESSEE(S) BY WAY OF TAX, DUTY, CESS OR FEE, T HAT IF AN ASSESSEE(S) PAYS SUCH TAX, DUTY, CESS OR FEE EVEN AFTER THE CLO SING 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 ENTITLE D TO DEDUCTION UNDER SECTION 43B ON ACTUAL PAYMENT BASIS AND SUCH DEDUCT ION WOULD BE ADMISSIBLE FOR THE ACCOUNTING YEAR. THIS PROVISO, H OWEVER, DID NOT APPLY TO THE CONTRIBUTION MADE BY THE ASSESSEE(S) TO THE LAB OUR WELFARE FUNDS. TO THIS EFFECT, FIRST PROVISO STOOD INTRODUCED WITH EF FECT FROM 1-4-1988. VIDE FINANCE ACT, 1988, THE SECOND PROVISO CAME TO BE INSERTED. IT READS AS FOLLOWS: 'PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPE CT OF ANY SUM REFERRED TO IN CLAUSE (B) , BE ALLOWED UNLESS SUCH SUM HAS ACTU ALLY BEEN PAID DURING THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE AS DEFI NED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36. ' AT THIS STAGE, WE ALSO QUOTE HEREINBELOW THE EXPLAN ATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36: 'EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEE'S CONTRIBUTION TO THE EMPLOYEE'S ACCOUNT IN THE RELEV ANT FUND UNDER ANY ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UN DER ANY STANDING ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE.' 7. HOWEVER, THE SECOND PROVISO STOOD FURTHER AMENDE D VIDE FINANCE ACT, 1989, WITH EFFECT FROM 1-4-1989, WHICH READS AS UND ER: 'PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPE CT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH SUM HAS ACTUA LLY 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 ) 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.' 8. ON READING THE ABOVE PROVISIONS, IT BECOMES CLEA R 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 PRO VIDENT FUND ACT. HOWEVER, THE SECOND PROVISO ONCE AGAIN CREATED FURT HER DIFFICULTIES. IN MANY OF THE COMPANIES, FINANCIAL YEAR ENDED ON 31ST MARCH, WHICH DID NOT COINCIDE WITH THE ACCOUNTING PERIOD OF R.P.F.C. FOR EXAMPLE, IN MANY CASES, THE TIME TO MAKE CONTRIBUTION TO R.P.F.C. EN DED AFTER DUE DATE FOR ITA NO.1396/CHNY/2019 :- 15 -: FILING OF RETURNS. THEREFORE, THE INDUSTRY ONCE AGA IN MADE REPRESENTATION TO THE MINISTRY OF FINANCE AND, TAKING COGNIZANCE OF T HIS DIFFICULTY, THE PARLIAMENT INSERTED ONE MORE AMENDMENT VIDE FINANCE ACT, 2003, WHICH, AS STATED ABOVE, CAME INTO FORCE WITH EFFECT FROM 1 -4-2004. IN OTHER WORDS, AFTER 1-4-2004, TWO CHANGES WERE MADE, NAMEL Y, DELETION OF THE SECOND PROVISO AND FURTHER AMENDMENT IN THE FIRST P ROVISO, 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 EMPLOYEES' PROVI DENT FUND, SUPERANNUATION FUND AND OTHER WELFARE FUNDS ON THE OTHER. HOWEVER, THE FINANCE ACT, 2003, BRINGING ABOUT THIS UNIFORMITY C AME INTO FORCE WITH EFFECT FROM 1-4-2004. THEREFORE, THE ARGUMENT OF TH E ASSESSEE(S) IS THAT THE FINANCE ACT, 2003, WAS CURATIVE IN NATURE, IT W AS NOT AMENDATORY AND, THEREFORE, IT APPLIED RETROSPECTIVELY FROM 1-4-1988 , WHEREAS THE ARGUMENT OF THE DEPARTMENT WAS THAT FINANCE ACT, 2003, WAS A MENDATORY AND IT APPLIED PROSPECTIVELY, PARTICULARLY WHEN THE PARLIA MENT HAD EXPRESSLY MADE THE FINANCE ACT, 2003, APPLICABLE ONLY WITH EFFECT FROM 1-4-2004. IT WAS ALSO ARGUED ON BEHALF OF THE DEPARTMENT THAT EVEN B ETWEEN 1-4-1988 AND 1-4-2004, PARLIAMENT HAD MAINTAINED A CLEAR DICHOTO MY BETWEEN PAYMENT OF TAX, DUTY, CESS OR FEE ON ONE HAND AND PAYMENT O F CONTRIBUTIONS TO THE WELFARE FUNDS ON THE OTHER. ACCORDING TO THE DEPART MENT, THAT DICHOTOMY CONTINUED UP TO 1-4-2004, HENCE, LOOKING TO THIS AS PECT, THE PARLIAMENT CONSCIOUSLY KEPT THAT DICHOTOMY ALIVE UP TO 1-4-200 4, BY MAKING FINANCE ACT, 2003, COME INTO FORCE ONLY WITH EFFECT FROM 1- 4-2004. HENCE, ACCORDING TO THE DEPARTMENT, FINANCE ACT, 2003 SHOU LD BE READ AS AMENDATORY AND NOT AS CURATIVE [RETROSPECTIVE] WITH EFFECT FROM 1-4-1988. 9. WE FIND NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT FOR THE FOLLOWING REASONS: FIRSTLY, AS STATED ABOVE, SECTIO N 43B [MAIN SECTION], WHICH STOOD INSERTED BY FINANCE ACT, 1983, WITH EFF ECT FROM 1-4-1984, EXPRESSLY COMMENCES WITH A NON OBSTANTE CLAUSE, THE UNDERLYING OBJECT BEING TO DISALLOW DEDUCTIONS CLAIMED MERELY BY MAKI NG A BOOK ENTRY BASED ON MERCANTILE SYSTEM OF ACCOUNTING. AT THE SAME TIM E, SECTION 43B [MAIN SECTION] MADE IT MANDATORY FOR THE DEPARTMENT TO GR ANT DEDUCTION IN COMPUTING THE INCOME UNDER SECTION 28 IN THE YEAR I N WHICH TAX, DUTY, CESS, ETC., IS ACTUALLY PAID. HOWEVER, PARLIAMENT T OOK COGNIZANCE OF THE FACT THAT ACCOUNTING YEAR OF A COMPANY DID NOT ALWAYS TA LLY WITH THE DUE DATES UNDER THE PROVIDENT FUND ACT, MUNICIPAL CORPORATION ACT [OCTROI] AND OTHER TAX LAWS. THEREFORE, BY WAY OF FIRST PROVISO, AN IN CENTIVE/RELAXATION WAS SOUGHT TO BE GIVEN IN RESPECT OF TAX, DUTY, CESS OR FEE BY EXPLICITLY STATING THAT IF SUCH TAX, DUTY, CESS OR FEE IS PAID BEFORE THE DATE OF FILING OF THE RETURN UNDER THE INCOME-TAX ACT [DUE DATE], THE ASS ESSEE(S) THEN WOULD BE ENTITLED TO DEDUCTION. HOWEVER, THIS RELAXATION/ INCENTIVE WAS RESTRICTED ONLY TO TAX, DUTY, CESS AND FEE. IT DID NOT APPLY T O CONTRIBUTIONS TO LABOUR WELFARE FUNDS. THE REASON APPEARS TO BE THAT THE EM PLOYER(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 STA TED ABOVE, THE SECOND PROVISO RESULTED IN IMPLEMENTATION PROBLEMS, WHICH HAVE BEEN MENTIONED HEREINABOVE, AND WHICH RESULTED IN THE ENACTMENT OF FINANCE ACT, 2003, DELETING THE SECOND PROVISO AND BRINGING ABOUT UNIF ORMITY IN THE FIRST PROVISO BY EQUATING TAX, DUTY, CESS AND FEE WITH CO NTRIBUTIONS TO WELFARE FUNDS. ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PROVISO, THEN, IN OUR VIEW, THE FINANCE ACT, 2003, WHICH IS MADE APPL ICABLE BY THE PARLIAMENT ONLY WITH EFFECT FROM 1-4-2004, WOULD BE COME CURATIVE IN NATURE, HENCE, IT WOULD APPLY RETROSPECTIVELY WITH EFFECT FROM 1-4-1988. ITA NO.1396/CHNY/2019 :- 16 -: SECONDLY, IT MAY BE NOTED THAT, IN THE CASE OF ALLI ED MOTORS (P.) LTD. V. CIT [1997] 224 ITR 677(SC), THE SCHEME OF SECTION 43B O F THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUESTION WHICH AROSE FO R DETERMINATION WAS, WHETHER SALES TAX COLLECTED BY THE ASSESSEE AND PAI D 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 T HE ACT WHILE COMPUTING THE BUSINESS INCOME OF THE PREVIOUS YEAR? THAT WAS A CASE WHICH RELATED TO ASSESSMENT YEAR 1984-85. THE RELEVANT ACCOUNTING PE RIOD ENDED ON 30-6- 1983. THE INCOME-TAX OFFICER DISALLOWED THE DEDUCTI ON CLAIMED BY THE ASSESSEE WHICH WAS ON ACCOUNT OF SALES TAX COLLECTE D BY THE ASSESSEE FOR THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEAR. T HE DEDUCTION WAS DISALLOWED UNDER SECTION 43B WHICH, AS STATED ABOVE , WAS INSERTED WITH EFFECT FROM 1-4-1984. IT IS ALSO RELEVANT TO NOTE T HAT THE FIRST PROVISO WHICH CAME INTO FORCE WITH EFFECT FROM 1-4-1988 WAS NOT O N THE STATUTE BOOK WHEN THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIE D MOTORS (P.) LTD. (SUPRA). HOWEVER, THE ASSESSEE CONTENDED THAT EVEN THOUGH THE FIRST PROVISO CAME TO BE INSERTED WITH EFFECT FROM 1-4-19 88, IT WAS ENTITLED TO THE BENEFIT OF THAT PROVISO BECAUSE IT OPERATED RET ROSPECTIVELY FROM 1-4- 1984, WHEN SECTION 43B STOOD INSERTED. THIS IS HOW THE QUESTION OF RETROSPECTIVITY AROSE IN ALLIED MOTORS (P.) LTD.'S CASE (SUPRA). THIS COURT, IN ALLIED MOTORS (P.) LTD.'S CASE (SUPRA) HELD THAT, W HEN A PROVISO IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE S ECTION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE S ECTION AND WHICH PROVISO IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION, IT COULD BE READ RETROSP ECTIVE IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHO LE. ACCORDINGLY, THIS COURT, IN ALLIED MOTORS (P.) LTD.'S CASE (SUPRA), HELD THA T THE FIRST PROVISO WAS CURATIVE IN NATURE, HENCE, RETROSPECTIVE IN OPERATI ON WITH EFFECT FROM 1-4- 1988. IT IS IMPORTANT TO NOTE ONCE AGAIN THAT, BY F INANCE ACT, 2003, NOT ONLY THE SECOND PROVISO IS DELETED BUT EVEN THE FIR ST PROVISO IS SOUGHT TO BE AMENDED BY BRINGING ABOUT AN UNIFORMITY IN TAX, DUT Y, CESS AND FEE ON THE ONE HAND VIS-A-VIS CONTRIBUTIONS TO WELFARE FUNDS O F 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.'S CASE (SUPRA) IS DELIVERED BY A BENCH OF THRE E LEARNED JUDGES, WHICH IS BINDING ON US. ACCORDINGLY, WE HOLD THAT FINANCE ACT, 2003, WILL OPERATE RETROSPECTIVELY WITH EFFECT FROM 1-4-1988 [WHEN THE FIRST PROVISO STOOD INSERTED]. LASTLY, WE MAY POINT OUT THE HARDSHIP AN D THE INVIDIOUS DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSE E(S) IF THE CONTENTION OF THE DEPARTMENT IS TO BE ACCEPTED THAT FINANCE AC T, 2003, TO THE ABOVE EXTENT, OPERATED PROSPECTIVELY. TAKE AN EXAMPLE - I N THE PRESENT CASE, THE RESPONDENTS HAVE DEPOSITED THE CONTRIBUTIONS WITH T HE R.P.F.C. AFTER 31ST MARCH [END OF 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 S TATUTE BOOK AT THE RELEVANT TIME, EACH OF SUCH ASSESSEE(S) WOULD NOT B E ENTITLED TO DEDUCTION UNDER SECTION 43B OF THE ACT FOR ALL TIMES. THEY WO ULD LOSE THE BENEFIT OF DEDUCTION EVEN IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE CONTRIBUTIONS TO THE WELFARE FUNDS, WHEREAS A DEFAULTER, WHO FAIL S TO PAY THE CONTRIBUTION TO THE WELFARE FUND RIGHT UP TO 1-4-2004, AND WHO P AYS THE CONTRIBUTION AFTER 1-4-2004, WOULD GET THE BENEFIT OF DEDUCTION UNDER SECTION 43B OF THE ACT. IN OUR VIEW, THEREFORE, FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, SHOULD BE READ AS RETROSPECTIVE. IT WOULD, T HEREFORE, OPERATE FROM 1-4-1988, WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE THAT THE PARLIAMENT HAS EXPLICITLY STATED THAT FINANCE ACT, 2003, WILL OPERATE WITH ITA NO.1396/CHNY/2019 :- 17 -: EFFECT FROM 1-4-2004. HOWEVER, THE MATTER BEFORE US INVOLVES THE PRINCIPLE OF CONSTRUCTION TO BE PLACED ON THE PROVISIONS OF F INANCE ACT, 2003. 10. BEFORE CONCLUDING, WE EXTRACT HEREINBELOW THE R ELEVANT OBSERVATIONS OF THIS COURT IN THE CASE OF CIT V. J.H. GOTLA [1985] 156 ITR 323, WHICH READS AS UNDER: '...WE SHOULD FIND OUT THE INTENTION FROM THE LANGU AGE USED BY THE LEGISLATURE AND IF STRICT LITERAL CONSTRUCTION LEAD S TO AN ABSURD RESULT, I.E., A RESULT NOT INTENDED TO BE SUBSERVED BY THE OBJECT O F THE LEGISLATION FOUND IN THE MANNER INDICATED BEFORE, THEN IF ANOTHER CONSTR UCTION IS POSSIBLE APART FROM STRICT LITERAL CONSTRUCTION, THEN THAT CONSTRU CTION SHOULD BE PREFERRED TO THE STRICT LITERAL CONSTRUCTION. THOUGH EQUITY A ND TAXATION ARE OFTEN STRANGERS, ATTEMPTS SHOULD BE MADE THAT THESE DO NO T REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE, THEN SUCH CONSTRUCTION SHOULD BE PREFERRED TO THE LITERAL CON STRUCTION....' (P. 339) FOR THE AFORE-STATED REASONS, WE HOLD THAT FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, IS CURATIVE IN NATURE, HENCE, IT I S RETROSPECTIVE AND IT WOULD OPERATE WITH EFFECT FROM 1-4-1988 [WHEN THE F IRST PROVISO CAME TO BE INSERTED]. FOR THE ABOVE REASONS, WE FIND NO MER IT IN THIS BATCH OF CIVIL APPEALS FILED BY THE DEPARTMENT WHICH ARE HEREBY DI SMISSED WITH NO ORDER AS TO COSTS. CIVIL APPEAL NO. 7755/2009 @ S.L.P. (C) NO. 20581/2 008 AND CIVIL APPEAL NO. 7757/2009 @ S.L.P. (C) NO. 18380/2009: 11. LEAVE GRANTED. 