Magic Auto Pvt. Ltd. , Delhi V. Central Circle 13 , Delhi

ITA 27/DEL/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2779 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2019-2020
• Appeal Filed On: 04-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 246; 54; 154; 43B; 143(3); 14A; 143(1); 143(2); 139(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. A. D. Jain, Vice President Dr. B. R. R. Kumar, Accountant Member ITA No. 27/Del/2022 : Asstt. Year : 2019-20 Ma gi c A uto Pv t . L td . , 7 /5 6 , De s h B an d hu G u p ta R o ad , Kar o l B ag h , C e n tr a l De l hi , De lh i -1 1 0 0 0 5 Vs AD IT , C PC , (APPELLANT) (RESPONDENT) PAN No. AAACM4873C Assessee by : Sh. Salil Kapoor, Adv. Revenue by : Sh. N. K. Bansal, Sr. DR Date of Hearing: 12.05.2022 Date of Pronouncement: 27.06.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: T he pr e se n t a p p e al ha s be e n f i le d b y the as se sse e aga i ns t the o r de r o f ld . C IT ( A )-2 6 , N e w D e lh i d ate d 0 7 .1 2 . 20 2 1 . Payment of ESI & PF: 2 . T he fa ct o f pa y me n t be fo r e f il i n g o f t he r e t ur n is no t in di s pu te , the de t ai ls o f p ay me n t s ha ve be e n d u ly me nt io ne d i n the r e co r d . 3 . T hi s i ss ue s ta nd s ad ju d ica te d b y t he C o -o r d in a te B e nc h o f T r ib u na l in IT A N o s . 1 2 6 5 , 1 2 6 6 , 1 2 6 7 , 1 3 8 3 , 1 3 8 4 & 1 3 9 2 /De l /2 0 2 1 & O t he r s v ide o r d e r da te d 2 8 .0 2 . 2 0 2 2 . I t w as he l d , ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 2 “6. We have gone through amendments in the Income Tax Act inserted by Finance Act 2021, Memorandum, plethora of orders passed by the various benches of Tribunal and the judgments of Hon’ble High Courts of various Judicatures. 7 . C o -o r di na te B e nc he s o f t he T r ib u na l ha ve be e n t ake n v ie w th a t t he e m plo y e e ’s co n tr i bu t io n to P F a n d E SI , if pa i d be fo r e the due da te o f fi l in g o f t he In co me T ax R e t ur n u /s 1 3 9 (1 ) , i s an al lo w ab le de du ct io n an d no di sa l lo w a nce ca n be ma de . T o me n t io n a fe w ,  O r de r o f the IT AT , Hy de r a ba d i n t he c ase o f C r e sce nt R o adw ays Pv t . L t d. , vs . , DC IT v i d e IT A .N o .1 9 5 2 / Hy d/2 0 1 8 da te d 0 1 .0 7 .2 0 2 1 .  O r de r o f t he IT AT , De lh i in t h e case o f DC IT vs . Dee De ve lo p me n t E n gi ne e r s L t d ., v i d e IT A .N o .4 9 5 9 / D e l. /20 1 6 da te d 0 8 .0 4 .2 0 2 1 .  O r de r o f t he IT A T , De l h i i n t he c ase o f DC IT vs . Plan ma n HR ( P) L t d ., vi de IT A .N o . 5 1 5 2 / De l . /2 0 1 7 da te d 1 5 .0 7 .2 0 2 1 .  O r de r o f t he I T AT , C he n na i i n t he case o f DC IT v s. T ale npr o In d ia HR Pv t. L td . , v i de IT A .N o .2 6 5 / C he n na i /2 0 1 9 da te d 0 9 .0 4 .2 0 2 1 .  O r de r o f t he IT AT , A gr a i n t he case o f M ah a d e v C o l d Sto r a ge vs . Jur i s di c tio n As se ss i ng O ff ice r vi de I .T. A. N o s . 2 0 & 2 1 / A gr a /2 0 2 1 da te d 1 4 .0 6 .2 0 2 1 .  O r de r o f the IT A T , C he n na i i n t h e ca se o f DC IT v s. R e pco Ho me F i na nce P vt . L t d. , r e po r te d in [2 0 2 0 ] 1 8 3 IT D 7 8 2 IT AT -C he n na i . ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 3  O r de r o f IT AT i n t he c ase o f Ea gle T r an s S h i pp i ng & L o gi s ti cs (I n di a) (P . ) L t d . V s AC IT in IT A N o . 3 2 4 /De l /2 0 1 7 o r de r da te d 2 5 .0 7 .2 0 1 9 w he r e i n the is sue h as be e n ru le d aga i ns t t he a sse sse e base d o n t he ju dg me nt s o f Ho n ’b le Hi g h C o ur t o f D e lh i i n t he ca se o f C IT Vs . B h ar a t Ho te l s L td . 4 1 0 IT R 4 1 7 .  O r de r o f IT AT , D e lh i i n t he case o f Ve d va n C o ns u l t an ts P v t. L td . V s. DC IT i n IT A N o . 1 3 1 2 / De l /2 0 2 0 d ate d 2 6 . 0 8 .2 0 2 1 w he r e i n t he i ss ue ha s be e n r u l e d ag ai ns t t he asse sse e base d o n t he ju dg me n t s o f Ho n ’b le Ma dr as H i g h C o ur t, Ho n’ b le B o m ba y Hi g h C o ur t a n d H o n’b le Ke r a la Hi g h Co ur t . T he s a id o r de r s a r e e xa m ine d w h ic h ar e a s un de r : MADRAS HIGH COURT : October 23, 2018 M/ S . UN IF AC M AN AG E MEN T SE R VIC ES (IN DI A ) PR IV AT E L T D. VER S US T HE DE PUT Y C O MM IS SI O N ER O F IN C O ME T AX , C O R PO R AT I O N C IR C L E 3 (2 ) , C HE N N A I T he s co pe o f Se c t io n 4 3 B an d Se c tio n 3 6 (1 )( va ) ar e di ffe r e n t an d t h us , t he r e is no que st io n o f r e ad in g bo t h pr o v is io ns to ge t h e r to co ns i de r a s to w he t he r the asse sse e is e n t it le d to de du ct io n i n r e s pe ct o f t he su m b e late d l y pa id to w ar ds s uc h co n tr ib u tio n , e spe c i al l y w he n s uch s u m is , a d mi t te d l y, a su m r e ce ive d b y t he a sse s se e / e mp lo ye r fr o m h is e m p l o ye e . T he r e f o r e , fo r co n s ide r i ng s uc h que st io n, a p pl ic a t io n o f Se c t io n 3 6 (1 ) ( va ) r .w .s . 2(2 4 )( x ) alo ne is t he pr o pe r co ur se an d an y o the r i nte r p r e tat io n w o u ld o n l y de f e at t he o b je c t and s co pe o f bo t h t he pr o v is io ns v iz ., 4 3 B an d 3 6 (1 )( va ) . ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 4 Ac co r d i ng l y, t he w r i t pe t it io n fa il s an d t he same is di sm i sse d. KERALA HIGH COURT : [2015] 378 ITR 443 : September 8, 2015 T HE C O M MI S SIO N ER O F IN C O ME T AX , C O C HIN V E R SU S M /S MER C HE M L IM IT E D T he d is t in ct io n d r aw n to cr e di t th e amo u n t o f the emp lo ye r an d t he e mp lo ye e w as w i t h a c le ar o b je c ti ve a nd ther e i s no i l le g al i ty o r o the r le ga l in f ir m i ty in cl as si f yin g t he co n tr ib u tio ns o f e mp lo ye e s a n d e mp lo ye r in t he ma tte r o f cr e d i ti n g the s am e to t he ap pr o pr i ate s ta tu to r y au tho r i t ie s . C o ns i de r i n g se ct i o n 3 6 (1 ) (v a ) o f the I nco me T a x Ac t a s i t st an ds , w it h r e s pe c t to a ny su m r e ce ive d b y t he asse s se e fr o m a ny o f h is e mp lo ye e s to w h ic h t he pr o v i sio ns of cl au se ( x ) o f su b- se c t io n (2 4 ) o f se c ti o n 2 ap pl ie s, asse sse e sh a ll n o t be e n ti t le d to de d uc t io n o f s uc h a mo un t in co mp u t in g the i nco me r e fe r r e d to i n se c tio n 2 8 if s uc h su m i s no t cr e d i te d by the as s e sse e to t he e mp lo ye es’ acco u nt i n the r e le v an t fu nd o r f u nd s o n o r be fo r e the d ue da te as pe r e x pl a na t io n to se ct io n 3 6 (1 )( va ) o f t he A ct . BOMBAY HIGH COURT: [2014] 368 ITR 749 (Bom): October 14, 2014 T HE C O M MI S SIO N ER O F IN C O M E T AX VER SU S G H AT G E PAT IL T R AN SPO R T S L T D. T he e mp lo ye r as se sse e w o ul d be e nt i t le d to de du c t ion o nl y if t he co n tr i b ut i o n to t he e m p lo ye e ’s w e lf ar e f u nd s to o d ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 5 cr e d i te d o n o r b e fo r e t he d ue d ate a n d no t o t h e r w ise – fo l lo w i ng t he de c is io n in C o mm is s io ne r o f I nco me T ax V /s . Al o m E xtr u sio ns L td . [ S UPR EM E C O UR T ] – bo th e mp lo yee s’ an d e mp lo ye r ’s co n tr i b ut io ns ar e co ve r e d u nde r the ame nd me n t to S e ct io n 4 3 B o f I . T . Ac t – the T r i b un al w a s r ig h t in ho l d in g th a t p ay me n t s a r e su b je c t to be ne fi ts o f Se c t io n 4 3 B . 8 . W e ha ve e xa m ine d t he de c is io n o f the Ho n ’b le G u ja r at Hi g h C o ur t i n t he case o f St ate R o a d T r ans po r t C o r po r a t io n (3 6 6 IT R 1 7 0 ) w he r e i n t h e co ur t ha s he l d the t he pa ym e nt w e re no t al lo w ab le u /s 3 6 ( 1 )( va ) .I t w as he l d as u nde r : “Section 43B, read with section 36(1)(va) of the Income Tax Act, 1961 Business disallowance - Certain deductions to be allowed on actual payment (employee's contribution) - whether where an employer has not credited sum received by it as employee's contribution to employee's account in relevant fund on or before due date as prescribed in Explanation to section 36(1)(va), assessee shall not be entitled to deduction of such amount though he deposits same before due date prescribed under section 43B i.e. prior to filing of return under section 139(1). Held, yes - assessee State Transport Corporation collected a sum being Provident Fund contribution from its employees. However, it had deposited lesser sum in Provident Fund account. Assessing Officer disallowed same under section 43B. However, Commissioner (Appeals) deleted disallowance on ground that employee's contribution was deposited before filing return. Whether since assessee had not deposited said contribution in respective fund account on date as prescribed in ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 6 explanation to section 36(1)(va), disallowance made by Assessing Officer as just and proper.” 9 . Si m i lar ly , t he j u dg me n t s o f Ho n’ ble H ig h C o ur t of De lh i i n the c ase o f C IT V s. B h ar a t Ho te l s L td . 4 1 0 IT R 4 1 7 he l d t ha t t he amo un ts w e r e no t a ll o w a b le u /s 3 6 (1 ) ( va ). T he r e l e van t po r t io n is a s un de r : "7. The issue here concerns the interplay of Section 2(24)(x) of the Act read with Section 36(1)(va) of the Act alongside provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (especially Regulation 38 of the Employees' Provident Funds Scheme, 1952) and the provisions of the Employees' State Insurance Act, 1948. The AO had brought to tax amounts which were deducted by the employer/assessee from the salaries and wages payable to its employees, as part of their contributions. It is not in dispute that the employer's right to claim deductions under the main part of Section 43-B of the Act is not an issue. The question the AO had to then decide was whether the amounts deducted from the salaries of the employees which had to be deposited within the stipulated time (in terms of notification/circular dated 19.03.1964 which was modified on 24.10.1973), as far as the EPF contribution went and the period of three weeks as far as the ESI contributions went. The AO made a tabular analysis with respect to the contributions deducted and actually deposited. The cumulative effect of notifications under the Employees' Provident Funds Act, 1952 and the Employees State Insurance Act, 1948 was that in respect of the EPF Scheme contributions the deductions were to be deposited within 15 days of the succeeding wage period with a grace period of 5 days; for ESI contributions the ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 7 deposit with the concerned statutory authority had to be made within three weeks of the succeeding wage month/period. The CIT in this case confirmed the additions - made by the AO based on the entire amounts that were disallowed. The ITAT however granted complete relief. 8. Having regard to the specific provisions of the Employees' Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT's decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace, period in terms of the extent notification). As far as the amounts constituting deductions from employees' salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. 9. In view of this discussion, the Revenue's appeal is partly allowed. The AO is directed to examine the contributions made with reference to the dates when they were actually made and grant relief to such of them which qualified for such relief in terms of the prevailing provisions and notifications. We also clarify that the assessee would be entitled to deduction in terms of Section 36(1)(va) of the Act." 1 0 . W e h ave a lso e xam i ne d the de c is io n o f the Ho n’ble Al l ah ab ad H ig h C o ur t i n the ca se o f S ag u n Fo u n dr y Pv t. L t d . V s ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 8 C IT 1 4 5 DT R 2 6 5 w he r e i n i t w a s h e ld th a t as the p ayme n ts ha ve be e n m ade be fo r e the d ue d ate s pe c if ie d u /s 1 3 9 ( 1 ) an d a s su c h ar e fu l ly a l lo w a ble . T he Ho n’ ble Hig h C o ur t o f Al l ah ab ad has co n si de r e d the case o f G u j ar a t S ta te R o ad T r a ns po r t C o r po r a t io n a n d he l d as u n de r : “17. We find that with respect to employees contribution to Provident Fund, as to whether disallowable or not with reference to Section 36(1)(va) read with Section 43B, a similar question came up for consideration before Gujarat High Court in Commissioner of Income-Tax v. Gujarat State Road Transport Corporation, (2014) 366 ITR 170. Therein Assessee collected Rs. 51,06,02,712/- from its employees towards provident fund contribution but deposited Rs. 21,16,61,582/- with provident fund trust. Thus there was a short fall of Rs. 24,89,41,130/-. This amount of short fall was treated by Assessing Officer as income of Assessee vide Section 2(24)(x) read with Section 36(1)(va) of Act 1961. Assessing Officer also added Rs. 1,93,55,580/being the amount of short fall towards employers contributory provident fund and disallowed the same under Section 43B of Act 1961. He also disallowed the said amount of Rs. 