12. IN VIEW OF OUR JUDGMENT IN THE CASE OF CIT V. A LOM EXTRUSIONS LTD. [CIVIL APPEAL ARISING OUT OF S.L.P. (C) NO. 23851 O F 2007], WE SET ASIDE THE IMPUGNED JUDGMENT AND ORDER OF THE BOMBAY HIGH COUR T AND ALLOW THESE CIVIL APPEALS FILED BY THE ASSESSEES WITH NO ORDER AS TO COSTS. 10.3.5 IT IS ALSO PERTINENT TO REPRODUCE AT THIS ST AGE THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF AIMIL LIMITED(SUPRA ) WHEREIN HONBLE DELHI HIGH COURT INTERPRETED THE DECISION OF HONBLE SUPR EME COURT TO BE APPLICABLE TO BOTH EMPLOYER AND EMPLOYEES CONTRIBUT ION AND IN CASE THE SAID AMOUNTS WERE DEPOSITED BY EMPLOYER TO THE CRED IT OF EMPLOYEES WITH THE RESPECTIVE FUNDS BEFORE THE DUE DATE AS PRESCRI BED U/S 139(1) OF THE 1961 ACT, THE DEDUCTION FROM THE INCOME SHALL BE AL LOWED , BY HOLDING AS UNDER: 4. IN SOME OTHER APPEALS PREFERRED BY THE ASSESSEE S, THE ITAT HAS TAKEN CONTRARY VIEW AND UPHELD THE ADDITION MADE BY THE A SSESSING OFFICERS. UNDER THESE CIRCUMSTANCES, ALL THESE APPEALS WERE A DMITTED AND HEARD ON THE FOLLOWING QUESTION OF LAW : 'WHETHER THE ITAT WAS CORRECT IN LAW IN DELETING TH E ADDITION RELATING TO EMPLOYEES' CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI MADE BY THE ASSESSING OFFICER UNDER SECTION 36(1)(VA) OF THE IN COME-TAX ACT, 1961?' 5. SECTION 36 OF THE ACT DEALS WITH CERTAIN DEDUCTI ONS WHICH SHALL BE ALLOWED IN RESPECT OF MATTERS DEALT WITH THEREIN, I N COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THE ACT. DIFFERENT TYP ES OF DEDUCTIONS ARE PROVIDED THEREIN IN VARIOUS CLAUSES OF SECTION 36. CLAUSE (IV) OF SUB-SECTION ITA NO.1396/CHNY/2019 :- 18 -: (1) DEALS WITH DEDUCTIONS ON ACCOUNT OF CONTRIBUTIO N TOWARDS A RECOGNIZED PROVIDENT FUND OR AN APPROVED SUPERANNUATION FUND M ADE BY THE ASSESSEE AS AN EMPLOYER, SUBJECT TO CERTAIN LIMITS AND ALSO SUBJECT TO CERTAIN CONDITIONS AS THE CBDT MAY THINK FIT TO SPECIFY. CL AUSE (V) OF SUB-SECTION (1) OF SECTION 36 ENABLES THE ASSESSEE TO SEEK DEDU CTION IN RESPECT OF SUM PAID BY IT AS AN EMPLOYER BY WAY OF CONTRIBUTION TO WARDS AN APPROVED GRATUITY FUND CREATED BY HIM FOR THE EXCLUSIVE BENE FIT OF HIS EMPLOYEES UNDER AN IRREVOCABLE TRUST. THEN COMES CLAUSE (VA) WHICH DEALS ABOUT EMPLOYEES' CONTRIBUTION IN THE PROVIDENT FUND AND E SI AND READS AS UNDER: '(VA)ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF H IS EMPLOYEES TO WHICH THE PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEE'S A CCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. EXPLANATION - FOR THE PURPOSES OF THIS CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CR EDIT AN EMPLOYEE'S CONTRIBUTION TO THE EMPLOYEE'S ACCOUNT IN THE RELEV ANT FUND UNDER ANY ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UN DER ANY STANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHERWISE.' 6. IT WOULD ALSO BE APPROPRIATE TO TAKE NOTE OF SEC TION 43B OF THE ACT PRIMARILY FOR THE REASON THAT IN VINAY CEMENT LTD.' S CASE (SUPRA) IT WAS THIS PROVISION WHICH CAME UP FOR DISCUSSION BEFORE THE S UPREME COURT AND ALSO KEEPING IN VIEW THE CONTENTION OF LEARNED COUNSEL F OR THE REVENUE THAT THIS JUDGMENT WOULD BE OF NO AVAIL TO THE ASSESSEE WHILE DISCUSSING THE MATTER UNDER SECTION 36(1)(VA) OF THE ACT. SECTION 43B STI PULATES THAT CERTAIN DEDUCTIONS ARE TO BE GIVEN ONLY ON ACTUAL PAYMENT. CLAUSE (B) THEREOF TALKS ABOUT CONTRIBUTION BY THE ASSESSEE AS EMPLOYER TO A NY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER F UND FOR THE WELFARE OF THE EMPLOYEES. SINCE WE ARE CONCERNED ONLY WITH CLA USE (B), WE REPRODUCE THE SAME FOR CLEARER UNDERSTANDING : '43B. CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYME NT.NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS A CT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF ****** (B)ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER B Y WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRA TUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF 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 EMPLOYED BY HIM ONLY IN COMPUT ING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM : PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BE FORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO ITA NO.1396/CHNY/2019 :- 19 -: PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVID ENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN .' [EMPHASIS SUPPLIED] 7. DURING THE PERIOD IN QUESTION WITH WHICH WE ARE CONCERNED, SECTION 43B CONTAINED SECOND PROVISO ALSO, WHICH STANDS OMITTED BY THE FINANCE ACT, 2003 WITH EFFECT FROM 1-4-2004. SINCE, THIS PROVISI ON EXISTED AT THE RELEVANT TIME, IT ALSO NEEDS TO BE REPRODUCED : 'PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPE CT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH SUM HAS ACTUA LLY 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 ) OF SUB-SECTION (1) OF SECTION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE OT HERWISE THAN IN CASH, THE SUM HAS BEEN REALIZED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' 8. AS PER THE FIRST PROVISO, IF THE PAYMENT IS ACTU ALLY MADE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FILING THE RETU RN, IT WOULD BE ADMISSIBLE AS DEDUCTION. THUS, THE 'DUE DATE' IS THE DATE ON W HICH RETURN IS TO BE FILED. THE CASE OF THE REVENUE IS THAT FOR EMPLOYEES' CONT RIBUTION, THE 2ND PROVISO WAS SPECIFICALLY INCORPORATED AND IN THE PR ESENT CASE, AS WE ARE CONCERNED WITH NON-DEPOSIT OF THE EMPLOYEES' CONTRI BUTION TOWARDS PROVIDENT FUND AS WELL AS ESI CONTRIBUTION BY THE E MPLOYER, ONLY 2ND PROVISO BE LOOKED INTO. 9. WHAT IS SOUGHT TO BE ARGUED IS THAT DISTINCTION IS TO BE MADE WHILE TREATING THE CASE RELATED TO EMPLOYERS' CONTRIBUTIO N ON THE ONE HAND AND EMPLOYEES' CONTRIBUTION ON THE OTHER HAND. IT WAS S UBMITTED THAT WHEN EMPLOYEES' CONTRIBUTION IS RECOVERED FROM THEIR SAL ARIES/WAGES, THAT IS TRUST MONEY IN THE HANDS OF THE ASSESSEE. FOR THIS REASON, RIGOURS OF LAW ARE PROVIDED BY TREATING IT AS INCOME WHEN THE ASSE SSEE RECEIVES THE EMPLOYEES' CONTRIBUTION AND ENABLING THE ASSESSEE T O CLAIM DEDUCTION ONLY ON ACTUAL PAYMENT BY DUE DATE SPECIFIED UNDER THE P ROVISIONS. 10. MS. PREM LATA BANSAL, LEARNED COUNSEL FOR THE R EVENUE, THUS, ARGUED THAT THE SECOND PROVISO TO SECTION 43B, AS IT STOOD AT THE RELEVANT TIME, CLEARLY MENTIONED THAT DEDUCTION IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B) SHALL NOT BE ALLOWED UNLESS SUCH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUANCE OF CHEQUE OR DRAFT OR BY ANY OT HER MODE ON OR BEFORE THE DUE DATE, AS DEFINED IN THE EXPLANATION BELOW C LAUSE (VA) OF SUB- SECTION (1) OF SECTION 36. THUS, THE ASSESSEE WOULD EARN THE ENTITLEMENT ONLY IF THE ACTUAL PAYMENT IS MADE BEFORE THE DUE D ATE SPECIFIED IN EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 OF THE ACT. AS PER THE SAID EXPLANATION, 'DUE DATE' MEANS THE D ATE BY WHICH THE ASSESSEE IS REQUIRED, AS AN EMPLOYER, TO CREDIT THE EMPLOYEES' CONTRIBUTION TO THE EMPLOYEES' ACCOUNT IN THE RELEVANT FUND UNDE R ANY ACT, RULES, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STAN DING ORDER AWARD CONTRACT OF SERVICE OR OTHERWISE. 11. BEFORE WE DELVE INTO THIS DISCUSSION, WE MAY TA KE NOTE OF SOME MORE PROVISIONS OF THE ACT. SECTION 2(24) OF THE ACT ENU MERATES DIFFERENT COMPONENTS OF INCOME. IT, INTER ALIA, STIPULATES TH AT INCOME INCLUDES ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND S ET UP UNDER THE PROVISIONS OF THE EMPLOYEES' STATE INSURANCE ACT, 1 948 (34 OF 1948), OR ANY OTHER FUND FOR THE WELFARE OF SUCH EMPLOYEES. I T IS CLEAR FROM THE ABOVE THAT AS SOON AS EMPLOYEES' CONTRIBUTION TOWAR DS PROVIDENT FUND OR ITA NO.1396/CHNY/2019 :- 20 -: ESI IS RECEIVED BY THE ASSESSEE BY WAY OF DEDUCTION OR OTHERWISE FROM THE SALARY/WAGES OF THE EMPLOYEES, IT WILL BE TREATED A S 'INCOME' AT THE HANDS OF THE ASSESSEE. IT CLEARLY FOLLOWS THEREFROM THAT IF THE ASSESSEE DOES NOT DEPOSIT THIS CONTRIBUTION WITH PROVIDENT FUND/ESI A UTHORITIES, IT WILL BE TAXED AS INCOME AT THE HANDS OF THE ASSESSEE. HOWEV ER, ON MAKING DEPOSIT WITH THE CONCERNED AUTHORITIES, THE ASSESSEE BECOME S ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF SECTION 36(1)(VA) OF THE AC T. SECTION 43B(B), HOWEVER, STIPULATES THAT SUCH DEDUCTION WOULD BE PE RMISSIBLE ONLY ON ACTUAL PAYMENT. THIS IS THE SCHEME OF THE ACT FOR M AKING AN ASSESSEE ENTITLED TO GET DEDUCTION FROM INCOME INSOFAR AS EM PLOYEES' CONTRIBUTION IS CONCERNED. IT IS IN THIS BACKDROP WE HAVE TO DETERM INE AS TO AT WHAT POINT OF TIME THIS PAYMENT IS TO BE ACTUALLY MADE. 12. SINCE THE ITAT WHILE HOLDING THAT THE AMOUNT WO ULD QUALIFY FOR DEDUCTION EVEN IF PAID AFTER THE DUE DATES PRESCRIB ED UNDER THE PROVIDENT FUND/ESI ACT BUT BEFORE THE FILING OF THE INCOME-TA X RETURNS BY PLACING RELIANCE UPON THE SUPREME COURT JUDGMENT IN VINAY C EMENT LTD.'S CASE (SUPRA). AT THIS JUNCTURE WE TAKE NOTE OF THE DISCU SSION OF ITAT ON THIS ASPECT : '11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IN THE ASSESSMENT ORDER LD. ASSESSING OFFICER HAS CATEGORICALLY STATED THAT WHAT THE AMOUNT DUE W AS FOR WHICH MONTH IN RESPECT OF EPF, FAMILY PENSION, PF INSPECTION CHARG ES AND ESI DEPOSITS AND WHAT WERE THE DUE DATES FOR THESE DEPOSITS AND ON W HICH DATE THESE DEPOSITS WERE MADE. THE DATES OF DEPOSITS ARE MENTI ONED BETWEEN 23RD MAY, 2001 TO 23RD APRIL, 2002. THE LATEST PAYMENT I S MADE ON 23RD APRIL, 2002 AND ASSESSEE BEING LIMITED COMPANY HAD FILED I TS RETURN ON 20TH OCTOBER, 2002 WHICH IS A DATE NOT BEYOND THE DUE DA TE OF FILING OF THE RETURN. THUS, IT IS CLEAR BEYOND DOUBT THAT ALL THE PAYMENTS WHICH HAVE BEEN DISALLOWED WERE MADE MUCH EARLIER TO THE DUE D ATE OF FILING OF THE RETURN. THE DISALLOWANCE IS NOT MADE BY THE ASSESSI NG OFFICER ON THE GROUND THAT THERE IS NO PROOF OF MAKING SUCH PAYMEN T BUT DISALLOWANCE IS MADE ONLY ON THE GROUND THAT THESE PAYMENTS HAVE BE EN MADE BEYOND THE DUE DATES OF MAKING THESE PAYMENTS UNDER THE RESPEC TIVE STATUTE. THUS, IT WAS NOT AN ISSUE THAT THE PAYMENTS WERE NOT MADE BY THE ASSESSEE ON THE DATES WHICH HAVE BEEN STATED TO BE THE DATES OF DEP OSITS IN THE ASSESSMENT ORDER. IF SUCH IS A FACTUAL ASPECT THEN ACCORDING TO LATEST POSITION OF LAW CLARIFIED BY HON'BLE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. THAT NO DISALLOWANCE COULD BE MAD E IF THE PAYMENTS ARE MADE BEFORE THE DUE DATE OF FILING THE RETURN OF IN COME. THIS ISSUE CAME BEFORE HON'BLE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. WHICH WAS A SPECIAL LEAVE PETITION FILED BY THE DEP ARTMENT 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 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 BEFO RE FILING OF THE RETURN. THE SPECIAL LEAVE PETITION IS DISMISSED.' ITA NO.1396/CHNY/2019 :- 21 -: 13. IT IS CLEAR FROM THE ABOVE THAT IN VINAY CEMENT LTD.'S CASE (SUPRA), THE SLP PREFERRED BY THE REVENUE AGAINST THE JUDGMENT O F THE GUWAHATI HIGH COURT WAS DISMISSED MAKING THE AFOREQUOTED OBSERVAT IONS. THE REASONS ARE GIVEN AND, THUS, IT AMOUNTS TO AFFIRMATION OF T HE VIEW TAKEN BY THE HIGH COURT OF GUWAHATI. 