1,93,55,580/- from expenses claimed by Assessee for the A.Y. in question i.e. 200506 as per provisions under Section 43B. Dissatisfied with assessment order, Assessee preferred appeal before CIT(A) who vide order dated 25.06.2009 partly allowed the same and deleted disallowance of Rs. 24,89,41,130/- (short fall in employees contribution to provident fund) and Rs. 1,93,55,580/- (short fall in employers contribution to provident fund) observing that employees contribution/employers contribution was deposited before filing ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 9 Return under Section 139(1) of Act 1961 for the relevant period. Revenue, in its turn, preferred appeal before Tribunal. Relying on judgment in Commissioner of Income-Tax v. Alom Extrusions Ltd. (supra), Tribunal dismissed appeal and confirmed order passed by CIT(A). That is how matter came before High Court in appeal. Court considered following question, posed in para 7.01, reads as under:" Short question which is posed for consideration of this court is with respect to the disallowance of the amount being the employees contribution to the PF account/ESI contribution which admittedly which the concerned assessee did not deposit with the PF Department/ESI Department within due date under the PF Act and/or the ESI Act." 18. Gujarat High Court referred to Section 2(24)(x) and found that any sum received by Assessee (employer) from his employees as contributions to any provident fund or superannuation fund or any fund set up under Act, 1948, or any other fund for welfare of such employees, constitute income. However, Section 36 of Act 1961 provides for deduction in computing income referred to in Section 28. The relevant provision of Section 36 applicable to the case before Gujarat High Court was Section 36(1)(va) with which we are also concerned. It entitles an Assessee for deduction in computing income referred to in Section 28 with respect to any sum received by Assessee (employer) from his employee to which Section 2(24)(x) apply, if such sum is credited by Assessee to employees accounts in the relevant fund before due date i.e. date prescribed in the relevant statute applicable to the concerned fund. Court also noticed that Section 43B is in ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 10 respect to certain deductions and applies only on actual payment. It held that amendment was made by deletion of Second Proviso of Section 43B only, but no corresponding amendment was made under Section 36(1)(va). It said: "It is required to be noted that as such there is no amendment in Section 36(1)(va) and even the Explanation to Section 36(1) (va) is not deleted and is still on the statute and is required to be complied with. Merely because with respect to the employers contribution the second proviso to Section 43B which provided that even with respect to the employers contribution (Section 43B(b)), the Assessee was required to credit the amount in the relevant fund under the PF Act or any other fund for the welfare of the employees on or before the due date under the relevant Act, is deleted, it cannot be said that Section 36(1)(va) has been deleted and/or amended." 19. That is how Gujarat High Court held that Section 43B would not be attracted in a case where dispute relates to employees contribution only. Section 43B would be confined only to employers contribution. It further said: "Therefore, with respect to the employees contribution received by the assessee if the assessee has not credited the said sum to the employees account in the relevant fund or funds on or before the due date mentioned in the Explanation to Section 36(1)(va), the assessee shall not be entitled to deductions of such amount in computing the income referred to in Section 28 of the Act." 20. Gujarat High Court distinguished judgment of Commissioner of Income-Tax v. Alom Extrusions Ltd. (supra) on the ground that therein actual dispute relates to employers contribution ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 11 and whether amendment in Section 43B by Finance Act, 2003 would operate retrospective or not, Supreme Court had no occasion to consider deduction with reference to Section 36(1)(va). For the same reason Gujarat High Court dissented with the judgments of Rajasthan High Court in Commissioner of Income-Tax v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd., (2014) 366 ITR 163, Punjab and Haryana High Court in Commissioner of Income-Tax v. Hemla Embroidery Mills P. Ltd., (2014) 366 ITR 167 , Himachal Pradesh High Court in Commissioner of Income-Tax v. Nipso Ployfabriks Ltd., (2013) 350 ITR 327 and Karnataka High Court in Commissioner of Income-Tax v. Sabri Enterprises, (2008) 298 ITR 141. 21. Karnataka High Court had an occasion to consider, whether it should dissent with the view taken in the earlier judgments and follow the view taken by Gujarat High Court in Commissioner of Income-Tax v. Gujarat State Road Transport Corporation (supra) and this occasion came in Essae Teraoka P. Ltd. v. Deputy Commissioner of Income-Tax, (2014) 366 ITR 408. Dispute relates to A.Y. 200809. Assessee filed Return on 26.09.2008. Return was processed under Section 143(1) and thereafter on scrutiny, notice under Section 143(2) was issued. Assessing Officer completed assessment by order dated 24.12.2010 under Section 143(3) disallowing Rs. 12,51,737/under Section 36(1)(va) and also disallowing Rs. 1,04,621/under Section 14A read with Rule 8D. In appeal, CIT (A) reversed findings of Assessing Officer but on appeal preferred by Revenue, Tribunal restored Assessing Officers order and that is how matter came to Karnataka High Court. The question up for consideration was, "whether Tribunal was ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 12 justified in affirming finding of Assessing Officer and denying Assessees claim of deduction of employees contribution to PF/ESI alleging that the payment was not made by appellant in accordance with the provisions of Section 36(1)(va) of Act 1961." The Assessees counsel relied on earlier judgment of Karnataka High Court in Commissioner of Income-Tax v. Spectrum Consultants P. Ltd., (2014) 2 ITROL 622 while counsel for Revenue attempted to pursue to take a different view following decision of Gujarat High Court. The Division Bench judgment delivered by Honble Dilip B. Bhosale, (as his lordship then was) held, if the contribution of employees fund is deposited within due date the Assessee is straightaway entitled for deduction under Section 36(1)(va). However Section 43B provides for certain deductions allowable only