14. WHEN WE KEEP THAT PROPOSITION IN MIND AND ALSO TAKE INTO CONSIDERATION VARIOUS JUDGMENTS WHERE VINAY CEMENT LTD.'S CASE (S UPRA) IS APPLIED AND FOLLOWED, IT WILL NOT BE POSSIBLE TO ACCEPT THE CON TENTION OF THE REVENUE. 15. IN CIT V. DHARMENDRA SHARMA [2008] 297 ITR 320, THIS COURT SPECIFICALLY DEALT WITH THIS ISSUE AND RELYING UPON THE AFORESAID JUDGMENT OF THE GUWAHATI HIGH COURT, AS AFFIRMED BY THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE (SUPRA), THE APPEAL OF THE REVEN UE WAS DISMISSED. MORE DETAILED DISCUSSION IS CONTAINED IN ANOTHER JU DGMENT OF THIS COURT IN CIT V. P.M. ELECTRONICS LTD. [2009] 177 TAXMAN 1 . SPECIFIC QUESTIONS OF LAW WHICH WERE PROPOSED BY THE REVENUE IN THAT CASE WERE AS UNDER : '(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 2ND PROVISO TO SECTI ON 43B BY WAY OF AMENDMENT BY THE FINANCE ACT, 2003 IS RETROSPECTIVE IN NATURE' (P. 2) 16. THESE QUESTIONS WERE ANSWERED BY THE DIVISION B ENCH IN THE FOLLOWING MANNER : '7. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENU E, AS WELL AS, THE ASSESSEE, WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVES TO BE SUSTAINED AS IT IS NO LONGER RES INTEGRA IN V IEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LT D. 213 ITR 268 WHICH HAS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. DHARMENDRA SHARMA [2008] 297 ITR 320. 8. DESPITE THE AFORESAID JUDGMENTS, THE LEARNED COU NSEL FOR THE TRIBUNAL HAS CONTENDED THAT IN VIEW OF THE JUDGMENT OF THE D IVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. SYNERGY FIN ANCIAL EXCHANGE LTD. [2007] 288 ITR 366 AND THAT OF THE DIVISION BENCH O F THE BOMBAY HIGH COURT IN THE CASE OF CIT V. PAMWI TISSUES LTD. [200 8] TAXINDIAONLINE.COM 104 (TIOL) THE ISSUE REQUIRES CONSIDERATION. ACCORD ING TO US, IN VIEW OF THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF VINAY CEMENT LTD. (SUPRA) BY THE SUPREME COURT BY A SPEAKING ORDER, T HE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE HAS TO BE REJECTED AT THE VERY THRESHOLD. THE REASON FOR THE SAME IS AS FOLLOWS: 9. THE GAUHATI HIGH COURT IN THE CASE OF CIT V. GEO RGE WILLIAMSON (ASSAM) LTD. [2006] 284 ITR 619 DEALT WITH THE VERY SAME IS SUE. IN THE SAID JUDGMENT THE DIVISION BENCH OF THE GAUHATI HIGH COU RT NOTED A CONTRARY VIEW TAKEN BY THE KERALA HIGH COURT IN THE CASE OF CIT V. SOUTH INDIA CORPORATION LTD. [2000] 242 ITR 114. AFTER NOTING T HE SAID JUDGMENT THE FACT THAT THE AMENDMENTS HAD BEEN MADE TO THE PROVI SIONS OF SECTION 43B OF THE ACT BY VIRTUE OF FINANCE ACT, 2003 WITH EFFE CT FROM 1-4-2004 IT AGREED WITH THE SUBMISSION OF THE LEARNED COUNSEL F OR THE ASSESSEE THAT BY VIRTUE OF THE OMISSION OF THE SECOND PROVISO AND TH E OMISSION OF CLAUSES (A), (C), (D ), (E) AND (F) WITHOUT ANY SAVING CLAU SE WOULD MEAN THAT THE PROVISIONS WERE NEVER IN EXISTENCE. FOR THIS PURPOS E, IN THE SAID CASE THE ITA NO.1396/CHNY/2019 :- 22 -: ASSESSEE HAD PLACED RELIANCE ON THE JUDGMENT OF A C ONSTITUTION 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. ASSTT. CIT [2002] 257 ITR 338 (SC). THE SAID SUBMISSIONS FOUND FAVOUR WITH THE DIVISION BENCH OF THE GUWAHATI HIGH COURT AND RELYI NG ON EARLIER DECISIONS OF ITS OWN COURT IN CIT V. ASSAM TRIBUNE [2002] 253 ITR 93 AND CIT V. BHARAT BAMBOO & TIMBER SUPPLIERS [1996] 219 ITR 212 THE DIVISION BENCH DISMISSED THE APPEAL OF THE REVENUE. IT TRANSPIRES THAT THE AFORESAID MATTER WAS TAKEN UP IN APPEAL ALONG WITH OTHER MATTERS INC LUDING VINAY CEMENT LTD.'S CASE (SUPRA). THE ORDER IN VINAY CEMENT LTD. 'S CASE (SUPRA) WAS PASSED BY THE SUPREME COURT ON 7-3-2007 WHEREIN IT OBSERVED AS FOLLOWS:- 'DELAY CONDONED. IN THE PRESENT CASE WE ARE CONCERN ED 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 SECTI ON 43B FOR THAT PERIOD PARTICULARLY IN VIEW OF THE FACT THAT HE HAS CONTRI BUTED TO PROVIDENT FUND BEFORE FILING OF THE RETURN. SPECIAL LEAVE PETITION IS DISMISSED'. 10. IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AND WHILE DOING S O THE SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFO RE IT PERTAIN TO A PERIOD PRIOR TO THE AMENDMENT BROUGHT ABOUT IN SECTION 43B OF THE ACT. THE AFORESAID POSITION AS REGARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO SECTION 43B HAS BEEN NOTICED BY A DIVI SION BENCH OF THIS COURT IN DHARMENDRA SHARMA'S CASE (SUPRA). APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT LTD.' S CASE (SUPRA) A DIVISION BENCH OF THIS COURT DISMISSED THE APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BENCH OF T HE MADRAS HIGH COURT IN THE CASE OF CIT V. NEXUS COMPUTER (P.) LTD. BY A JUDGMENT DATED 18-8- 2008 PASSED IN TAX CASE (A) NO. 1192/2008 DISCUSSED THE IMPACT OF BOTH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. (SUPRA) AND VINAY CEMENT LTD.'S CASE ( SUPRA) AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COUR T IN SYNERGY FINANCIAL EXCHANGE'S CASE (SUPRA). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF THE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED V. STATE OF KERALA 119 STC 505 AT PAGE 526 IN PARAGRAPH 40 AND NOTED THE FOLLOWING OBSERVATIONS: 'IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKIN G ORDER, I.E., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE O RDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAIN ED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ARTICLE 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLA RATION 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 C OURT, TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS 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 TH E COURT. TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF TH E SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR THAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUBSEQUEN T PROCEEDINGS BETWEEN THE PARTIES.' 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COU RT IN KUNHAYAMMED'S CASE (SUPRA) THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF ITA NO.1396/CHNY/2019 :- 23 -: NEXUS COMPUTER (P.) LTD. (SUPRA) CAME TO THE CONCLU SION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT LTD.'S C ASE (SUPRA) WOULD BIND THE HIGH COURT AS IT WAS NOT DECLARED BY THE S UPREME COURT UNDER ARTICLE 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONI NG OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P.) LTD.'S CASE (SUPRA). J UDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE (SUPRA) AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA'S CASE (SUPRA). 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGRE E WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COUR T IN PAMWI TISSUES LTD.'S CASE (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDER ATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED.' (P. 3) IT ALSO BECOMES CLEAR THAT DELETION OF THE 2ND PROV ISO IS TREATED AS RETROSPECTIVE IN NATURE AND WOULD NOT APPLY AT ALL. THE CASE IS TO BE GOVERNED WITH THE APPLICATION OF THE 1ST PROVISO. 17. WE MAY ONLY ADD THAT IF THE EMPLOYEES' CONTRIBU TION IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYM ENT BUT CAN INCUR PENALTIES ALSO, FOR WHICH SPECIFIC PROVISIONS ARE M ADE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. THEREFORE, THE ACT PERM ITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE A FORESAID CONSEQUENCES. INSOFAR AS THE INCOME-TAX ACT IS CONCERNED, THE ASS ESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RE TURN IS FILED, AS PER THE PRINCIPLE LAID DOWN BY THE SUPREME COURT IN VINAY C EMENT LTD.'S CASE (SUPRA). 18. WE, THUS, ANSWER THE QUESTION IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. AS A CONSEQUENCE, THE APPEALS FILED BY THE ASSESSEES STAND ALLOWED AND THOSE FILED BY THE REVENUE ARE DISMISSE D. NO COSTS. 10.3.6 WE HAVE ALSO OBSERVED THAT HONBLE MADRAS HI GH COURT IN THE CASE OF CIT V. M/S.INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD.(CITED SUPRA), HAS DECIDED THIS ISSUE IN FAVOUR OF THE TAX -PAYER AND DEDUCTION TOWARDS EMPLOYEES CONTRIBUTION TO PF/ESI WAS ALLOWE D PROVIDED THE SAME IS DEPOSITED TO THE CREDIT OF EMPLOYEES WITH RESPEC TIVE PF/ESI FUNDS BEFORE THE DUE DATE PRESCRIBED U/S 139(1) OF THE 1961 ACT, ALBEIT THE SAME WAS DEPOSITED AFTER THE DUE DATE AS PRESCRIBED FOR PAYM ENT UNDER STATUTE GOVERNING PF/ESI. THE HONBLE MADRAS HIGH COURT WHI LE ADJUDICATING THE AFORESAID APPEAL IN THE CASE OF INDUSTRIAL SECURITY (SUPRA) IN FAVOUR OF TAX- PAYER REFERRED TO THE DECISION OF HONBLE SUPREME C OURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LIMITED REPORTED IN 319 ITR 306( SC) AND DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. AIMI L LIMITED REPORTED IN (2010) 321 ITR 508(DEL.) , AND HONBLE MADRAS HIGH COURT 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 EXTRUSION LTD. REPORTED IN 319 ITA NO.1396/CHNY/2019 :- 24 -: ITR 306, WHEREBY , THE SUPREME COURT HELD THAT OMIS SION OF SECOND PROVISO TO SECTION 43B AND AMENDMENT TO FIRST PROVI SO BY FINANCE ACT, 2003 ARE CURATIVE IN NATURE AND ARE EFFECTIVE RETRO SPECTIVELY , 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. AIMIL LTD. REPORTE D IN 321 ITR 508 HELD THAT IF THE ASSESSEE HAD DEPOSITED EMPLOYEES CONTR IBUTION TOWARDS PROVIDENT FUND AND ESI AFTER DUE DATE AS PRESCRIBED UNDER THE RELEVANT ACT, BUT BEFORE THE DUE DATE OF FILING OF RETURN UN DER THE INCOME TAX ACT, NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVIS IONS OF SECTION 43B AS AMENDED BY FINANCE ACT, 2003. 6. IN THE PRESENT CASE, THE ASSESSEE HAD REMITTED T HE EMPLOYEES CONTRIBUTION BEYOND THE DUE DATE FOR PAYMENT, BUT W ITHIN THE DUE DATE FOR FILING THE RETURN OF INCOME. HENCE, FOLLOWING THE A BOVE-SAID DECISION, WE FIND NO REASON TO DIFFER WITH THE FINDINGS OF THE T RIBUNAL. ACCORDINGLY, WE FIND NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL Q UESTION OF LAW ARISES FOR CONSIDERATION IN THESE APPEALS. ACCORDINGLY, BOTH T HE TAX CASE(APPEALS) STAND DISMISSED. NO COSTS. CONSEQUENTLY, M.P. N. 1 OF 2015 IS ALSO DISMISSED. 10.3.7 WE HAVE ALSO OBSERVED THAT CO-ORDINATE DIVIS ION BENCH OF CHENNAI TRIBUNAL IN ACIT V. SPEL SEMICONDUCTOR LIMITED IN I .T.A. NO. 3263/CHNY/2018 FOR AY:2013-14 HAS DECIDED THIS ISSU E IN FAVOUR OF THE TAX-PAYER AS IN THAT CASE THE EMPLOYEE CONTRIBUTION OF THE PROVIDENT FUND WAS DEPOSITED BY EMPLOYER TO THE CREDIT OF EMPLOYE ES WITH RESPECTIVE PF FUND AFTER THE DUE DATE AS PRESCRIBED IN THE APPLIC ABLE PF ACT, BUT WAS DEPOSITED BEFORE THE DUE DATE AS PRESCRIBED FOR FI LING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE 1961 ACT, BY RELYING ON DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL SECURITY & INTELLIGENCE INDIA PRIVATE LIMITED(SUPRA) . ONE OF US NAMELY HO NBLE JUDICIAL MEMBER WAS PART OF THE DIVISION BENCH WHO PRONOUNCED THE O RDER IN THE CASE OF SPEL SEMICONDUCTOR LIMITED(SUPRA). 10.3.8 WE HAVE OBSERVED THAT MOST OF THE HONBLE HI GH COURTS IN INDIA HAVE TAKEN A VIEW ON THIS ISSUE OF BELATED DEPOSIT OF EMPLOYEE CONTRIBUTION TOWARDS PF/ESI AND OTHER EMPLOYEES WELFARE FUNDS BE YOND THE DATE PRESCRIBED UNDER STATUTE GOVERNING PF/ESI AND OTHER EMPLOYEE WELFARE FUNDS BUR DEPOSITED PRIOR TO DUE DATE FOR FILING OF RETURN OF INCOME U/S 139(1) OF THE 1961 ACT, IN FAVOUR OF THE TAX-PAYER , WHILE WE HAVE ALSO OBSERVED THAT HONBLE KERALA HIGH COURT AND HONBLE GUJARAT HIGH COURT HAS TAKEN A VIEW ON THIS ISSUE FAVORABLE TO REVENUE . OUR HONBLE JURISDICTIONAL HIGH COURT HAS TAKEN A VIEW IN FAVOU R OF THE TAX-PAYER AND JUDICIAL DISCIPLINE DEMANDS THAT WE FOLLOW THE JUDG MENT OF HONBLE JURISDICTIONAL HIGH COURT VIZ. IN THE CASE OF CIT V. M/S.INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD.(SUPRA), WHICH JUD GMENT IS BINDING ON US. AT THIS STAGE WE WOULD LIKE TO REFER TO ORDER IN W RIT PETITION PASSED BY SINGLE JUDGE OF HONBLE MADRAS HIGH COURT IN THE CA SE OF UNIFAC MANAGEMENT SERVICES (INDIA) PRIVATE LIMITED V. DCIT IN WP NO. 5264 OF 2020, WMP NO. 6461 OF 2018, VIDE ORDER DATED 23.10 .2018 (REPORTED IN (2018) 409 ITR 225(MAD.), WHEREIN SINGLE JUDGE OF HONBLE MADRAS HIGH COURT DECIDED THIS ISSUE IN FAVOUR OF REVENUE . HOW EVER, SUBSEQUENTLY, THE SAID DECISION OF SINGLE JUDGE OF HONBLE MADRAS HIG H COURT WAS CHALLENGED BY THE TAX-PAYER BEFORE THE DIVISION BENCH OF HONB LE MADRAS HIGH COURT BY FILING WRIT APPEAL NO. 2854 OF 2018 AND CMP NO. 23727 OF 2018 AND THE DIVISION BENCH OF HONBLE MADRAS HIGH COURT WAS PLE ASED TO GRANT PERMISSION TO THE TAX-PAYER TO WITHDRAW THE ORIGINA L WRIT PETITION NAMELY ITA NO.1396/CHNY/2019 :- 25 -: WP NO. 5264 OF 2018 AS WELL WRIT APPEAL NO. 2854 OF 2018, VIDE ORDERS DATED 09.01.2019. THE REVENUE HAS REFERRED BEFORE U S DURING THE COURSE OF HEARING , DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF ORCHID PHARMA(SUPRA) , WHEREIN THE HONBLE MADRAS HIGH COU RT HAD NOTED THAT THE ASSESSEE DID NOT APPEAR BEFORE TRIBUNAL AND ALSO IT IS AN ORDER PASSED BY HONBLE MADRAS HIGH COURT EX-PARTE IN THE ABSENCE O F THE TAX-PAYER, WHEREIN NO NOTICE WAS ISSUED TO THE TAX-PAYER AS PR OCEEDINGS WERE PENDING AGAINST THE TAX-PAYER BEFORE NATIONAL COMPA NY LAW TRIBUNAL AS THE TAX-PAYER WAS IN LIQUIDATION. THE HONBLE MADRA S HIGH COURT OBSERVED IN THE CASE OF ORCHID PHARMA(SUPRA) THAT TRIBUNAL H AS DECIDED THE ISSUE IN FAVOUR OF TAX-PAYER BY RELYING ON DECISION OF HONB LE MADRAS HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY AND INTELLIGENCE PR IVATE LIMITED(SUPRA). THE REVENUE BROUGHT TO THE NOTICE OF THE HONBLE MADRAS HIGH COURT , DECISION(S) OF HONBLE KERALA HIGH COURT IN THE CAS E OF CIT V. MERCHEM LIMITED REPORTED IN (2015) 378 ITR 443(KER.) AND AL SO DECISION IN THE CASE OF POPULAR VEHICLES AND SERVICES PRIVATE LIMITED V. CIT REPORTED IN (2018) 96 TAXMANN.COM 13(KER.), WHEREIN THIS ISSUE IS DECI DED BY HONBLE KERALA HIGH COURT IN FAVOUR OF REVENUE AND WITH THIS BACK GROUND, HONBLE MADRAS HIGH COURT REMANDED THE MATTER BACK TO THE FILE OF LEARNED CIT(A) FOR FRESH ADJUDICATION OF THE ISSUE , AFTER CONSIDERING ENTIR E LAW IN STATUTE AND DECISIONS OF COURTS POST THE DECISION OF HONBLE DE LHI HIGH COURT IN THE CASE OF AIMIL LIMITED(SUPRA). WE HAVE OBSERVED THAT HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION(CITED SUPRA) WH ILE ADJUDICATING ON APPLICABILITY OF AMENDED PROVISION OF SECTION 43B O F THE 1961 ACT BY VIRTUE OF DELETION OF SECOND PROVISO AND AMENDMENT OF FIRS T PROVISO BY FINANCE ACT, 2003 WHICH WAS APPLICABLE WEF 01.04.2004 , HEL D THE SAID AMENDMENTS TO BE CURATIVE IN NATURE AND TO APPLY RE TROSPECTIVE WEF 01.04.1988. THE HONBLE SUPREME COURT ALSO REFERRED TO LARGER BENCH DECISION IN THE CASE OF ALLIED MOTORS PRIVATE LIMIT ED (1997) 224 ITR 677(SC) TO HOLD AMENDMENT MADE BY FINANCE ACT, 2003 TO BE RETROSPECTIVE . WHILE HOLDING THE SAME TO BE RETROS PECTIVE, THE HONBLE SUPREME COURT REFERRED TO ITS DECISION IN THE CASE OF CIT V. J.H.GOTLA REPORTED IN (1985) 156 ITR 323(SC) WHEREIN IT HELD THAT IF STRICT INTERPRETATION LEADS TO ABSURD RESULTS WHICH ARE NO T INTENDED BY THE OBJECT OF THE LEGISLATION, AND IF OTHER CONSTRUCTION IS PO SSIBLE , THEN THAT CONSTRUCTION SHOULD BE PREFERRED TO THE STRICT LEGA L CONSTRUCTION. THE HONBLE SUPREME COURT OBSERVED THAT THOUGH EQUITY A ND TAXATION ARE OFTEN STRANGERS, ATTEMPTS SHOULD BE MADE THAT THESE DO NO T REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE, THEN SUCH CONSTRUCTION SHOULD BE PREFERRED TO LITERAL CONSTRU CTION. WE HAVE OBSERVED THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V . GHATGE PATIL TRANSPORTS LIMITED REPORTED IN (2014) 368 ITR 749( BOM.) HELD THAT DECISION OF HONBLE SUPREME COURT IN THE CASE OF AL OM EXTRUSION(CITED SUPRA) SHALL APPLY BOTH TO EMPLOYEES AS WELL EMPLOY ERS CONTRIBUTION TO VARIOUS EMPLOYEES WELFARE FUNDS , AND IF THE AMOUNT TOWARDS EMPLOYEES CONTRIBUTION TO EMPLOYEES WELFARE FUNDS IS DEPOSITE D BEFORE THE DUE DATE PRESCRIBED FOR FILING OF RETURN OF INCOME U/S 139(1 ) OF THE 1961 ACT, THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION. THE AFORE SAID DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GHATGE PATIL TRANS PORT (SUPRA) IS REPRODUCED HEREUNDER: 15. IN THIS MANNER, THE AMENDMENT PROVIDED BY FINA NCE ACT, 2003 PUT ON PAR THE BENEFIT OF DEDUCTIONS OF TAX, DUTY, CESS AN D FEE ON THE ONE HAND WITH CONTRIBUTIONS TO VARIOUS EMPLOYEES' WELFARE FU NDS ON THE OTHER. ALL THIS CAME UP FOR CONSIDERATION BEFORE THE HON'BLE S UPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA). THE TRIBUNAL IN THE CASE AT HAND ITA NO.1396/CHNY/2019 :- 26 -: RELIED UPON THE SAID JUDGMENT. THERE IS NO REASON T O FAULT THE ORDER PASSED BY THE TRIBUNAL. WE ARE OF THE VIEW THAT THE DECISI ON OF THE SUPREME COURT IN ALOM EXTRUSIONS LTD. (SUPRA) APPLIES TO EMPLOYEE S' CONTRIBUTION AS WELL AS EMPLOYERS' CONTRIBUTION. QUESTION NOS.2, 3 & 4 A RE ACCORDINGLY ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10.3.9 THE HONBLE BOMBAY HIGH COURT HAS CONSISTENT LY HELD THIS ISSUE IN FAVOUR OF THE TAX-PAYER IN ITS OTHER DECISIONS ALSO SUCH AS GEEKAY SECURITY SERVICES PRIVATE LIMITED V. DCIT REPORTED IN (2019) 101 TAXMANN.COM 192(BOM.) , CIT V. HINDUSTAN ORGANICS CHEMICALS LIM ITED (2014) 366 ITR 1(BOM.). THE HONBLE DELHI HIGH COURT IN AIMIL LIMI TED (SUPRA) HELD THAT IF EMPLOYEES CONTRIBUTION IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOY ER NOT ONLY PAYS INTEREST ON DELAYED PAYMENTS BUT CAN INCUR PENALTIES ALSO , FOR WHICH SPECIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUND ACT AS WE LL AS THE ESI ACT. IT FURTHER HELD THAT THE STATUTES GOVERNING PF/ESI PER MITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS , SUBJECT TO THE AFORESAID CONSEQUENCES. INSOFAR AS THE 1961 ACT IS CONCERNED, THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT MADE IS BEFORE TH E RETURN OF INCOME IS FILED , AS PER THE PRINCIPLE LAID DOWN BY THE SUPRE ME COURT IN VINAY CEMENT LTD.S CASE(SUPRA). HOWEVER, HONBLE DELHI HIGH CO URT HAS NOW DECIDED THIS ISSUE IN FAVOUR OF REVENUE IN THE CASE OF CIT V. BHARAT HOTELS LIMITED REPORTED IN (2019) 410 ITR 417(DEL.) , WHILE IMPLIE DLY REVERSING THE STAND TAKEN IN ITS EARLIER DECISION IN THE CASE OF AIMIL LIMITED(SUPRA). HOWEVER, THE DECISION IN THE CASE OF AIMIL LIMITED(SUPRA) WA S NOT BROUGHT TO THE NOTICE OF HONBLE JUDGES OF DELHI HIGH COURT WHILE ADJUDICATING IN THE CASE OF BHARAT HOTELS(SUPRA). THE HONBLE PUNJAB AND HAR YANA HIGH COURT HAS DECIDED THIS ISSUE IN FAVOUR OF THE TAX-PAYER IN TH E CASE OF CIT V. RAI AGRO INDUSTRIES LIMITED REPORTED IN (2011) 334 ITR 122( PUNJ & HAR.) ;CIT V. HEMLA EMBROIDERY MILLS PRIVATE LIMITED REPORTED IN (2014) 366 ITR 167( PUNJ. & HAR.). HONBLE RAJASTHAN HIGH COURT IN THE CASE(S) OF CIT V. STATE BANK OF BIKANER AND JAIPUR REPORTED IN (2014) 43 TA XMANN.COM 411(RAJ.) AND IN CIT V. JAIPUR VIDYUT VITRAN NIGAM LIMITED RE PORTED IN (2014) 49 TAXMANN.COM 540(RAJ) HAS DECIDED THIS ISSUE IN FAVO UR OF THE TAX-PAYER. SIMILARLY, HONBLE KARNATAKA HIGH COURT AND HONBLE HIMACHAL PRADESH HIGH COURT HAS DECIDED THIS ISSUE IN FAVOUR OF THE TAX-PAYER. HOWEVER, HONBLE GUJARAT HIGH COURT HAS DECIDED THIS ISSUE I N FAVOUR OF REVENUE IN CIT V. GUJARAT STATE ROAD TRANSPORT CORPORATION REP ORTED IN (2014) 366 ITR 170(GUJ.) ; CHECKMATE FACILITY & ELECTRONIC SOL UTIONS (P.) LTD. V. DY. CIT [TAX APPEAL NO. 1256 OF 2018, DATED 15-10-2018 AND PCIT V. SUZLON ENERGY LIMITED REPORTED IN (2020) 115 TAXMANN.COM 3 40(GUJ). THUS, HONBLE GUJARAT HIGH COURT HELD THAT TO GET DEDUCTI ON TOWARDS EMPLOYEES CONTRIBUTION TOWARDS PF/ESI AND OTHER WELFARE FUNDS , THE EMPLOYER OUGHT TO HAVE DEPOSITED THE SAID AMOUNT TO THE CREDIT OF EMPLOYEES WITH THE RELEVANT FUNDS ON OR BEFORE THE DUE DATE SPECIFIED IN PF/ESI ACT OR OTHER WELFARE FUNDS , KEEPING IN VIEW PROVISIONS OF SECTI ON 36(1)(VA) READ WITH EXPLANATION 1 AND SECTION 2(24)(X) OF THE 1961 ACT. SIMILARLY, HONBLE KERALA HIGH COURT HAS ALSO DECIDED THIS ISSUE IN F AVOUR OF REVENUE IN THE CASE OF CIT V. MERCHEM LIMITED REPORTED IN (2015) 3 78 ITR 443(KER. HC) AND ALSO IN POPULAR VEHICLES AND SERVICES PRIVATE L IMITED V. CIT (2018) 406 ITR 150 (KER.HC). WHILE DECISING THE APPEAL IN THE CASE OF MERCHEM LIMITED(SUPRA) IN FAVOUR OF REVENUE ON THIS ISSUE, THE HONBLE KERALA HIGH COURT HELD THAT DEDUCTION ON ACCOUNT OF EMPLOYEES C ONTRIBUTION TOWARDS PF/ESI CAN ONLY BE ALLOWED IF THE SAID AMOUNT IS DE POSITED TO THE CREDIT OF EMPLOYEE WITH RELEVANT FUNDS WITHIN THE DUE DATE AS PRESCRIBED UNDER THE STATUTE GOVERNING PF/ESI KEEPING IN VIEW PROVISIONS OF SECTION 36(1)(VA) ITA NO.1396/CHNY/2019 :- 27 -: READ WITH EXPLANATION 1 AND PROVISIONS OF SECTION 2 (24)(X) OF THE 1961 ACT, THUS APPLYING STRICT INTERPRETATION AND HOLDING THA T OTHERWISE SECTION 36(1)(VA) READ WITH EXPLANATION 1 WILL BECOME OTIOS E WHICH WAS NOT THE INTENTION OF LEGISLATURE. IT FURTHER WENT ON TO HOL D THAT THE ISSUE BEFORE HONBLE SUPREME COURT WHILE ADJUDICATING APPEAL IN THE CASE OF ALOM EXTRUSION(SUPRA) WAS NEVER WITH RESPECT OF EMPLOYEE S CONTRIBUTION TO PF/ESI AND IT WAS ONLY IN CONTEXT OF EMPLOYERS CONT RIBUTION TO PF/ESI , WHEREIN AMENDMENTS BROUGHT IN BY FINANCE ACT, 2003 WERE HELD TO BE RETROSPECTIVE BY HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION(SUPRA). THE DECISION OF HONBLE KERALA HI GH COURT IN THE CASE OF POPULAR VEHICLES (SUPRA) IS REPRODUCED AS HEREUNDE R: 7. WE WILL FIRST NOTICE THE PROVISIONS. 'S.2(24) 'INCOME' INCLUDES ** ** ** (X) ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLO YEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE PROVISIONS OF THE EMPLOYEES' STATE INSURANCE ACT, 1 948 A(34 OF 1948), OR ANY OTHER FUND FOR THE WELFARE OF SUCH EMPLOYEES'. 'S.36. OTHER DEDUCTIONS (1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CL AUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THEREIN, IN COMPU TING THE INCOME REFERRED TO IN THE SECTION 28 ** ** ** (V) ANY SUM PAID BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TOWARDS AN APPROVED GRATUITY FUND CREATED BY HIM FO R THE EXCLUSIVE BENEFIT OF HIS EMPLOYEES UNDER AN IRREVOCABLE TRUST; (VA) ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF H IS EMPLOYEES TO WHICH THE PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEE'S A CCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. EXPLANATION.