on actual payment. It gives an extension to the employer to make payment of contribution to provident fund or any other fund, till due date applicable for furnishing of Return under Section 139(1) of Act 1961, in respect of previous year in which liability to pay such sum was incurred, and evidence of such payment is furnished by Assessee along with such Return. Court then said: "In short, this provision states, notwithstanding anything contained in any other provision contained in this Act, a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution to any fund such as provident fund shall be allowed if it is paid on or before the due date as contemplated under Section 139(1) of the Income-Tax Act. This provision has nothing to do with the consequences, provided for under the PF Act/PF Scheme/ESI ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 13 Act, for not depositing the "contribution" on or before the due dates therein." (emphasis added) 22. It also said that the word "contribution" used in clause (b) of Section 43B of Act 1961 means the contribution of employer and employee, both, and that being so, if contribution is deposited on or before due date for furnishing Return of income under subsection (1) of Section 139 of Act 1961, employer is entitled for deduction. 23. Though in a short judgment, but Punjab and Haryana High Court in Commissioner of Income-Tax v. Hemla Embroidery Mills (P.) Ltd., (supra) not only followed Commissioner of Income- Tax v. Alom Extrusions Ltd. (supra) but also its own earlier judgment in Commissioner of Income-Tax v. Rai Agro Industries Ltd., (2011) 334 ITR 122 , to hold that Section 43B shall apply to both contributions i.e. employers and employees. 24. Kerala High Court in recent judgment in Commissioner of Income-Tax v. Merchem Ltd., (2015) 378 ITR 443, has followed the decision of Gujrat High Court in Commissioner of Income- Tax v. Gujrat State Road Transport Corporation (supra) and dissented with the otherwise judgments of Rajasthan High Court in Commissioner of Income-Tax v. State Bank of Bikaner and Jaipur, (2014) 363 ITR 70, Karnataka High Court in Commissioner of Income-Tax v. Spectrum Consultants India P. Ltd. (supra) and Bombay High Court in Commissioner of Income-Tax v. Ghatge Patil Transports Ltd., (2014) 368 ITR 749. ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 14 25. Before following a particular view when there is divergence in views of different High Courts, we find it appropriate to examine Supreme Court judgment in Commissioner of Income- Tax v. Alom Extrusions Ltd. (supra) to find out whether it can be confined only in respect to employers contribution or is applicable to both contributions, whether by employer or employee. 26. The question, whether benefit under Section 43B, as a result of amendment of Finance Act, 2003, is retrospective or not, came to be considered in Commissioner of Income-Tax v. Alom Extrusions Ltd. (supra). Court considered the intent, purpose and object in the historical back drop of insertion of Section 43B and its progress by way of various amendments. Referring Section 2(24)(x) it said, income is defined under Section 2(24) which includes profits and gains. Further in clause (x) of Section 2(24) any sum received by Assessee from employees as contributions to any provident fund/superannuation fund or any fund set up under Act 1948, or any other fund for welfare of such employees constitute income. This is the reason why every Assessee/Employer was entitled to deduction even prior to April, 1, 1984, keeping books on mercantile system of accounting, as a business expenditure, by making provision in his books of account in that regard. Assessee was capable of keeping money with him and just by mentioning in accounts, was able to claim deduction as business expenses. Section 43B was inserted to check this practise and it resulted in discontinuing mercantile system of accounting with regard to tax, contributions etc. With induction of Section 43B an Assessee could claim deduction on actual payment basis. By ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 15 Finance Act, 1988 Parliament inserted first proviso w.e.f. 01.04.1988 which inter alia provides that any sum payable by Assessee by way of tax, duty, cess or fee, if payment is made after closing of accounting year but before date of filing of Return under Section 139(1), Assessee would be entitled to deduction on actual payment basis. This proviso did not include within its ambit, contributions under labour welfare statutes. By Finance Act, 1988, Second Proviso thus Second proviso was further amended by Finance Act, 1989 w.e.f. 01.04.1989. 27. Court held that Assessee/employer thus would be entitled to deduction only if contribution stands credited on or before due date given in the Act 1952 or Act 1948. Second proviso created difficulties, inasmuch as under Act, 1981, due date was after the date of filing of returns and thus industries made representations to the Ministry of Finance. Court, looking to the history of amendments held, it is evident that Section 43B, when enacted in 1984, commences with a non obstante clause. The underlying object being to disallow deductions claimed merely by making a book entry based on the mercantile system of accounting. At the same time, Section 43B made it mandatory for the Department to grant deduction in computing income under Section 28 in the year in which tax, duty, cess etc. is actually paid. Parliament took cognizance of the fact that accounting year of a company did not always tally with the due dates under Provident Fund Act, Municipal Corporation Act (Octroi) and other Tax laws. Therefore, by way of First Proviso, an incentive/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 Act ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 16 1961, Assessee would than be entitled to deduction. This relaxation/incentive was restricted only to tax, duty, cess and fee. It did not apply to contributions to labour welfare funds. The reason appears to be that the employer should not sit on the collected contributions and deprive workmen of the rightful benefits under social welfare legislations by delaying payment of contributions to the welfare funds. But when implementation problems were pointed out for different due dates, uniformity was brought about in first proviso by Finance Act, 2003. Hence, amendment made by Finance Act 2003 in Section 43B is retrospective, being curative in nature and apply from 01.04.1988. In the result when contribution had been paid, prior to filing of return under Section 139(1), Assessee/employer would be entitled for deduction and since deletion of Second Proviso and amendment of First Proviso is curative and apply retrospectively w.e.f. 01.04.1988. 