- FOR THE PURPOSES OF THIS CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CR EDIT AN EMPLOYEE'S CONTRIBUTION TO THE EMPLOYEE'S ACCOUNT IN THE RELEV ANT FUND UNDER ANY ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UN DER ANY STANDING ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE'. 'S.43B. CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAY MENT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RES PECT OF ** ** ** (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES'. ITA NO.1396/CHNY/2019 :- 28 -: 8. LOOKING AT THE PROVISIONS WE ARE DEFINITE THAT T HE ACT TREATS EMPLOYER'S AND EMPLOYEE'S CONTRIBUTION DISTINCTLY. SUB-CLAUSE (V) OF SECTION 36(1) SPEAKS OF A GRATUITY FUND, WHEREIN THE EMPLOYEE DOE S NOT CONTRIBUTE AT ALL. SECTION 36(1)(VA) SPEAKS OF THE EMPLOYEE'S CONTRIBU TION TO A WELFARE FUND FOR THE BENEFIT OF EMPLOYEES ALONE, BY VIRTUE OF TH E SPECIFIC REFERENCE TO SECTION 2 (24). SECTION 2 (24) INCLUDES AS INCOME, ANY CONTRIBUTION RECEIVED BY THE EMPLOYER FROM THE EMPLOYEE FOR THE PURPOSE OF REMITTANCE TO A FUND CREATED FOR THE WELFARE OF THE EMPLOYEES; INCLUDING INTER ALIA A PROVIDENT FUND AND THAT UNDER THE ESI ACT. WHEN THE SAME IS REMITTED ON THE DUE DATE AS PRESCRIBED IN THE STATUTE OR ORDER CREATING SUCH FUND, THEN IT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 36. SECT ION 43B(B) REFERS TO 'A SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER', TO AN EMPLOYEES WELFARE FUND WHICH IS THE EMPLOYER'S CONTRIBUTION. 9. WE HAVE CAREFULLY GONE THROUGH THE DECISIONS OF THE HON'BLE SUPREME COURT AS ALSO OF THE DIVISION BENCH. THE PRIMARY QU ESTION TO BE CONSIDERED IS WHETHER THERE SHOULD BE A RECONSIDERATION OF MER CHEM LTD.'S CASE (SUPRA). ALOM EXTRUSIONS LTD.'S CASE (SUPRA)AND MER CHEM LTD.'S CASE (SUPRA)APPLIED IN TWO DIFFERENT FIELDS; THE FORMER WITH REFERENCE TO SECTION 43B(B), BEING EMPLOYER'S CONTRIBUTION AND THE LATTE R DEALING WITH EMPLOYEE'S CONTRIBUTION AS COVERED BY SECTION 36(1) (VA). WE WOULD FIRST DEAL WITH ALOM EXTRUSIONS LTD.'S CASE (SUPRA)WHICH HAS DILATED UPON THE HISTORY OF THE LEGISLATION AND THE REASON FOR THE V ARIOUS AMENDMENTS BROUGHT IN. WE FIRST NOTICE THAT THE QUESTION WHICH AROSE FOR CONSIDERATION IN ALOM EXTRUSIONS LTD.'S CASE (SUPRA)WAS AS TO 'WH ETHER OMISSION (DELETION) OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TAX ACT, 1961, BY THE FINANCE ACT, 2003, OPERATED WITH EFFEC T FROM APRIL 1, 2004, OR WHETHER IT OPERATED RETROSPECTIVELY WITH EFFECT FRO M APRIL 1, 1988' (SIC PARA 4). THE HON'BLE SUPREME COURT NOTICED THAT PRIOR TO FINANCE ACT, 2003, THE SECOND PROVISO TO SECTION 43B RESTRICTED THE DEDUCT ION IN RESPECT OF ANY SUM PAYABLE BY AN EMPLOYER BY WAY OF CONTRIBUTION T O PROVIDENT FUND/SUPERANNUATION FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES, UNLESS IT STOOD PAID WITHIN THE SPECIFIED DUE DATE. 10. HERE WE HAVE TO NOTICE THAT SUB-CLAUSE (B) OF S ECTION 43B SPEAKS OF SUM PAYABLE BY THE EMPLOYER WHICH IS THE 'EMPLOYER' S CONTRIBUTION', PAYABLE BY THE EMPLOYER WITHOUT DEDUCTION FROM THE SALARY OF THE EMPLOYEE. EMPLOYEES CONTRIBUTION THOUGH REMITTED TO THE FUND BY THE EMPLOYER, IT IS DEDUCTED FROM THE EMPLOYEES SALARY, WHICH DEDUCTION IS STATUTORILY ENABLED. DEDUCTION FROM THE SALARY OF T HE EMPLOYEE, OF COURSE, IS THE LIABILITY OF THE EMPLOYER AND SO IS THE REMI TTANCE TO THE FUND BUT IT DOES NOT CHANGE THE ESSENTIAL NATURE OF THE CONTRIB UTION; WHICH IS OF THE EMPLOYEE. A CONTRIBUTION DEDUCTED FROM THE EMPLOYEE 'S SALARY AND PAID BY THE EMPLOYER CANNOT, FOR A MOMENT, BE TERMED AS THE EMPLOYER'S CONTRIBUTION. THERE IS A CLEAR DISTINCTION INSOFAR AS THE CONTRIBUTIONS PAYABLE UNDER THE EPF&MP ACT AS ALSO THE ESI ACT. T HE EMPLOYER'S CONTRIBUTION HAS TO BE PAID BY THE EMPLOYER HIMSELF AND THERE IS POSSIBLE NO DEDUCTION FROM THE SALARY OF THE EMPLOYEE, WHERE AS WITH RESPECT TO THE EMPLOYEE'S CONTRIBUTION, IT HAS TO BE DEDUCTED FROM THE SALARY OF THE EMPLOYEE AND PAID TO THE RELEVANT FUND. 11. THE SUPREME COURT IN ALOM EXTRUSIONS LTD.'S CAS E (SUPRA) AS WAS NOTICED, WAS SPECIFICALLY CONSIDERING THE ISSUE WIT H RESPECT TO THE EMPLOYER'S CONTRIBUTION. THE HON'BLE SUPREME COURT NOTICED THAT PRIOR TO 1983 EVEN A BOOK ENTRY MADE WITH RESPECT TO AN ASSE SSEE FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, MAKING A PROVISION FOR THE PAYMENT OF ITA NO.1396/CHNY/2019 :- 29 -: CONTRIBUTIONS TOWARDS EPF AND ESI COULD BE CLAIMED AS A DEDUCTION. BY INTRODUCTION OF SECTION 43B IN THE FINANCE ACT, 198 3, THE OBJECT WAS TO 'DISALLOW DEDUCTIONS CLAIMED MERELY BY MAKING A BOO K ENTRY BASED ON THE MERCANTILE SYSTEM OF ACCOUNTING' (SIC - PARA 16). S ECTION 43B MADE IT MANDATORY FOR THE DEPARTMENT TO GRANT DEDUCTION IN COMPUTING THE INCOME UNDER SECTION 28 IN THE YEAR IN WHICH THE TAX, DUTY , CESS, ETC. WERE PAID. HOWEVER, THE DUE DATES UNDER THE VARIOUS ENACTMENTS , IE; THE WELFARE AND TAX LEGISLATION WOULD NOT HAVE THE DUE DATE BEFORE THE DATE OF FILING OF RETURN AS PROVIDED IN THE INCOME TAX ACT. ON ACCOUN T OF THIS THE FIRST PROVISO WAS INTRODUCED TO GRANT A RELIEF BY WAY OF DEDUCTION INSOFAR AS THE TAX, DUTIES, CESS OR FEE PAID BEFORE THE FILING OF THE RETURN UNDER THE IT ACT THOUGH AFTER THE PREVIOUS YEAR; THE LIABILITIES HAV ING ACCRUED IN THAT PREVIOUS YEAR. THIS RELAXATION, HOWEVER, WAS RESTRI CTED TO TAX, DUTIES, CESS AND FEE AND NOT APPLIED TO CONTRIBUTIONS TO LABOUR WELFARE FUNDS. THE REASON ALSO STATED BY THE HON'BLE SUPREME COURT 'TO BE THAT THE EMPLOYER(S) SHOULD NOT SIT ON THE COLLECTED CONTRIB UTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTFUL BENEFITS UNDER SOCIAL WELFA RE LEGISLATIONS BY DELAYING PAYMENT OF CONTRIBUTIONS TO THE WELFARE FU NDS' (SIC - PARA 16). IT IS THIS DECLARATION BY THE HON'BLE SUPREME COURT WH ICH IS RELIED ON BY THE LEARNED COUNSEL FOR THE APPELLANT TO CONTEND THAT T HE HON'BLE SUPREME COURT WAS CONSIDERING THE QUESTION OF EMPLOYEE'S CO NTRIBUTION ALSO. OTHERWISE, THERE WOULD NOT HAVE BEEN A REFERENCE TO AN 'EMPLOYER SITTING ON THE COLLECTED CONTRIBUTION', IS THE COMPELLING A RGUMENT. 12. WE HAVE TO UNDERSTAND THIS STATEMENT WITH REFER ENCE TO THE QUESTION FRAMED BY THE HON'BLE SUPREME COURT AT THE FIRST IN STANCE IN THE OPENING PARAGRAPH OF THE JUDGMENT. WE ALSO HAVE TO NOTICE T HAT EVEN OTHERWISE THE EXPLANATION TO SUB-CLAUSE (VA) OF SECTION 36(1) TOO K CARE OF THE EMPLOYEE'S CONTRIBUTIONS; WHICH WAS INTRODUCED BY T HE FINANCE ACT, 1987 WITH EFFECT FROM 01.04.1988, FROM WHICH DATE THE ST ATUTE RECOGNISED THE DISTINCTION BETWEEN EMPLOYEE'S AND EMPLOYER'S CONTR IBUTION. IN THIS CONTEXT WE HAVE TO NECESSARILY DWELL UPON THE VARIOUS AMEND MENTS OVER THE YEARS AND LOOK AT THE SEQUENCE IN WHICH THEY WERE BROUGHT IN. ONLY ON INTRODUCTION OF SECTION 43B WITH EFFECT FROM 01.04. 1984, THERE WAS AN INSISTENCE THAT THERE SHOULD BE ACTUAL PAYMENT OF A MOUNTS CLAIMED AS DEDUCTIONS, ENUMERATED UNDER THE PROVISION. SECTION 43B (B) SPOKE OF SUM PAYABLE BY THE EMPLOYER BY WAY OF CONTRIBUTION TO A WELFARE FUND. AT THAT POINT IT COULD BE UNDERSTOOD THAT THE SUB-CLAUSE TO OK IN BOTH EMPLOYEE'S AND EMPLOYER'S CONTRIBUTION. THE LEGISLATURE THEN T OOK NOTE OF THE CIRCUMSTANCE THAT MANY CLAIM THE DEDUCTION ON THE G ROUND OF MAINTAINING ACCOUNTS ON MERCANTILE OR ACCRUAL BASIS AND FAIL TO DISCHARGE THE LIABILITY. HENCE BY FINANCE ACT 1987, CLAUSE (X) UNDER SECTION 2 (24) , SUB-CLAUSE (VA) OF SECTION 36 (1) AND THE 2ND PROVISO TO SECTI ON 43B WERE BROUGHT IN. FROM THAT DATE THE STATUTE TREATS THE EMPLOYEE'S AN D EMPLOYER'S CONTRIBUTION DIFFERENTLY. 13. OTHERWISE THERE WAS NO REQUIREMENT FOR BRINGING IN A SUB-CLAUSE UNDER THE DEFINITION CLAUSE OF 'INCOME' INCLUDING THE EMP LOYEE'S CONTRIBUTION RECEIVED BY THE EMPLOYER AND PROVIDING A DEDUCTION BY SUB-CLAUSE (VA) AND PERMITTING THE DEDUCTION ONLY IF THAT CONTRIBUTION IS PAID IN ACCORDANCE WITH THE STATUTE, WHICH CREATED THE FUND. THE 2ND PROVIS O TO SECTION 43B THEN UNDERWENT A COSMETIC CHANGE AND LATER WAS DELETED. THERE WAS ALSO A NEW PROVISO ADDED UNDER SECTION 43B FOR PERMITTING DEDU CTION ON CONTRIBUTIONS PAID BEFORE THE RETURNS ARE FILED. THIS TOOK IN ONL Y THE EMPLOYER'S CONTRIBUTION ESPECIALLY SINCE SECTION 2(24) AND SUB -CLAUSE (VA) WERE RETAINED. THE EMPLOYEE'S CONTRIBUTIONS, AS MERCHEM LTD.'S CASE ITA NO.1396/CHNY/2019 :- 30 -: (SUPRA)NOTICED, STANDS ON A DIFFERENT FOOTING, SINC E IT IS COLLECTED FROM THE EMPLOYEE AS A DEDUCTION IN THEIR SALARY ITSELF. THI S WOULD IN EFFECT BE INCOME OF THE ASSESSEE, AS HAS BEEN SPECIFICALLY IN DICATED IN THE DEFINITION OF 'INCOME' UNDER SECTION 2(24)(X), WHICH PROVISION WAS INTRODUCED W.E.F 01.04.1988 AS PER FINANCE ACT, 1987. 14. WE ARE OF THE OPINION THAT THE QUESTION WITH RE SPECT TO EMPLOYEE'S CONTRIBUTION IS REGULATED BY CLAUSE (X) OF SECTION 2(24) AND SUB-CLAUSE (VA) OF SECTION 36(1) AND WOULD NOT BE AFFECTED BY SECTI ON 43B. SECTION 43B THOUGH A NON-OBSTANTE CLAUSE, MAKES DEDUCTIONS TO B E ALLOWABLE ONLY ON ACTUAL PAYMENT; WHEN SUCH DEDUCTIONS ARE OTHERWISE ALLOWABLE. PRIMARILY IT IS TO BE NOTICED THAT IT IS A RESTRICTIVE CLAUSE, T HE AMENDMENTS TO WHICH OR THE DELETION OF A PROVISO IN WHICH CANNOT LEAD TO I T BEING CONVERTED AS AN ENABLING PROVISION PERMITTING DEDUCTION EVEN WHEN T HERE WAS NO DEDUCTION PERMISSIBLE BY THE OTHER PROVISIONS OF THE ACT. THE NON-OBSTANTE CLAUSE HAS NO EFFECT INSOFAR AS THE EMPLOYEE'S CONTRIBUTION WH ICH IS SPECIFICALLY COVERED BY SUB-CLAUSE (VA) OF SECTION 36(1). BY VIR TUE OF THE EXPLANATION BELOW SUB-CLAUSE (VA), NO DEDUCTION COULD BE CLAIME D IF THE CONTRIBUTION HAS NOT BEEN PAID, AFTER COLLECTION FROM THE EMPLOY EES BY WAY OF DEDUCTION FROM THEIR SALARIES, WITHIN THE DUE DATE UNDER THE EPF&MP ACT. THE DELETION OF A PROVISO UNDER SECTION 43B CANNOT RENDER OTIOSE THE EXPLANATION UNDER SECTION 36(1)(VA). 15. MERCHEM LTD.'S CASE (SUPRA), WE NOTICE, DEALT W ITH THE SPECIFIC QUESTION OF DISALLOWANCE OF EMPLOYEE'S CONTRIBUTION WHEN THE SAME WAS NOT PAID WITHIN THE TIME PROVIDED UNDER THE STATUTE UNDER WH ICH THE WELFARE FUND WAS CREATED AND HELD SO IN PARAGRAPH 19: '19. THEREFORE, INCOME OF THE ASSESSEE INCLUDES ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEE AS CONTRIBUTION TO ANY P ROVIDENT FUND OR SUPERANNUATION FUND OR FUNDS SET UP UNDER THE PROVI SIONS OF THE EMPLOYEES' STATE INSURANCE ACT, 1948 (34 OF 1948) O R ANY OTHER FUND FOR THE WELFARE OF SUCH EMPLOYEES. ACCORDING TO US, ON A READING OF SEC. 36(1)(VA) ALONG WITH SEC. 2(24)(X), IT IS CATEGORIC AND CLEAR THAT THE CONTRIBUTION RECEIVED BY THE ASSESSEE FROM THE EMPL OYEE ALONE WAS TREATED AS INCOME FOR THE PURPOSE OF SEC. 36(1)(VA) OF THE ACT AND THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE WAS ENTITLED TO GET DEDUCTION FOR THE SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES TOWARDS CONTRIBUTION TO THE FUND OR FUNDS SO MENTIO NED ONLY IF, THE SAID AMOUNT WAS CREDITED BY THE ASSESSEE ON OR BEFORE TH E DUE DATE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND AS PROVIDED UNDER EXPLANATION 1 TO SEC.36(1)(VA) OF THE ACT. ACCORDING TO US, SO FAR A S SEC. 43B(B) IS CONCERNED, IT TAKES CARE OF ONLY THE CONTRIBUTION P AYABLE BY THE EMPLOYER/ASSESSEE TO THE RESPECTIVE FUND. THEREFORE , IN THAT CIRCUMSTANCES, SEC. 36(1)(VA) AND SEC. 43B(B) OPERA TE IN DIFFERENT FIELDS I.E. THE FORMER TAKES CARE OF EMPLOYEE'S CONTRIBUTI ON AND THE LATTER EMPLOYER'S CONTRIBUTION. THE ASSESSEE WAS ENTITLED TO GET THE BENEFIT OF DEDUCTION UNDER SEC. 43B(B) AS PROVIDED UNDER THE P ROVISO THERETO ONLY WITH REGARD TO THE PORTION OF THE AMOUNT PAID BY TH E EMPLOYER TO THE CONTRIBUTORY FUND. SUCH AN UNDERSTANDING OF SEC. 43 B IS FURTHER EXEMPLIFIED BY THE PHRASEOLOGY USED IN THE PROVISO, WHICH READS THUS: 'PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON O R BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO ITA NO.1396/CHNY/2019 :- 31 -: PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVID ENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN .' FURTHER, IN EXPLANATION 1 TO SEC. 43B ALSO, THE PHR ASEOLOGY USED PERSUADE US TO THINK THAT SEC. 43B CAN BE APPLIED TO THE CON TRIBUTION PAYABLE BY THE ASSESSEE AS AN EMPLOYER, WHICH READS THUS: 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT WHERE A DEDUCTION IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (A) OR CLA USE (B) OF THIS SECTION IS ALLOWED IN COMPUTING THE INCOME REFERRED TO IN SECT ION 28 OF THE PREVIOUS YEAR (BEING A PREVIOUS YEAR RELEVANT TO THE ASSESSM ENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1983 OR ANY EARLIER ASSESS MENT YEAR) IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSES SEE, THE ASSESSEE SHALL NOT BE ENTITLED TO ANY DEDUCTION UNDER THIS SECTION IN RESPECT OF SUCH SUM IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHI CH THE SUM IS ACTUALLY PAID BY HIM.' THEREFORE, ACCORDING TO US, SINCE THE RESPONDENT HA S ADMITTEDLY NOT PAID THE DEDUCTION SO MADE WITHIN THE DUE DATE AS PROVID ED UNDER SEC. 36(1)(VA), THE RESPONDENT WAS NOT ENTITLED TO GET D EDUCTION OF THE AMOUNTS DEDUCTED THEREUNDER FOR AND ON BEHALF OF TH E EMPLOYEES'. 16. THE LEARNED JUDGES HAD ELABORATELY CONSIDERED T HE DECISION IN ALOM EXTRUSIONS LTD.'S CASE (SUPRA)AND HAS FOUND THE PRO VISIONS HAVING APPLICATION IN DIFFERENT FIELDS. SECTION 43B(B) DEA LT WITH THE EMPLOYER'S CONTRIBUTION AND SUB-CLAUSE (VA) OF SECTION 36(1) W AS CONCERNED WITH THE EMPLOYEES CONTRIBUTION AS RIGHTLY HELD. WE DO NOT F IND OURSELVES PERSUADED TO TAKE A DIFFERENT VIEW WITH RESPECT TO EMPLOYEE'S CONTRIBUTION AND WE RESPECTFULLY FOLLOW THE DECISION OF THE DIVISION BE NCH OF THIS COURT IN MERCHEM LTD.'S CASE (SUPRA). WE, HENCE, ANSWER THE SUBSTANTIAL QUESTION OF LAW RAISED WITH RESPECT TO RECONSIDERATION OF ME RCHEM LTD.'S CASE (SUPRA)IN THE NEGATIVE, AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 17. THE OTHER QUESTION OF LAW FRAMED REFER TO THE ' AMOUNTS PAYABLE', THE REFERENCE OBVIOUSLY IS TO 'ANY SUM PAYABLE BY THE A SSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUP ERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUNDS FOR THE WELFARE OF EMPLOYEES' AS FOUND IN SUB-CLAUSE (B) OF SECTION 43B, WHICH REFERS ONLY TO THE EMPLOYER'S CONTRIBUTION AND NOT THE EMPLOYEE'S CONTRIBUTION. E MPLOYEE'S CONTRIBUTION, AS HAS BEEN ALREADY HELD BY US, IS COVERED BY CLAUS E (VA) OF SECTION 36(1) AND THE DEDUCTION IS RESTRICTED BY THE EXPLANATION BELOW IT. WITH RESPECT TO EMPLOYER'S CONTRIBUTION, THE DEDUCTION IS ALLOWABLE ONLY ON ACTUAL PAYMENT, AS PER SECTION 43B RESTRICTED ONLY BY THE PROVISO A S IS NOW AVAILABLE IN THE ACT, WHICH REQUIRES PAYMENT BEFORE THE FILING OF RE TURN. ANY SUM PAID AS EMPLOYER'S CONTRIBUTION, WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME, UNDER SUB-SECTION (1) OF SECTION 139, THEN THE SAME WOULD BE ENABLED DEDUCTION. HENCE, IN THE PRESENT CASE IF THE EMPLOY ER'S CONTRIBUTION UNDER THE EPF OR ESI FOR THE FINANCIAL YEAR 2007-08 IS PA ID AFTER THE SAID YEAR BUT BEFORE THE DATE OF FILING OF THE RETURN FOR THAT YE AR, THEN NECESSARILY IT WOULD BE ALLOWABLE AS A DEDUCTION IN THE ASSESSMENT YEAR, DE HORS THE FACT THAT IT WAS PAID IN THE SUBSEQUENT YEAR. 18. SUB-CLAUSE (VA) OF SECTION 36(1) TAKES CARE OF THE EMPLOYEE'S CONTRIBUTION, WHICH STANDS UNAFFECTED BY SECTION 43 B AS THE RESTRICTION AVAILABLE IN SECTION 43B IS ALREADY AVAILABLE UNDER THE EXPLANATION TO THE ITA NO.1396/CHNY/2019 :- 32 -: SAID CLAUSE, WITH A QUALIFICATION OF THE PAYMENT BE ING BEFORE THE DUE DATE, AS STIPULATED BY THE STATUTE OR ORDER CREATING THE FUND. WE WOULD ALSO OBSERVE THAT, AS THE HON'BLE SUPREME COURT NOTICED, THE LEGISLATURE TOOK A DIFFERENT APPROACH WITH RESPECT TO THE CONTRIBUTION S DEDUCTED FROM THE SALARY OF THE EMPLOYEES WHICH HAD TO BE PAID TO THE WELFARE FUND WITHIN THE DUE DATE; AS PROVIDED UNDER THE STATUTE WHICH CREAT ED THE WELFARE FUND. THE CONTRIBUTIONS WHICH ARE DEDUCTED AT THE TIME OF PAYMENT OF SALARY IS RECEIVED BY THE EMPLOYER-COMPANY AND IS TREATED AS INCOME UNDER SECTION 2(24). ON REMITTANCE OF THIS CONTRIBUTION, WITHIN T HE DUE DATE, IT IS ALLOWED AS A DEDUCTION UNDER SECTION 36. IF IT IS NOT PAID TO THE WELFARE FUND WITHIN THE DUE DATE PROVIDED UNDER THE RELEVANT STATUTE, I T REMAINS AS AN INCOME IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE/EMPLOYER C OMPANY. THE SAID CONTRIBUTION HAVING NOT BEEN PAID TO THE APPLICABLE WELFARE FUND WITHIN THE DUE DATE PROVIDED, THE ASSESSEE FOR ALL TIME IS DEP RIVED OF CLAIMING SUCH A REMITTANCE, MADE SUBSEQUENTLY, AS DEDUCTION FROM TH E INCOME. THIS, AS THE HON'BLE SUPREME COURT NOTICED, IS LOOKING AT THE SP IRIT BEHIND THE LABOUR WELFARE LEGISLATION AND THE NEED FOR THE EMPLOYER T O SATISFY THE REMITTANCE WITHIN THE TIME PROVIDED UNDER THE STATUTE CREATING THE WELFARE FUND. AT LEAST WITH RESPECT TO THE EMPLOYEE'S CONTRIBUTIONS, WHICH THE EMPLOYER DEDUCTS FROM THE SALARY OF THE EMPLOYEES, IF IT IS NOT REMITTED INTO THE FUND WITHIN THE DUE DATE, THE EMPLOYER NOT ONLY HAS DEFA ULTED THE STIPULATION IN THE LABOUR LEGISLATION BUT HAS RECEIVED AN INCOME; ALBEIT AN ILLEGAL ENRICHMENT. SUB-SECTION (V) IS WITH RESPECT TO AND CONFINED TO A GRATUITY FUND AND DOES NOT HAVE ANY RELEVANCE HERE. WE, HENC E, ANSWER THE OTHER QUESTIONS OF LAW FRAMED, ALSO AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. WE DISMISS THE APPEAL, LEAVING THE PARTIES TO SUFFE R THEIR RESPECTIVE COSTS. 10.3.10 THUS, IT CAN BE CLEARLY SEEN THAT THE HONB LE HIGH COURTS IN INDIA HAVE TAKEN A DIFFERENT VIEWS SO FAR AS TO ALLOWABIL ITY OF EMPLOYEE CONTRIBUTION TO PF/ESI AND OTHER WELFARE FUNDS WHIC H IS DEPOSITED TO THE CREDIT OF EMPLOYEE WITH REVENANT FUNDS BEYOND THE T IME STIPULATED UNDER THE RELEVANT STATUTE APPLICABLE TO PF/ESI AND OTHER FUNDS FOR WELFARE OF EMPLOYEES, BUT DEPOSITED PRIOR TO DUE DATE OF FILIN G OF RETURN OF INCOME U/S 139(1) OF THE 1961 ACT. IF WE APPLY STRICT INTERPRE TATION AS IS NORMALLY APPLIED AS THERE IS NO EQUITY IN TAX LAWS, WE HAVE OBSERVED THAT THE EMPLOYEE CONTRIBUTION RECEIVED BY AN EMPLOYER IS TR EATED AS INCOME UNDER THE PROVISIONS OF SECTION 2(24)(X) OF THE 1961 ACT , WHILE DEDUCTION IS ALLOWED U/S 36(1)(VA) READ WITH EXPLANATION OF THE AMOUNT RECEIVED BY AN EMPLOYER FROM EMPLOYEES AS THEIR CONTRIBUTION WHICH STOOD DEPOSITED BY EMPLOYER TO THE CREDIT OF EMPLOYEE WITH RELEVANT FU ND ON OR BEFORE THE DUE DATE AS IS PRESCRIBED UNDER RELEVANT STATUTE GOVERN ING PF/ESI AND OTHER EMPLOYEES WELFARE FUNDS. THE PROVISIONS OF SECTION 43B OF THE 1961 ACT HAS A HEADING THAT CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT BASIS AND IT STARTS WITH A NON OBSTANTE CLA USE THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISIONS OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RES PECT OF. THUS, IT STIPULATES THAT DEDUCTION SHALL BE ALLOWED ONLY ON ACTUAL PAYMENT BASIS IN THE YEAR OF PAYMENT OF DEDUCTION WHICH OTHERWISE IS ALLOWABLE UNDER THE 1961 ACT. THUS, IF THE DEDUCTION IS NOT OTHERWISE A LLOWABLE UNDER THE 1961 ACT OWING TO PROVISION IN STATUTE, THEN RECOURSE TO SECTION 43B OF THE 1961 ACT CANNOT BE MADE AT THRESHOLD. SECTION 43B OF THE 1961 ACT CREATES FURTHER EMBARGO ON DEDUCTIONS WHICH ARE OTHERWISE A LLOWABLE UNDER THE PROVISION OF THE 1961 ACT, BUT OWING TO SECTION 43B IT CAN ONLY BE ALLOWED ONLY ON ACTUAL PAYMENT BASIS AND NOT OTHERWISE . T HEN SECTION 43B OF THE ITA NO.1396/CHNY/2019 :- 33 -: 1961 ACT , BY A PROVISO STIPULATES THAT NOTHING CON TAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALL Y PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR F URNISHING THE RETURN OF INCOME U/S 139(1) OF THE 1961 ACT . SO , WHAT IS IM PORTANT FOR ENTERING INTO PROVISIONS OF SECTION 43B OF THE 1961 ACT IS T HAT THE DEDUCTION OUGHT TO BE FIRSTLY ALLOWABLE UNDER THE PROVISION OF THE 1961 ACT BEFORE RECOURSE TO SECTION 43B OF THE 1961 ACT CAN BE TAKEN. PROVIS IONS OF SECTION 36(1)(VA) ALLOWS DEDUCTION TOWARDS EMPLOYEES CONTRI BUTION TO PF/ESI AND OTHER WELFARE FUNDS OF EMPLOYEES WHICH IS REQUIRED TO BE DEPOSITED BY EMPLOYER TO THE CREDIT OF EMPLOYEE WITH RELEVANT FU ND ON OR BEFORE THE DUE DATE AS IS PRESCRIBED UNDER THE RELEVANT STATUTE AP PLICABLE FOR PF/ESI AND OTHER WELFARE FUNDS OF EMPLOYEES , OTHERWISE DEDUCT ION U/S 36(1)(VA) OF THE 1961 ACT IS NOT ALLOWABLE AND EMPLOYEE CONTRIBU TION TOWARDS PF/ESI AND OTHER EMPLOYEES WELFARE FUNDS RECEIVED BY EMPLO YER SHALL BE DEEMED TO BE INCOME OF THE ASSESSEE U/S 2(24)(X) OF THE 19 61 ACT. THUS, FIRSTLY TO GET DEDUCTION U/S 36(1)(VA) OF THE 1961 ACT OF THE EMPLOYEE CONTRIBUTION RECEIVED BY EMPLOYERS TOWARDS PF/ESI WHICH CONSTITU TE INCOME IN THE HANDS OF EMPLOYER BY VIRTUE OF SECTION 2(24)(X) OF THE 1961 ACT, THE EMPLOYERS IS REQUIRED TO DEPOSIT THE EMPLOYEES CON TRIBUTION TO THE CREDIT OF EMPLOYEES WITH RELEVANT FUNDS ON OR BEFORE THE D UE DATE PRESCRIBED UNDER THE STATUTE GOVERNING PF/ESI AND OTHER EMPLOY EES WELFARE FUNDS. BUT ONCE AT THRESHOLD STAGE OF SECTION 36(1)(VA) RE AD WITH EXPLANATION 1 AND SECTION 2(24)(X) OF THE 1961 ACT , INFRINGEMENT TOOK PLACE VIZ. THE EMPLOYER FAIL TO DEPOSIT THE EMPLOYEE CONTRIBUTION TOWARDS PF/ESI AND OTHER EMPLOYEES WELFARE FUNDS TO THE CREDIT OF EMPL OYEE WITH RELEVANT FUND BEFORE DUE DATE AS PRESCRIBED UNDER RELEVANT STATUT E GOVERNING PF/ESI AND OTHER EMPLOYEES WELFARE FUND, THEN AT THRESHOLD ITS ELF NO DEDUCTION U/S 36(1)(VA) READ WITH EXPLANATION 1 AND SECTION 2(24) (X) OF THE 1961 ACT CAN BE ALLOWED AND CONSEQUENTLY THERE CANNOT BE ANY QUESTION OF ENTERING FURTHER INTO SECTION 43B OF THE 1961 ACT AS THE DED UCTION AT THRESHOLD LEVEL OF SECTION 36(1)(VA) OF THE 1961 ACT IS ITSELF NOT AVAILABLE. THIS ARE THE LITERAL AND STRICT INTERPRETATION OF PROVISIONS OF SECTION 2(24)(X) READ WITH SECTION 36(1)(VA) OF THE 1961 ACT . THE DEDUCTION P ROVISIONS ARE TO BE STRICTLY CONSTRUED AND ONUS IS ON THE ASSESSEE TO P ROVE THAT IT IS ENTITLED FOR DEDUCTION/ EXEMPTION AS IT FALLS WITHIN FOUR CORNER S OF THE STATUTE. THERE IS NO EQUITY IN TAX LAWS AND EXEMPTION/DEDUCTION PROVI SIONS ARE TO BE STRICTLY CONSTRUED. THE DECISION OF CONSTITUTION BENCH OF HO NBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF CUSTOMS (IMPORTS) V. DI LIP KUMAR & CO. REPORTED IN (2018) 9 SCC 1 AND DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAMNATH & CO. V. CIT REPORTED IN (2020) 116 TAXMANN.COM 885(SC)(REFER PARA 17 TO 20) ARE RELAVANT . ADMITTE DLY , IN THE INSTANT CASE THE AFORESAID SUM OF RS. 6,31,788/- BEING EMPLOYEE CONTRIBUTION