28. From the aforesaid judgment, we find that irrespective of the fact that deduction in respect of sum payable by employer contribution was involved, but Court did not restrict observations, findings and declaration of law to that context but looking to the objective and purpose of insertion of Section 43B applied it to both the contributions. It also observed clearly that Section 43B is with a non-obstante clause and therefore over ride even if, anything otherwise is contained in Section 36 or any provision of Act 1961. 29. Therefore, we are clearly of the view that law laid down by High Courts of Karnataka, Rajasthan, Punjab and Haryana, Delhi, Bombay and Himachal Pradesh have rightly applied Section 43B in respect to both contributions i.e. employer and ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 17 employee. Otherwise view taken by Gujarat High Court and followed by Kerala High Court, with great respect, we find expedient to dissent therewith.” 1 1 . T hu s, w e f in d t h at t he J u dg me n t o f Ho n’ b le A l la ha ba d H ig h C o ur t ha s du l y r e fle cte d o n t he ju d gme n ts o f v a r io us Ho n’b le C o ur ts a nd t ake n a co n s ide r e d de c is io n o n t hi s i ss ue . 1 2 . W i th r e g ar d to the pr e ce de nt iar y v al ue i n de c i di n g the is sue be fo r e us , w e h ave go ne t hr o ug h t he fo l lo w i n g j ud gme n ts : T he Ho n ’b le A l la ha ba d H ig h C o ur t i n K . N . A gar w al v. C IT 1 8 9 IT R 7 6 9 he l d t ha t, "In de e d , the o r de r s o f the T r ib un al an d t he H i gh C our t ar e bi n di n g u po n t he Asse ss i ng o ff ice r an d s in ce he a cts i n a qu as i ju d ic ia l c a pac i ty , t he d i sc ip l i ne o f su ch fu n ct io n in g de ma n ds th a t he s ho ul d f o l lo w t he de c is io n o f the T r ib u na l o r t he H i gh C o ur t, as the c ase m ay be . He can no t i g no r e me r e l y o n the gr o u n d t ha t t he T r ib un al 's o r d e r is t he su b je ct m atte r o f r e vi sio n i n t he H ig h C o ur t o r t he Hi g h C o ur t 's de c isio n is u n de r ap pe a l be fo r e t h e Su pr e me C o ur t . Pe r m i tt i ng h i m to ta ke s uc h a vie w w o u ld i ntr o du ce j ud i ci a l i nd i sc ip l ine , w hi c h is no t c a lle d fo r e ve n i n su ch c as e s. I t w o u ld le a d to a c hao t ic s i tuat io n" . 1 3 . T he Ho n’ b le Ape x C o ur t i n B ar ad a ka nt a Mi shr a vs. B hi mse n Di xi t A IR 1 9 7 2 SC 2 4 6 6 he l d t ha t i t w o u ld be ano ma lo us to su gge st th a t a T r ib un al o ve r w hi ch a H i g h C o ur t ha s su pe r i n te n de n ce can i g no r e t he law de cl ar e d b y i t an d i f a T r ib u na l ca n d o s o , a l l t he s u bo r d i na te co ur ts ca n e qu al l y do so , fo r the r e i s no spe ci f ic pr o vi s i o n a s in r e s pe c t o f Su pr e me ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 18 C o ur t, m ak i ng t he law de cl ar e d b y the H ig h C o ur t b ind i ng o n su bo r d i na te C o ur ts . 1 4 . At th is ju nc t ur e , w e w o u l d l ike to me n t io n th at t he r e i s no fi xe d r u le o r dir e ct io n a s to w h a t sho u ld be a ppo site co ur se to r e so r t in ca se o f co nf l ic t i ng de c i sio ns o f Ho n’ ble Jur is d ic t io na l Hi g h C o ur t a n d n o n- j ur is di c tio na l Hi g h C o ur t. 1 5 . Ar t i cle 1 4 1 o f t he C o ns t i tu t io n la ys do w n th at the “ law de c lar e d” b y t he Su pr e me C o ur t is bi n di n g u po n al l t he co ur t s w i th the te r r i to r y o f In d ia . T h e “ law de cl ar e d ” has t o be co n str ue d a s a p r in c ip le o f law t h at e ma na te s fr o m a j u dg me n t , o r an i nte r pr e ta ti o n o f a law o r j u dg me n t by t he S upr e me C o ur t , upo n w hi ch , the case is de c i de d . He nce , it f lo w s fro m t he a bo ve th a t t he “ law de c lar e d” is t he pr i n ci p le c ul le d o u t o n t he r e a d in g o f a ju d gme n t a s a w ho le i n the l ig h t o f the q ue st io ns r a i se d , upo n w hi ch t he c ase i s de c ide d. A mb ic a Q u ar r y W o r ks v s . S ta te o f G u jar at (1 9 8 7 ) 1 SC C 2 1 3 ; a n d C IT vs . S u n E n gg . W o r ks (P ) L td . (1 9 9 2 ) 4 S C C 3 6 3 . 1 6 . T he Ho n’ ble S u p r e me C o ur t i n C IT v s. R a lso n I n du str ie s L td . (2 8 8 IT R 3 2 2 ) o bse r ve d t ha t w he n a n o r de r i s pas se d by a hi g he r au t ho r it y , the lo w e r au t ho r i ty is bo u nd the re by ke e p in g in v ie w the pr i nc i ple s o f j ud i ci al di sc ip l ine . 1 7 . T he H ig h C o ur t s ar e C o ur t o f r e co r d un de r Ar t icl e 2 1 5 o f the C o n st i tu t io n. B y v ir tue o f t he pr o v is io ns o f Art ic le 2 2 7 , t he Hi g h C o ur ts ha ve po w e r o f su pe r i nte n de n ce o ve r al l C o ur t s a nd tr ib un a ls i n t he ir r e spe c t ive j ur is di c tio n . T h us , it i s im p l ie d th at al l C o ur ts a nd T r i bu na ls in t he r e s pe c t ive S ta te w il l be bo un d by the de c is io n s o f t he Hi g h C o ur t. ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 19 1 8 . In o r de r to have fi xi t y, fi n al i ty a nd co n cl us i ve ne s s o f t he ju d ic ia l pr o ce e di ng s, t he ‘ pr e ce d e nt s’ h ave a r e m arka b le r o le in the fo r m at io n o f ju d ic ia l o pi n io n s , j ud i ci a l o r de r s a nd di s pe ns a tio n o f j us t ice . T he co n ce p t o f “Stare decisis et non quieta movere”, w h ic h tr a ns la te s as ' to s ta nd b y t hi n gs de c i de d an d no t d i st ur b s e tt le d po in ts '. T h e do c tr i ne o f stare decisis, o r bi n di n g pr e ce de n t, i s the pr in c ip l e by w h ic h j ud g e s ar e bo u n d by de c i sio ns o f su pe r io r co ur t s. T he pr in ci pa l a bet in pr e d ic t ab i l it y , un ifo r m it y an d j u di ci al f a ir ne ss . 1 9 . W e have al so g i ve n co ns i de r a b le tho ug h t to t he w o r ds o f the Ho n’b le J ud ge s o f the S up r e me C o u r t i n the ca se o f Di str i bu to r s (B ar o da ) P v t. L t d v s . Un io n o f In d ia 19 8 5 AIR 1 5 8 5 w he r e i n i t w a s h e ld th at , “ T o pe r pe t ua te an e r r o r is no he r o i sm . T o r e c t if y it is t he co m pu l sio n o f j u di c ia l co ns c ie n ce . I n th i s w e de r i ve co m fo r t a nd str e ng t h fr o m th e w ise an d i ns pir in g w o r ds o f J us t ice B r o nso n in Pie r ce v . De l am e te r A .M .Y . at p age 1 8 : "a J ud g e o ugh t to be w ise e no ug h to kno w t ha t he is fa l li b le the r e fo r e eve r y da y t o le ar n: gr e at an d ho ne st e no ug h to di sc ar d a ll me r e pr i de o f o pi n io n a nd fo l lo w tr u th w he r e ve r i t may le ad : a nd co ur a ge o u s e no u gh to ac kno w le dge h is e r r o r s ". 