TOWARDS PF WAS NOT DEPOSITED BY ASSESSEE TO THE CREDIT OF E MPLOYEES WITH PF FUNDS WITHIN DUE DATE PRESCRIBED UNDER STATUTE GOVERNING PF WHICH AT THRESHOLD WAS HIT BY PROVISIONS OF SECTION 36(1)(VA) READ WIT H EXPLANATION 1 AND SECTION 2(24)(X) OF THE 1961 ACT AND DEDUCTION IS N OT ALLOWABLE GOING BY STRICT AND LITERAL INTERPRETATION OF PROVISIONS OF THE STATUTE. THUS, ONCE THE DEDUCTION IS FOUND TO BE NOT ALLOWABLE OTHERWISE UN DER THE 1961 ACT BEING HIT BY INFRINGEMENT OF SECTION 36(1)(VA) OF THE 196 1 ACT ON ACCOUNT OF EMPLOYEES SHARE OF PF CONTRIBUTION BEING DEPOSITED TO THE CREDIT OF EMPLOYEE WITH RELEVANT FUND BY ASSESSEE-EMPLOYER BE YOND THE TIME STIPULATED AS DUE DATE UNDER PF ACT , THERE IS NO Q UESTION OF ENTERING INTO PROVISIONS OF SECTION 43B OF THE 1961 ACT WHICH DEA LS WITH ALLOWING DEDUCTION ON PAYMENT BASIS PROVIDED THE DEDUCTION I S OTHERWISE ALLOWABLE UNDER THE PROVISIONS OF THE 1961 ACT. SECTION 36( 1)(VA) OF THE 1961 ACT IS A PROVISION WHICH ENTITLES TAX-PAYER TO CLAIM DEDUC TION FROM THE INCOME ITA NO.1396/CHNY/2019 :- 34 -: AND HENCE THE PROVISION IS TO BE STRICTLY CONSTRUED AND THE ONUS IS ON THE ASSESSEE TO PROVE THAT IT FULFILLS ALL THE CONDITIO NS AS STIPULATED UNDER SECTION 36(1)(VA) READ WITH EXPLANATION BEFORE CLAI MING DEDUCTION FROM ITS INCOME. THE DECISION OF CONSTITUTION BENCH OF HONB LE SUPREME COURT IN THE CASE OF COMMISSIONER OF CUSTOMS (IMPORTS) V. DI LIP KUMAR & CO. REPORTED IN (2018) 9 SCC 1 IS RELEVANT . THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAMNATH & CO. V. CIT REPORTED IN (2020) 116 TAXMANN.COM 885(SC) IS RELEVANT (REFER PARA 17 TO 20) , WHICH IS REPRODUCED HEREUNDER: DILIP KUMAR & CO. 17. THE CORE QUESTION REFERRED FOR AUTHORITATIVE PR ONOUNCEMENT TO THE CONSTITUTION BENCH IN THE CASE OF DILIP KUMAR & CO. (SUPRA) WAS AS TO WHAT INTERPRETATIVE RULE SHOULD BE APPLIED WHILE INTERPR ETING A TAX EXEMPTION PROVISION/NOTIFICATION WHEN THERE IS AN AMBIGUITY A S TO ITS APPLICABILITY WITH REFERENCE TO THE ENTITLEMENT OF THE ASSESSEE OR THE RATE OF TAX? THE REFERENCE TO THE CONSTITUTION BENCH WAS NECESSITATE D ESSENTIALLY FOR THE REASON THAT IN A FEW DECISIONS, ONE OF THEM BY A 3- JUDGE BENCH OF THIS COURT IN THE CASE OF SUN EXPORT CORPN. V. COLLECTOR OF CUSTOMS: [1997] 6 SCC 564, THE PROPOSITION CAME TO BE STATED THAT ANY AMBIGUITY IN A TAX PROVISION/NOTIFICATION MUST BE INTERPRETED IN FAVOU R OF THE ASSESSEE WHO IS CLAIMING BENEFIT THEREUNDER. 14 17.1. IN DILIP KUMAR & CO., THE CONSTITUTION BENCH OF THIS COURT EXAMINED SEVERAL OF THE PAST DECISIONS INCLUDING THAT BY ANO THER CONSTITUTION BENCH IN CCE V. HARI CHAND SHRI GOPAL: [2011] 1 SCC 236 A S ALSO THAT BY A DIVISION BENCH OF THIS COURT IN THE CASE OF UOI V. WOOD PAPERS LTD.: [1990] 4 SCC 256 WHEREIN, THE PRINCIPLES WERE STATED IN CL EAR TERMS THAT THE QUESTION AS TO WHETHER A SUBJECT FALLS IN THE NOTIF ICATION OR IN THE EXEMPTION CLAUSE HAS TO BE STRICTLY CONSTRUED; AND ONCE THE AMBIGUITY OR DOUBT IS RESOLVED BY INTERPRETING THE APPLICABILITY OF EXEMPTION CLAUSE STRICTLY, THE COURT MAY CONSTRUE THE EXEMPTION CLAU SE LIBERALLY. THIS COURT FOUND THAT IN WOOD PAPERS LTD. (SUPRA), SOME OF THE OBSERVATIONS IN AN EARLIER DECISION IN THE CASE OF CCE V. PARLE EXPORT S (P) LTD.: [1989] 1 SCC 345 WERE ALSO EXPLAINED WITH ALL CLARITY. THIS COUR T NOTED THE ENUNCIATIONS IN WOOD PAPER LTD. WITH TOTAL APPROVAL AS COULD BE NOTICED IN THE FOLLOWING:- '46. IN THE JUDGMENT OF THE TWO LEARNED JUDGES IN U NION OF INDIA V. WOOD PAPERS LTD.: [1990] 4 SCC 256 (HEREINAFTER REFERRED TO AS 'WOOD PAPERS LTD. CASE', FOR BREVITY), A DISTINCTION BETWEEN STA GE OF FINDING OUT THE ELIGIBILITY TO SEEK EXEMPTION AND STAGE OF APPLYING THE NATURE OF EXEMPTION WAS MADE. RELYING ON THE DECISION IN CCE V. PARLE E XPORTS (P) LTD. : [1989] 1 SCC 345, IT WAS HELD: (WOOD PAPERS LTD. CASE, SCC P. 262, PARA 6) '6. ... DO NOT EXTEND OR WIDEN THE AMBIT AT THE STA GE OF APPLICABILITY. BUT ONCE THAT HURDLE IS CROSSED, CONSTRUE IT LIBERALLY. ' THE REASONING FOR ARRIVING AT SUCH CONCLUSION IS FO UND IN PARA 4 OF WOOD PAPERS LTD. CASE, WHICH READS: (SCC P. 260) '4. ... LITERALLY EXEMPTION IS FREEDOM FROM LIABILI TY, TAX OR DUTY. FISCALLY, IT MAY ASSUME VARYING SHAPES, SPECIALLY, IN A GROWING ECONOMY. FOR INSTANCE TAX HOLIDAY TO NEW UNITS, CONCESSIONAL RATE OF TAX TO GOODS OR PERSONS FOR LIMITED PERIOD OR WITH THE SPECIFIC OBJECTIVE, ETC. THAT IS WHY ITS CONSTRUCTION, UNLIKE CHARGING PROVISION, HAS TO BE TESTED ON DIFFERENT ITA NO.1396/CHNY/2019 :- 35 -: TOUCHSTONE. IN FACT, AN EXEMPTION PROVISION IS LIKE AN EXCEPTION AND ON NORMAL PRINCIPLE OF CONSTRUCTION OR INTERPRETATION OF STATUTES IT IS CONSTRUED STRICTLY EITHER BECAUSE OF LEGISLATIVE INTENTION OR ON ECONOMIC JUSTIFICATION OF INEQUITABLE BURDEN OR PROGRESSIVE APPROACH OF FISCA L PROVISIONS INTENDED TO AUGMENT STATE REVENUE. BUT ONCE EXCEPTION OR EXEMPT ION BECOMES APPLICABLE NO RULE OR PRINCIPLE REQUIRES IT TO BE C ONSTRUED STRICTLY. TRULY SPEAKING LIBERAL AND STRICT CONSTRUCTION OF AN EXEM PTION PROVISION ARE TO BE INVOKED AT DIFFERENT STAGES OF INTERPRETING IT. WHE N THE QUESTION IS WHETHER A SUBJECT FALLS IN THE NOTIFICATION OR IN THE EXEMP TION CLAUSE THEN IT BEING IN NATURE OF EXCEPTION IS TO BE CONSTRUED STRICTLY AND AGAINST THE SUBJECT, BUT ONCE AMBIGUITY OR DOUBT ABOUT APPLICABILITY IS LIFT ED AND THE SUBJECT FALLS IN THE NOTIFICATION THEN FULL PLAY SHOULD BE GIVEN TO IT AND IT CALLS FOR A WIDER AND LIBERAL CONSTRUCTION.' (EMPHASIS SUPPLIED) ** ** ** 58. IN THE ABOVE PASSAGE, NO DOUBT THIS COURT OBSER VED THAT: (PARLE EXPORTS CASE, SCC P. 357, PARA 17) '17. WHEN TWO VIEWS OF A NOTIFICATION ARE POSSIBLE, IT SHOULD BE CONSTRUED IN FAVOUR OF THE SUBJECT AS NOTIFICATION IS PART OF A FISCAL ENACTMENT.' THIS OBSERVATION MAY APPEAR TO SUPPORT THE VIEW THA T AMBIGUITY IN A NOTIFICATION FOR EXEMPTION MUST BE INTERPRETED TO B ENEFIT THE SUBJECT/ASSESSEE. A CAREFUL READING OF THE ENTIRE P ARA, AS EXTRACTED HEREINABOVE WOULD, HOWEVER, SUGGEST THAT AN EXCEPTI ON TO THE GENERAL RULE OF TAX HAS TO BE CONSTRUED STRICTLY AGAINST THOSE W HO INVOKE FOR THEIR BENEFIT. THIS WAS EXPLAINED IN A SUBSEQUENT DECISIO N IN WOOD PAPERS LTD. CASE. IN PARA 6, IT WAS OBSERVED AS FOLLOWS: (SCC P . 262) '6. ... IN CCE V. PARLE EXPORTS (P) LTD., THIS COUR T WHILE ACCEPTING THAT EXEMPTION CLAUSE SHOULD BE CONSTRUED LIBERALLY APPL IED RIGOROUS TEST FOR DETERMINING IF EXPENSIVE ITEMS LIKE GOLD SPOT BASE OR LIMCA BASE OR THUMS UP BASE WERE COVERED IN THE EXPRESSION FOOD PRODUCT S AND FOOD PREPARATIONS USED IN ITEM NO. 68 OF FIRST SCHEDULE OF CENTRAL EXCISES AND SALT ACT AND HELD 'THAT IT SHOULD NOT BE IN CONSONA NCE WITH SPIRIT AND THE REASON OF LAW TO GIVE EXEMPTION FOR NON-ALCOHOLIC B EVERAGE BASIS UNDER THE NOTIFICATION IN QUESTION'. RATIONALE OR RATIO IS SA ME. DO NOT EXTEND OR WIDEN THE AMBIT AT STAGE OF APPLICABILITY. BUT ONCE THAT HURDLE IS CROSSED CONSTRUE IT LIBERALLY. SINCE THE RESPONDENT DID NOT FALL IN THE FIRST CLAUSE OF THE NOTIFICATION THERE WAS NO QUESTION OF GIVING THE CL AUSE A LIBERAL CONSTRUCTION AND HOLD THAT PRODUCTION OF GOODS BY RESPONDENT MEN TIONED IN THE NOTIFICATION WERE ENTITLED TO BENEFIT.' 59. THE ABOVE DECISION, WHICH IS ALSO A DECISION OF A TWO- JUDGE BENCH OF THIS COURT, FOR THE FIRST TIME TOOK A VIEW THAT LIB ERAL AND STRICT CONSTRUCTION OF EXEMPTION PROVISIONS ARE TO BE INVOKED AT DIFFER ENT STAGES OF INTERPRETING IT. THE QUESTION WHETHER A SUBJECT FAL LS IN THE NOTIFICATION OR IN THE EXEMPTION CLAUSE, HAS TO BE STRICTLY CONSTRUED. WHEN ONCE THE AMBIGUITY OR DOUBT IS RESOLVED BY INTERPRETING THE APPLICABILITY OF EXEMPTION CLAUSE STRICTLY, THE COURT MAY CONSTRUE T HE NOTIFICATION BY GIVING FULL PLAY BESTOWING WIDER AND LIBERAL CONSTRUCTION. THE RATIO OF PARLE EXPORTS CASE DEDUCED AS FOLLOWS: (WOOD PAPERS LTD. CASE, SC C P. 262, PARA 6) ITA NO.1396/CHNY/2019 :- 36 -: '6. ... DO NOT EXTEND OR WIDEN THE AMBIT AT STAGE O F APPLICABILITY. BUT ONCE THAT HURDLE IS CROSSED, CONSTRUE IT LIBERALLY.' 60. WE DO NOT FIND ANY STRONG AND COMPELLING REASON S TO DIFFER, TAKING A CONTRA VIEW, FROM THIS. WE RESPECTFULLY RECORD OUR CONCURRENCE TO THIS VIEW WHICH HAS BEEN SUBSEQUENTLY, ELABORATED BY THE CONS TITUTION BENCH IN HARI CHAND CASE ' (EMPHASIS IN BOLD SUPPLIED) 17.2. THE CONSTITUTION BENCH DECISION IN HARI CHAND SHRI GOPAL (SUPRA) WAS ALSO TAKEN NOTE OF, INTER ALIA, IN THE FOLLOWIN G:- '50. WE WILL NOW CONSIDER ANOTHER CONSTITUTION BENC H DECISION IN CCE V. HARI CHAND SHRI GOPAL (HEREINAFTER REFERRED AS 'HAR I CHAND CASE', FOR BREVITY). WE NEED NOT REFER TO THE FACTS OF THE CAS E WHICH GAVE RISE TO THE QUESTIONS FOR CONSIDERATION BEFORE THE CONSTITUTION AL BENCH. K.S. RADHAKRISHNAN, J., WHO WROTE THE UNANIMOUS OPINION FOR THE CONSTITUTION BENCH, FRAMED THE QUESTION VIZ. WHETHER MANUFACTURE R OF A SPECIFIED FINAL PRODUCT FALLING UNDER THE SCHEDULE TO THE CENTRAL E XCISE TARIFF ACT, 1985 IS ELIGIBLE TO GET THE BENEFIT OF EXEMPTION OF REMISSI ON OF EXCISE DUTY ON SPECIFIED INTERMEDIATE GOODS AS PER THE CENTRAL GOV ERNMENT NOTIFICATION DATED 11-8-1994, IF CAPTIVELY CONSUMED FOR THE MANU FACTURE OF FINAL PRODUCT ON THE GROUND THAT THE RECORDS KEPT BY IT A T THE RECIPIENT END WOULD INDICATE ITS 'INTENDED USE' AND 'SUBSTANTIAL COMPLIANCE' WITH PROCEDURE SET OUT IN CHAPTER 10 OF THE CENTRAL EXCI SE RULES, 1994, FOR CONSIDERATION? THE CONSTITUTION BENCH ANSWERING THE SAID QUESTION CONCLUDED THAT A MANUFACTURER QUALIFIED TO SEEK EXE MPTION WAS REQUIRED TO COMPLY WITH THE PRECONDITIONS FOR CLAIMING EXEMPTIO N AND THEREFORE IS NOT EXEMPT OR ABSOLVED FROM FOLLOWING THE STATUTORY REQ UIREMENTS AS CONTAINED IN THE RULES. THE CONSTITUTION BENCH THEN CONSIDERE D AND REITERATED THE SETTLED PRINCIPLES QUA THE TEST OF CONSTRUCTION OF EXEMPTION CLAUSE, THE MANDATORY REQUIREMENTS TO BE COMPLIED WITH AND THE DISTINCTION BETWEEN THE ELIGIBILITY CRITERIA WITH REFERENCE TO THE COND ITIONS WHICH NEED TO BE STRICTLY COMPLIED WITH AND THE CONDITIONS WHICH NEE D TO BE SUBSTANTIALLY COMPLIED WITH. THE CONSTITUTION BENCH FOLLOWED THE RATIO IN HANSRAJ GORDHANDAS CASE, TO REITERATE THE LAW ON THE ASPECT OF INTERPRETATION OF EXEMPTION CLAUSE IN PARA 29 AS FOLLOWS: (HARI CHAND CASE, SCC P. 247)'29. THE LAW IS WELL SETTLED THAT A PERSON WHO CLAIMS EX EMPTION OR CONCESSION HAS TO ESTABLISH THAT HE IS ENTITLED TO THAT EXEMPT ION OR CONCESSION. A PROVISION PROVIDING FOR AN EXEMPTION, CONCESSION OR EXCEPTION, AS THE CASE MAY BE, HAS TO BE CONSTRUED STRICTLY WITH CERTAIN E XCEPTIONS DEPENDING UPON THE SETTINGS ON WHICH THE PROVISION HAS BEEN P LACED IN THE STATUTE AND THE OBJECT AND PURPOSE TO BE ACHIEVED. IF EXEMP TION IS AVAILABLE ON COMPLYING WITH CERTAIN CONDITIONS, THE CONDITIONS H AVE TO BE COMPLIED WITH. THE MANDATORY REQUIREMENTS OF THOSE CONDITIONS MUST BE OBEYED OR FULFILLED EXACTLY, THOUGH AT TIMES, SOME LATITUDE C AN BE SHOWN, IF THERE IS FAILURE TO COMPLY WITH SOME REQUIREMENTS WHICH ARE DIRECTORY IN NATURE, THE NON-COMPLIANCE OF WHICH WOULD NOT AFFECT THE ES SENCE OR SUBSTANCE OF THE NOTIFICATION GRANTING EXEMPTION. ** ** **' (EMPHASIS IN BOLD SUPPLIED) ITA NO.1396/CHNY/2019 :- 37 -: 17.3. IN VIEW OF ABOVE AND WITH REFERENCE TO SEVERA L OTHER DECISIONS, IN DILIP KUMAR & CO., THE CONSTITUTION BENCH SUMMED UP THE PRINCIPLES AS FOLLOWS:- '66. TO SUM UP, WE ANSWER THE REFERENCE HOLDING AS UNDER: 66.1. EXEMPTION NOTIFICATION SHOULD BE INTERPRETED STRICTLY; THE BURDEN OF PROVING APPLICABILITY WOULD BE ON THE ASSESSEE TO S HOW THAT HIS CASE COMES WITHIN THE PARAMETERS OF THE EXEMPTION CLAUSE OR EX EMPTION NOTIFICATION. 