2 0 . T hu s, w e se e a fi ne ba la nce be tw e e n t he f i xi t y an d the fle xi b i li t y. 2 1 . In t hi s bac k gr o u nd , the var io us de c is io ns o f the Ho n’ b le Jur i sd i ct io na l H ig h C o ur ts h ave be e n pe r u se d . ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 20 2 2 . In t he ca se o f C I T Vs. B h ar a t Ho t e ls L t d . 4 1 0 IT R 4 1 7 , the que st io n o f la w a t se r ia l no . 2 fr a me d by t he Ho n’ ble H ig h C o ur t r e ads a s un de r : ( o r de r da te d 0 6 .0 9 .2 0 1 8 ) “ 2 . W he t he r t he pa yme nt o f pr o vi de n t f un d a nd e mp loye e s s ta te in sur an ce d ue s de po si te d b y th e asse s se e w it h in t he gr ace pe r io d w o u ld q u al if y fo r de du c ti o n u n de r Se ct io n 4 3B o f the Inc o me T ax Ac t, 1 9 6 1 ? ” 2 3 . T he s ai d q ue s tio n w a s de a l t a t p ar a 7 & 8 o f t he o r de r , it has be e n he l d t ha t t he asse sse e undo u bte d ly w as e n ti t le d to cl ai m t he be ne f i t an d pr o pe r l y t r e at s uc h amo u nt s as h av in g be e n d u ly de po s i te d , w h ic h w e r e i nf ac t de p o s it e d w ith i n t he pe r io d pr e scr ibe d ( i.e . 1 5 + 5 da ys i n t he case o f EPF a nd 2 1 da ys + an y o t he r gr ace pe r io d in t e r ms o f e x te n t n ot if ic at io n ). 2 4 . T hu s, t he Ho n’ ble C o ur t ha s he l d t ha t the e mp loye r s co n tr ib u tio n is a n al lo w ab le de d uc t io n , i f p ai d b e fo r e the due da te a nsw e r i ng t he q ue s t io n o f l aw fr a me d. T he Ho n’b le C o ur t w e nt f ur the r a n d he ld th at a s far as the a mo u n ts cons t it u ti n g de d uc t io n s fr o m e mp lo ye e ’ s sa l ar i e s to w ar ds the ir co n tr ib u tio ns , w h ic h w e r e ma d e be yo n d s uc h s t ip u la te d pe r io d , o bv io u s ly the asse sse e w a s n o t e n t i tle d to c la i m t he de d uc t io n fro m i ts r e tur ns . 2 5 . W e have pe r u se d t he o r de r o f t he Ho n ’b le Jur is di c tio na l Hi g h C o ur t i n th e case o f C IT Vs . AI MIL L td . 3 2 1 ITR 5 0 8 vide o r de r da te d 2 3 .1 2 .2 0 0 9 he l d th at i f t he e m p lo ye e s ' co n tr ib u tio n is no t de po si te d by t he d ue da te pr e scr i be d u nde r the r e le va nt Ac ts a nd i s de po si te d l a te , t he e mp lo ye r no t o n ly pa ys i n te r e s t o n de l aye d pa y me n t b ut c an i nc ur pe n al t ie s a lso , for w h ic h ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 21 spe c i fi c pr o v is io ns ar e ma de i n the Pr o v i de n t Fu nd Ac t a s w e l l as t he E S I A ct . T he r e fo r e , t he A ct pe r m i ts the e m p lo ye r to m ake the de po si t w i t h so me de l ay s , su b je c t to t he afo r e sa id co n se q ue n ce s . I n so far as t he In c o me - ta x Ac t i s c o nce r ne d , t he asse sse e c an ge t the be ne f it i f t he ac t ua l pa y me n t is ma de be fo r e the r e t ur n i s f i le d , as pe r the pr in c ip le lai d do w n by t he Ho n’ b le Su pr e me C o ur t i n t he cas e o f V i nay C e me n t Lt d. 2 6 . T he br ie f fa ct s o f s uc h case ar e as u nde r : “ 2 . T he ca se r e l ate s to the a ss e ssme n t ye ar 2 0 0 2 -0 3. T he r e spo nde n t ass e sse e ha d f ile d i ts r e t ur n o n 3 0 -1 0 -20 0 2 de c lar i ng in co m e at R s. 7 ,9 5 , 4 3 0 . Dur i ng th e asse s sme n t pr o ce e di n gs , t he As se ss i ng O ff i ce r (AO ) fo u n d t ha t the asse sse e ha d de po s i te d e mp lo ye r s' co n tr i bu t io n as w e l l as e mp lo ye e s ' co n tr ib u tio n to w ar ds pr o v i de n t f u nd a n d E SI a fte r the d ue da te , as pr e scr i be d u nde r the r e le v a nt Ac t /R u le s . A cco r din gl y , he ma de a dd i tio n o f R s. 4 2 ,5 8 ,5 7 4 be i n g e m plo ye e s ' co ntr ib u t io n un de r se c t io n 3 6 (1 ) (va) o f the Ac t a nd R s . 3 0 ,6 8 ,5 8 3 be i ng e mp lo ye r s' co n t r ib u t io n u nde r se c tio n 4 3 B o f t he A ct . Fe l t ag gr ie ve d by th is a sse s s me n t o r de r , the a sse s s e e pre fe r r e d ap pe a l be fo r e t he C IT ( A ) w ho de c ide d t he sa me vide o r de r s da te d 1 5 -7 -2 0 0 5 . T ho ug h t he C IT (A ) a cce pte d t he co nte n t io n o f the a sse s se e th a t if the p ay me n t is m ade be fo r e t he due d ate o f fi l in g o f r e tur n , no d is al lo w an ce co u l d be ma de i n v ie w o f t he pr o v is io ns o f se c t io n 4 3 B , as a m e nde d vide F i na n ce Ac t , 2 0 0 3 , he s t il l co nf ir me d the ad d it io n m ade by t he As se s sing O f fi ce r o n the gr o un d t ha t no do c ume n tar y pr o o f w a s g i ve n t o su p po r t t h at pa yme nt w a s in fac t ma de by t h e asse sse e . T he asse sse e fi le d an ap p li ca t io n u nde r se c t io n 1 5 4 o f t he Ac t be fo r e the C IT (A ) fo r r e c ti f ic at io n o f t he mi s tak e . A f te r h av i ng sa tisf ie d t ha t ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 22 pa yme nt ha d , i n fa c t, be e n m ade , t he C IT ( A ) r e ct if ie d t he mi s take a nd de l e te d t he a d di t io n by ho ld i ng t ha t the as se s se e ha d ma de t he p ay me n t be f o r e t he due da te o f fi li n g o f t he r e tur n , w h ic h w a s a f ac t ap par e n t fr o m the r e co r d . ” T he de c is io n o f I T AT : 2 7 . T he C o -o r di na te B e nch o f IT AT r e lie d o n t he j udgme n t o f Ho n’ b le Su pr e me C o ur t i n t he ca se o f C IT Vs . V i na y C e me n ts L td . 2 1 3 C T R 2 6 8 to s up po r t i ts d e ci sio n to t he e f fe ct th at i f t he e mp lo ye r s' a s w e l l as e mp lo ye e s' co n tr ib u tio n to w a rds pr o v i de n t fu nd a n d ES I i s pa id be fo r e t he due d a te o f fi l i n g o f r e t ur n , no di sa l lo w a nce c an be ma de by t he As se ss i ng O f f ice r . 2 8 . T he r e le va n t p ar t o f t he o r de r o f t he IT AT r e lyin g o n t he C IT Vs . V in ay C e me n ts L td . ( su pr a) i s as u n de r : "11. We have carefully considered the rival submissions in the light of material placed before us. In the assessment order ld. Assessing Officer has categorically stated that what the amount due was for which month in respect of EPF, Family Pension, PF inspection charges and ESI deposits and what were the due dates for these deposits and on which date these deposits were made. The dates of deposits are mentioned between 23rd May, 2001 to 23rd April, 2002. The latest payment is made on 23rd April, 2002 and assessee being limited company had filed its return on 20th October, 2002 which is a date not beyond the due date 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 date of filing of the return. The disallowance is not made by the Assessing Officer on the ground ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 23 that there is no proof of making such payment but disallowance is made only on the ground that these payments have been made beyond the due dates of making these payments under the respective 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 deposits 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 made if the payments are made before the due date of filing the return of income. 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 department against the High Court Order of 26th June, 2006 in ITA No. 2/05 and ITA No. 56/03 and ITA No. 80/03 of the High Court of Guwahati, Assam and it is order dated 7th March, 2007. A copy of the said order is placed on record. The observations of their Lordships on the issue are as under :— 'In the present case we are concerned with the law as it stood prior to the amendment of section 43B. In the circumstances the assessee was entitled to claim the benefit in section 43B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return. The special leave petition is dismissed." 2 9 . T hu s, w e fi n d t h at the C o -o r di na te be nc h o f IT AT and t he Ho n’ b le J ur is di c t io n a l h ig h C o ur t o f De l hi ha ve r e lie d o n the ju d gme n t o f V in a y C e me n ts L td . ( su pr a ) . ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 24 3 0 . Fur t he r , t he Ho n ’b le J ur is d ic t io n a l H i gh C o ur t o f De l hi i n the case o f P C IT Vs . Pr o In te r a c ti ve Se r v i ce s (I nd ia) Pv t . L t d . i n IT A 9 8 3 /2 0 1 8 d a te d 1 0 .0 9 .2 0 1 8 w h ile d is m is si n g the ap pe a l o f the R e ve n ue he l d t ha t “ t he le g is la t ive i nte n t w a s / is to e n sur e th a t t he a mo un t pa i d i s a l lo w e d as a n e xpe nd i t ur e on l y w he n pa yme nt i s ac t u al ly ma de . W e d o no t t hi n k t ha t the le gi sl a ti ve in te nt an d o b je c t ive is to tr e a t b e la te d pa yme n t o f E mp lo ye e 's Pr o v i de n t Fu n d ( EP D) an d Em p lo ye e 's St a te I ns u r ance S che me (E SI ) as de e me d in co me o f the e m plo ye r u nde r Se c t ion 2 (2 4 ) (x ) o f the A c t. ” 3 1 . Fur t he r , th i s is s ue has be e n e xa mi ne d in the Fin ance Ac t, 2 0 2 1 w h ic h ar e a s un de r : “ Se c t io n 2 (2 4 ) (x ) o f the In co me T a x A c t, 1 9 6 1 r e ads : “ a ny su m r e ce ive d by the asse ss e e fr o m h i s e mp lo ye e s as co n tr ib u tio ns to an y pr o v i de n t f u nd o r s upe r a n nu at io n fu n d o r an y fu n d se t up un de r t he pr o v i sio ns o f t he Em plo yee s' S ta te Ins ur an ce A c t, 1 9 4 8 (3 4 o f 1 9 4 8 ), o r a n y o the r fu nd fo r t he w e lf ar e o f su ch e mp lo ye e s .” FINANCE ACT, 2021 [13 OF 2021] An Act to give effect to the financial proposals of the Central Government for the financial year 2 0 2 1 -2 0 2 2 .BE it enacted by Parliament in the Seventy-second Year of the Republic of India as follows:— CHAPTER I PRELIMINARY Short title and commencement. 1. (1 ) T h is A ct m ay be ca l le d the F in an ce Ac t , 2 0 2 1 . (2 ) Sa ve a s o t he r w ise pr o v ide d i n t h is A ct ,— ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 25 (a) se c tio ns 2 to 8 8 sha l l co me i nto fo r ce o n t he 1 s t day o f Apr i l , 2 0 2 1 ; (b) se c tio ns 1 0 8 t o 1 2 3 sha l l co me i nt o fo r ce o n s uc h date a s the C e n tr a l G o ve r n me n t ma y, by no t if ic a tio n i n the O ff ic ia l G az e tte , ap po i n t . Amendment of section 36. 9. In se c tio n 3 6 o f the I nco me - t ax A ct , in s ub - s e ct io n (1 ), in cl au se (va), the Explanation s ha l l be nu mbe r e d a s Explanation 1 t he r e o f an d af te r Explanation 1 a s so n um be r e d , the fo l lo w i ng Explanation s ha l l be i nse r te d , n ame ly :— 'Explanation 2.— Fo r t he r e mo va l o f do ub t s, i t i s h e r e by c la r i f ie d th a t t he pr o v is io ns o f se c t io n 4 3 B sha l l no t a p pl y an d s ha l l be de e me d ne ve r to ha ve be e n ap pl ie d fo r t he p ur po se s o f de te r m in i ng t he "due da te " u nde r t h is c la use ;' . Amendment of section 43B. 11. I n se c t io n 4 3 B o f the I nco m e -t ax Ac t , af te r Explanation4, the fo l lo w in g Explanation s ha l l be in se r te d , na me ly :— "Explanation5.— F o r t he r e mo v al o f do u b ts , i t is he r e by c lar if ie d th a t the pr o vi s io ns o f t hi s se c t io n s ha l l no t a p p ly an d sh a ll be de e me d ne ve r to h ave be e n a p pl i e d to a su m r e c e ive d by the asse sse e fr o m a ny o f h i s e m p lo y e e s to w h ic h the pr ov is io ns o f su b- c la use (x) o f c la use (24) o f s e ct io n 2 ap p l ie s ." . 3 2 . W e have a lso p e r use d the Me m o r an du m E xp la i n in g t he Pr o v is io ns i n t he F in an ce B i l l , 2 0 2 1 . U nde r t he h e ad “ Pr o v i sio n r e la t in g to D ir e ct T axe s” w i th to r at io na l iz a t i o n of v ar io us pr o v is io ns , the is sue o f c la use (2 4 ) o f Se c t io n 2 su b- c la use (x ) , Se c t io n 3 6 (1 ) cl a use (va ) , Se c tio n 4 3 B w it h r e gar d to pr o vi s io n s ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 26 o f su b -Se ct io n ( 1 ) o f Se c t io n 1 3 9 have be e n de al t at le ng t h. T he gi s t is a s un de r : “Rationalization of various Provisions Pa yme nt b y e m p lo ye r o f e m p lo ye e co n tr ib u tio n to a fun d o n o r be fo r e d ue da te C la use (2 4 ) o f se ct io n 2 o f t he Ac t pr o v ide s an i nclu s ive de f in i t io n o f t he in co me . S ub - cl ause (x ) t o t he said c la use pr o v i de th a t i n co me to in cl u d e any s um r e c e ive d by the asse sse e fr o m h i s e m pl o ye e s as co n tr ib u tio n to a ny pr o v i de n t fu nd o r s upe r an nu at io n f un d o r any f un d se t up u n der t he pr o v is io ns o f E SI Ac t o r a ny o t he r fu nd fo r the w e lf ar e o f s uc h e mp lo ye e s. Se c t io n 3 6 o f t h e Act pe r t ai ns t o the o t he r de d uc t io n s. Su b- se c tio n (1 ) o f t h e sai d se c t io n pr o vi de s fo r v ar io us de d uc t io n s al lo w e d w h i le co mp u ti n g t he i nco me u nde r the