66.2. WHEN THERE IS AMBIGUITY IN EXEMPTION NOTIFICA TION WHICH IS SUBJECT TO STRICT INTERPRETATION, THE BENEFIT OF SUCH AMBIGUIT Y CANNOT BE CLAIMED BY THE SUBJECT/ASSESSEE AND IT MUST BE INTERPRETED IN FAVOUR OF THE REVENUE. 66.3. THE RATIO IN SUN EXPORT CASE IS NOT CORRECT A ND ALL THE DECISIONS WHICH TOOK SIMILAR VIEW AS IN SUN EXPORT CASE STAND OVERR ULED.' (EMPHASIS IN BOLD SUPPLIED) 17.4. OBVIOUSLY, THE GENERALISED, RATHER SWEEPING, PROPOSITION STATED IN THE CASE OF SUN EXPORT CORPORATION (SUPRA) AS ALSO IN O THER CASES THAT IN THE MATTERS OF TAXATION, WHEN TWO VIEWS ARE POSSIBLE, T HE ONE FAVOURABLE TO ASSESSEE HAS TO BE PREFERRED, STANDS SPECIFICALLY D ISAPPROVED BY THE CONSTITUTION BENCH IN DILIP KUMAR & CO. (SUPRA). IT HAS BEEN LAID DOWN BY THE CONSTITUTION BENCH IN NO UNCERTAIN TERMS THAT E XEMPTION NOTIFICATION HAS TO BE INTERPRETED STRICTLY; THE BURDEN OF PROVI NG ITS APPLICABILITY IS ON THE ASSESSEE; AND IN CASE OF ANY AMBIGUITY, THE BEN EFIT THEREOF CANNOT BE CLAIMED BY THE SUBJECT/ASSESSEE, RATHER IT WOULD BE INTERPRETED IN FAVOUR OF THE REVENUE. 18. IT HAS BEEN REPEATEDLY EMPHASISED ON BEHALF OF THE APPELLANT THAT SECTION 80-O OF THE ACT IS ESSENTIALLY AN INCENTIVE PROVISION AND, THEREFORE, NEEDS TO BE INTERPRETED AND APPLIED LIBERALLY. IN T HIS REGARD, WE MAY OBSERVE THAT DEDUCTIONS, EXEMPTIONS, REBATES ET CET ERA ARE THE DIFFERENT SPECIES OF INCENTIVES EXTENDED BY THE ACT OF 196115 . IN OTHER WORDS, INCENTIVE IS A GENERIC TERM AND 'DEDUCTION' IS ONE OF ITS SPECIES; 'EXEMPTION' IS ANOTHER. FURTHERMORE, SECTION 80-O IS ONLY ONE O F THE PROVISIONS IN THE ACT OF 1961 DEALING WITH INCENTIVE; AND EVEN AS REG ARDS THE INCENTIVE FOR EARNING OR SAVING FOREIGN EXCHANGE, THERE ARE OTHER PROVISIONS IN THE ACT, INCLUDING SECTION 80HHC, WHEREUNDER THE APPELLANT W AS INDEED TAKING BENEFIT BEFORE THE ASSESSMENT YEAR 1993-94. 19. WITHOUT EXPANDING UNNECESSARILY ON VARIEGATED P ROVISIONS DEALING WITH DIFFERENT INCENTIVES, SUFFICE WOULD BE TO NOTICE TH AT THE PROPOSITION THAT INCENTIVE PROVISIONS MUST RECEIVE 'LIBERAL INTERPRE TATION' OR TO SAY, LEANING IN FAVOUR OF GRANT OF RELIEF TO THE ASSESSEE IS NOT AN APPROACH COUNTENANCED BY THIS COURT. THE LAW DECLARED BY THE CONSTITUTION BENCH IN RELATION TO EXEMPTION NOTIFICATION, PROPRIO VIGORE, WOULD APPLY TO THE INTERPRETATION AND APPLICATION OF ANY AKIN PROPOSITION IN THE TAXI NG STATUTES FOR EXEMPTION, DEDUCTION, REBATE ET AL., WHICH ALL ARE ESSENTIALLY THE FORM OF TAX INCENTIVES GIVEN BY THE GOVERNMENT TO INCITE OR ENCOURAGE OR SUPPORT ANY PARTICULAR ACTIVITY16. 20. THE PRINCIPLES LAID DOWN BY THE CONSTITUTION BE NCH, WHEN APPLIED TO INCENTIVE PROVISIONS LIKE THOSE FOR DEDUCTION, WOUL D ALSO BE THAT THE BURDEN LIES ON THE ASSESSEE TO PROVE ITS APPLICABILITY TO HIS CASE; AND IF THERE BE ITA NO.1396/CHNY/2019 :- 38 -: ANY AMBIGUITY IN THE DEDUCTION CLAUSE, THE SAME IS SUBJECT TO STRICT INTERPRETATION WITH THE RESULT THAT THE BENEFIT OF SUCH AMBIGUITY CANNOT BE CLAIMED BY THE ASSESSEE, RATHER IT WOULD BE INTERPR ETED IN FAVOUR OF THE REVENUE. IN VIEW OF THE CONSTITUTION BENCH DECISION IN DILIP KUMAR & CO. (SUPRA), THE GENERALISED OBSERVATIONS IN BABY MARIN E EXPORTS (SUPRA) WITH REFERENCE TO A FEW OTHER DECISIONS, THAT A TAX INCE NTIVE PROVISION MUST RECEIVE LIBERAL INTERPRETATION, CANNOT BE CONSIDERE D TO BE A SOUND STATEMENT OF LAW; RATHER THE APPLICABLE PRINCIPLES WOULD BE THOSE ENUNCIATED IN WOOD PAPERS LTD. (SUPRA), WHICH HAVE BEEN PRECISELY APPROVED BY THE CONSTITUTION BENCH. THUS, AT AND UN TIL THE STAGE OF FINDING OUT ELIGIBILITY TO CLAIM DEDUCTION, THE AMBIT AND S COPE OF THE PROVISION FOR THE PURPOSE OF ITS APPLICABILITY CANNOT BE EXPANDED OR WIDENED AND REMAINS SUBJECT TO STRICT INTERPRETATION BUT, ONCE ELIGIBIL ITY IS DECIDED IN FAVOUR OF THE PERSON CLAIMING SUCH DEDUCTION, IT COULD BE CON STRUED LIBERALLY IN REGARD TO OTHER REQUIREMENTS, WHICH MAY BE FORMAL O R DIRECTORY IN NATURE. 10.3.11 THUS, KEEPING IN VIEW STRICT AND LITERAL IN TERPRETATION OF PROVISIONS OF SECTION 36(1)(VA) OF THE 1961 ACT READ WITH EXPL ANATION 1 AND SECTION 2(24)(X) OF THE 1961 ACT , THE ASSESSEE WILL NOT BE ENTITLED FOR DEDUCTION AS THE EMPLOYEE CONTRIBUTION TOWARDS PF RECEIVED BY AS SESSEE WAS DEPOSITED LATE BEYOND THE TIME STIPULATED UNDER THE RELEVANT STATUTE GOVERNING PF. BUT, IT IS EQUALLY TRUE THAT THE CONSTITUTIONAL COU RTS VIZ. HONBE HIGH COURTS AND HONBLE SUPREME COURT IN INDIA HAVE POWERS TO R EAD DOWN THE PROVISIONS OF THE 1961 ACT TO MAKE IT WORKABLE AND TO AVOID ABSURDITY. ON PERUSAL OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION(SUPRA) , IT IS OBSERVED THAT HONBLE SUPR EME COURT HAS ELABORATELY DISCUSSED PROVISIONS OF SECTION 36(1)(V A) ,2(24)(X) AND AMENDMENTS MADE BY FINANCE ACT, 2003 TO SECTION 43B OF THE 1961 ACT, WHICH AMENDMENTS TO SECTION 43B OF THE 1961 ACT WE RE HELD TO BE RETROSPECTIVE IN NATURE. THE HONBLE SUPREME COURT ALSO REFERRED IN ITS DECISION IN ALOM EXTRUSION (SUPRA) TO ITS EARLIER D ECISION IN CIT V. J.H. GOTLA [1985] 156 ITR 323(SC) , PARA 10 THAT INTENTION OF THE LEGISLATURE IS TO BE FOUND OUT FROM THE LANGUAGE USED AND IF STRICT LITE RAL CONSTRUCTION LEADS TO AN ABSURD RESULT I.E. RESULT NOT INTENDED TO BE SUB SERVED BY THE OBJECT OF THE LEGISLATION FOUND IN THE MANNER INDICATED BEFOR E, THEN IF ANOTHER CONSTRUCTION IS POSSIBLE APART FROM STRICT LITERAL CONSTRUCTION, THEN THAT CONSTRUCTION SHOULD BE PREFERRED TO THE STRICT LITE RAL CONSTRUCTION. THOUGH EQUITY AND TAXATION ARE OFTEN STRANGERS, ATTEMPTS S HOULD 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. THE HONBLE DELHI HIGH COURT AND HON BLE BOMBAY HIGH COURT AFTER CONSIDERING, ANALYZING AND INTERPRETING THE DECISION IN THE CASE OF ALOM EXTRUSION (SUPRA) HAS HELD THAT IT WILL APPLY BOTH TO EMPLOYERS AND EMPLOYEE CONTRIBUTION AND IF THE SAME IS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE 1961 A CT, THE DEDUCTION SHALL BE ALLOWED , EVEN IF THE SAME IS DEPOSITED BEYOND THE TIME STIPULATED AS DUE DATE AS PRESCRIBED UNDER THE PROVISIONS OF STATUTE GOVERNING PF/ESI ACT. THUS, THE APPLICABLE PROVISION AS IS CONTAINED IN S ECTION 36(1)(VA) IS READ DOWN BY MOST OF THE CONSTITUTIONAL COURTS INCLUDING OUR JURISDICTIONAL HIGH COURT (BARRING HONBLE GUJARAT HIGH COURT AND HONB LE KERALA HIGH COURT) TO MAKE IT WORKABLE AS OTHERWISE THE TAX-PAYER WILL LOSE THE DEDUCTION FOR EVER IF THE EMPLOYEE CONTRIBUTION IS NOT DEPOSITED WITHIN DUE DATE AS PRESCRIBED UNDER RELEVANT STATUTE , ALTHOUGH THE SA ID CONTRIBUTION STOOD DEPOSITED BY EMPLOYER BELATEDLY BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME U/S 139(1) OF THE 1961 ACT AND THE AMOUNT WI LL STOOD BROUGHT TO TAX AS INCOME KEEPING IN VIEW PROVISIONS OF SECTION 2(24)(X) OF THE 1961 ITA NO.1396/CHNY/2019 :- 39 -: ACT SO FAR EMPLOYEE SHARE OF CONTRIBUTION TOWARDS P F ,ESI AND OTHER EMPLOYEES WELFARE FUNDS IS CONCERNED. NO DOUBT IT IS WELL CHERISHED OBJECTIVE THAT THERE SHOULD NOT BE AN UNJUST ENRICH MENT OF THE EMPLOYER OF THE AMOUNT WHICH IT COLLECTS FROM ITS EMPLOYEES TOW ARDS EMPLOYEES SHARE OF PF , ESI AND OTHER EMPLOYEES WELFARE FUNDS AND I N THE IDEAL SITUATION , THE SAID AMOUNTS OUGHT TO HAVE BEEN DEPOSITED BY EM PLOYER WHICH IT COLLECTED FROM ITS EMPLOYEES, TO THE CREDIT OF EMPL OYEE WITH RELEVANT FUNDS WITHIN TIME STIPULATED AS DUE DATE BY RESPECTIVE ST ATUTE GOVERNING PF/ESI ETC. BUT AT THE SAME TIME IF THE EMPLOYER DOES NOT DEPOSIT THE CONTRIBUTION TOWARDS PF/ESI ETC WITHIN DUE DATE AS PRESCRIBED UN DER RELEVANT STATUTE GOVERNING PF/ESI ETC, THE EMPLOYERS ARE VISITED WIT H INTEREST FOR DELAYED DEPOSIT OF PF/ESI AS WELL PENALTIES FOR LATE DEPOSI T BEYOND THE TIME STIPULATED UNDER THE RELEVANT STATUTE GOVERNING PF/ ESI AND OTHER EMPLOYEES WELFARE FUNDS. REFERENCE IS DRAWN TO SECT ION 7Q AND 14 OF THE EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVIS IONS ACT, 1952 . SIMILARLY, HONBLE MADRAS HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PRIVATE LIMITED (SUPRA) AFTER CO NSIDERING AND INTERPRETING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION (SUPRA) AND HONBLE DELHI HIGH COURT IN T HE CASE OF AIMIL LIMITED(SUPRA) HELD THAT DEDUCTION IS TO BE ALLOWED FOR BELATED PAYMENT OF EMPLOYEE CONTRIBUTION TO PF/ESI WHICH IS DEPOSITED BEYOND THE DUE DATE STIPULATED UNDER THE RELEVANT STATUTES GOVERNING PF /ESI , BUT THE SAME STOOD DEPOSITED BEFORE THE DUE DATE FOR FILING OF R ETURN OF INCOME AS IS PRESCRIBED U/S 139(1) OF THE 1961 ACT. WE AT TRIBUN AL BEING INFERIOR JUDICIAL BODY TO HONBLE MADRAS HIGH COURT , ARE BOUND BY DE CISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY(SUPRA) AS A CARDINAL PRINCIPLES OF JUDICIAL DISCIPLINE AND TO I NSTILL CERTAINTY AMONG TAX- PAYERS, THUS, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY AND INTELL IGENCE(SUPRA) , WE ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS. 6,31 ,788/- TOWARDS EMPLOYEES CONTRIBUTION TO PF WHICH WAS DEPOSITED LA TE BEYOND DUE DATE AS PRESCRIBED UNDER RELEVANT STATUTE GOVERNING PF , BU T THE SAME STOOD DEPOSITED TO THE CREDIT OF EMPLOYEES WITH RELEVANT FUND BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME AS PRESCRIBED U /S 139(1) OF THE 1961 ACT. THE REVENUE FAILS ON THIS ISSUE FOR THE REASONS CIT ED ABOVE . WE ORDER ACCORDINGLY. THUS, RESPECTFULLY FOLLOWING THE ABOVE DECISION(S), WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE EMPLOYEE CONTRIBUTION TOWARDS PF/ESI RECEIVED BY ASSESSEE FROM ITS EMPLOYEES WHIC H WAS DEPOSITED BEYOND THE DUE DATE AS PRESCRIBED UNDER THE RELEVAN T STATUTE GOVERNING PF/ESI BUT WERE DEPOSITED WITHIN THE DUE DATE PRESC RIBED FOR FILING OF RETURN OF INCOME U/S 139(1) OF THE 1961 ACT SHALL B E ALLOWED AS DEDUCTION WHILE COMPUTING INCOME OF THE ASSESSE UNDER CHAPTER IV-D OF THE 1961 ACT UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. THUS ITA NO.1396/CHNY/2019 :- 40 -: ASSESSEE SUCCEEDS ON THIS ISSUE RAISED BY ASSESSEE VIDE GROUND NUMBER 2 TO 4 IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL, IN THE MANNER INDICATED ABOVE . THIS ORDER IS PRONOUNCED IN THE OPEN COURT HELD IN VIRTUAL MODE THROUGH VIDEO CONFERENCING MODE USING WEBEX PLATFOR M IN THE PRESENCE OF BOTH THE PARTIES. WE ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.1396/CHNY/2019 FOR AY: 2014-15 IS PARTLY ALLOWED IN THE MANNER INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT THROUGH VIDEO CO NFERENCING MODE ON 28.09.2020. 1 5 6 28.09.2020 1 SD/ - SD/ - ( # $ . . & ) (DUVVURU R.L.REDDY) ) /JUDICIAL MEMBER ( ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED: 28 TH SEPTEMBER, 2020. TLN 1 /)= >= /COPY TO: 1. . /APPELLANT 4. ? /CIT 2. /0. /RESPONDENT 5. = /)) /DR 3. ? ( ) /CIT(A) 6. + /GF