he ad Pr o f i ts a nd ga in s o f b us ine ss o r pr o fe ss io n ‘ . C la use (v a) o f t he sa id su b -se c t io n pr o v i de s fo r dedu c tio n o f an y s u m r e ce ive d by t he a sse sse e fr o m a ny o f h is e mp lo ye e s to w h ic h t he pr o v i si o ns o f s ub - cl au s e (x ) o f c la use ( 24 ) o f se c t io n 2 ap p ly , if s uc h s um i s cr e d i te d b y the as s e sse e to the e mp lo ye e ' s ac co un t i n t he r e le va nt f u nd o r f un ds o n o r be fo r e the d ue da te . Ex p la na tio n to th e sa id c la use pr o vi de s t ha t , fo r th e pur po se s o f th i s c la use , " d ue da te to me an t he d ate b y w hi c h t he asse sse e is r e q u ir e d a s an e mp lo ye r to cr e di t a n e m plo ye e ' s co n tr ib u tio n to the e mp lo ye e ' s ac co u n t in t he r e le v an t f u nd u nder an y Ac t, ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 27 r ule , o r de r o r no t i fi ca t io n iss u e d the r e -u n de r o r unde r an y st an d in g o r de r , a w ar d , co ntr ac t o f se r v i ce o r o t he rw ise . Se c t io n 4 3 B s pe c if ie s the l i st o f d e du ct io ns t ha t ar e ad m is si b le un de r the A c t o nl y u po n t he ir ac t ua l pa yme n t. E m ploye r 's co n tr ib u tio n is c o ve r e d in c la use (b ) o f se ct io n 4 3B . A cco r d in g to i t , i f a ny s um to w ar ds e m plo ye r ' s co n tr i b ut io n to an y pr o v i de n t fu nd o r su pe r a nn u at io n fu n d o r gr a tu i t y fu n d o r a n y o the r fu n d fo r th e w e lf ar e o f t he e mp lo ye e s i s ac t ua l ly pa id by the a sse s se e o n o r be fo r e t he du e date fo r f ur ni s hin g t he r e tur n o f t he i nco me u nde r s u b- se c t io n (1 ) o f se ct io n 1 3 9 , asse sse e w o u ld be e n t i tle d to de du ct io n un de r se ct io n 4 3 B and s uc h de d uc t io n w o u l d be ad m is si b le fo r t he ac co un t i ng year . T h is pr o v is io n do e s n o t co ve r e m plo y e e co n tr ib u t io n r e fer r e d to i n cl au se (v a) o f s u b- se c t io n (1 ) o f s e ct io n 3 6 o f t he Ac t . T ho u gh se c ti o n 4 3 B o f the Ac t co ve r s o n l y e mp lo ye r ‘s co n tr ib u tio n an d do e s no t co ve r e mp lo ye e co ntr ib u t io n , so me co ur ts h ave ap p l ie d t he pr o v i sio n o f se c tio n 4 3 B o n e m p lo ye e co n tr ib u tio n a s w e l l. T he r e i s a di s ti nc t io n be t w e en e m pl o ye r co n tr ib u tio n a nd e m plo ye e ‘ s co n t r ib u t io n to w ar ds w el far e f un d . It ma y be no te d th at e mp lo ye e ‘ s co n tr i b ut io n t o w ar ds w e l far e fu nd s i s a me cha n is m to e ns ur e t he co m p li ance by the e mp lo ye r s o f t h e la bo ur w e lf ar e la w s . He nce , i t ne ed s to be str e sse d t ha t the e mp lo ye r ‘ s co n t r ib u t io n to w ar d s we lf ar e f un ds suc h a s E SI an d PF ne e d s to be cle ar l y d i st i ng u is hed f r o m the e mp lo ye e ‘ s co n t r ib u t io n to w ar d s w e lf ar e f u nd s. Em p lo ye e ‘ s co n tr ib u tio n i s e mp lo ye e o w n mo ne y a nd the e m p lo ye r de po s i ts th i s co ntr i bu t io n o n be h al f o f t he e m p lo ye e in fi d uc iar y cap ac i ty . B y l ate de po s it o f e mp lo ye e co n tr ib u tio n , t he e mp lo ye r s ge t u nj us t ly e nr ic he d b y ke e p in g the mo ney ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 28 be lo n gi n g to t he e mp lo ye e s. C l a use (v a) o f s u b- se c tio n (1 ) o f Se c t io n 3 6 o f t h e Ac t w a s in se r t e d to t he A c t v i de F i na nce Ac t 1 9 8 7 as a me a s ur e s o f pe n al iz i ng e mp lo ye r s w ho m is -ut i l iz e e mp lo ye e ‘ s co ntr ib u t io n s. Ac co r d i ng l y, in o r de r to pr o vi de c e r ta in t y, it is pr o po se d to – ( i) ame n d c la use (v a) o f su b -se c t i o n (1 ) o f se ct io n 3 6 o f t he Ac t by in se r t i ng a no the r e x p la na t io n to the s a id c l a use to cl ar i fy th a t the pr o v is io n o f se c tio n 4 3 B do e s no t ap p ly a nd de e me d to ne ve r ha ve be e n ap p l ie d fo r t he p ur po se s o f de te r m ini n g the ―d ue da te un de r t h is c la use ; an d ( ii ) a me n d se ct io n 4 3 B o f t he A ct by in se r t i ng Ex p la na t io n 5 to the sa id se c tio n to c lar if y th at th e pr o v is io ns o f t he sa i d se c t io n do n o t ap p ly a nd de e me d to ne ve r ha ve be e n ap p l ie d to a su m r e ce i ve d b y t he asse sse e fr o m a ny o f hi s e m p lo ye e s to w h ic h pr o v is io ns o f s u b -c la use (x ) o f c la use (2 4 ) o f se c ti o n 2 a pp l ie s . T he se ame n dme n ts w i ll ta ke e ffe c t fr o m 1 st Apr i l , 20 2 1 and w il l acco r d in g ly a pp ly to the as s e ssme n t ye ar 2 0 2 1 -2 2 a nd su bse que n t a sse s sme nt ye ar s .” [C la use s 8 an d 9 ] 3 3 . T hu s, t he ma t t e r has be e n f i na l ly de c ide d a nd the co n tr o ve r sy h as be e n p u t to r e st . 3 4 . Hav i ng go ne t hr o ug h the O r de r s o f t he C o -o r d in ate B e n ch o f T r ib un a l a l l o w i ng t he de l a ye d pa yme n t pe r t ai n in g to e mp lo ye e s co ntr ib u t io n , O r de r s o f t he C o -o r d in ate Be n ch o f T r ib u na l di sa l lo w i ng t he de l a ye d pa yme n t pe r t ai n in g to e mp lo ye e s co n tr ib u t io n , J ud g me nt s o f var io u s Ho n’ b le C o ur ts di sa l lo w in g the d e la ye d pa yme nt , Ju d gme nt s o f v ar ious Ho n ’b le ITA No. 27/Del/2022 Magic Auto Pvt. Ltd. 29 C o ur ts d isa l lo w i n g the de la ye d p ay me n t , pr o v is io ns o f Se c ti o n 2 (2 4 ) ( x) , Se ct io n 3 6 (1 ) (v a) , Se ct i o n 4 3 B , Se c t io n 13 9 (1 ) o f the Inc o me T a x Ac t, 1 9 6 1 , pr o v is io n s o f F i na nc e Ac t 2 0 21 , Me mo r an du m e x pl a in i ng the pr o v is io ns in F in an ce B ill , 2 0 2 1 an d the s pe c if i c a me n dme n ts w h i ch w i l l t ake e ffe ct fr o m 0 1 .0 4 .2 0 2 1 , w e he r e b y ho l d t ha t no d is a llo w a nce i s ca l le d fo r be l ate d pay me n t o f the e mp l o ye e ’s co n tr ib u t io n to the r e spe c t ive ES I a nd EP F fu nd i n t he ca se o f a sse s se e w ho have de po si te d t he sa me be fo r e t he d ue da te o f fi l i ng o f In co me T ax R e tur n. ” 4 . In the ab se n ce o f an y m a te r i al ch an ge a nd the lega l pr o po s it io n, w e h e r by a l lo w t he a p pe a l o f t he a sse sse e . O r de r Pr o no u nce d i n the O pe n C o ur t o n 2 7 /0 6 /2 0 2 2 . Sd / - Sd / - (A. D. Jain) (Dr. B. R. R. Kumar) Vice President Accountant Member Dated: 27/06/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR