DCIT, Cochin V. M/s.Popular Vehicles & Services Ltd, Ernakulam

ITA 275/COCH/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8394 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: A S NARAYANAMOORTHY
• Section: 43B; 143(3); 28; 139

Judgement Text

ITA NO 275/C/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI B P JAIN , AM & GEORGE GEORGE K, JM ITA NO .275/COCH/2014 (A SST YEAR 2008 - 09 ) THE DY COMMR OF INCOME TAX CIRCLE 4(1), RANGE 4 KOCHI VS M/S POPULAR VEHICLES AND SERVICE LTD KUTTUKARAN CENTRE PALARIVATTO M MAMANGALAM ERNAKULAM 682 025 ( APPELLANT) (RESPONDENT) PAN NO. AABCP3805G ASSESSEE BY SH A S NARAYANAMOORTHY REVENUE BY SH A DHAN A RAJ, SR DR DATE OF HEARING 18 TH JU LY 2016 DATE OF PRONOUNCEMENT 19 TH JU LY 2016 ORDER PER GEORGE GEORGE K, JM; THIS APPEAL, AT THE INSTANCE OF THE REVENUE , IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 14.1.2014 . THE RELEVANT ASSESSMENT YEAR IS 2008 - 09. 2 THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE CIT(A) IS JUSTIFIED IN ALLOWING THE DEDUCTION U/S 36(1)(VA) OF THE I T ACT WHEN THE EMPLOYEES CONTRIBUTION TO PF /ESI WAS NOT RE MITTED WITHIN THE SPECIFIED TIME LIMIT. ITA NO 275/C/2014 2 3 THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE I S A DEALER OF MARUTI SUZUKI VEHICLES AND ITS SPARE PARTS. FOR THE ASSESSMENT YEAR 2008 - 09, THE RETURN O F INCOME WAS FILED ON 2.9.2008 DECLARING TOTAL INCOME AT RS. 53, 68,390/ - . THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 6.12.2010 FIXING A TOTAL INCOME AT RS. 1,69,37,73 9/ - . THE AO MADE AN ADDITION OF RS. 34,65,872/ - , BEING EMPLOYEES CONTRIBUTION TO P F/ESI , HAVING PAID AFTER THE DUE DATE MENTIONED IN THE RELEVANT STATUE/RULE. 4 AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLATE AUTHORITY . THE CIT(A) DELETED THE ADDITION OF RS . 34,65,872/ - . THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: `7.3 I HAVE GONE THROUGH THE FACTS OF THE CASE, ASSESSMENT ORDER, ASSESSEE S SUBMISSIONS IN THIS REGARD AND THE LEGAL POSITION AS ITS E XISTS. IT IS NOW HELD BY VARIOUS HIGH COURTS THAT ESI/PF CONTRIBUTIONS, IF TEY WERE PAID BEFORE THE FILING OF RETURN , THEN NO DISALLOWANCE SHOULD BE MADE ON THIS ACCOUNT. THE DELHI HIGH COURT HAS HELD IN THE CASE OF CIT VS AIML LTD 321 ITR 508 THAT EMPL OYER S CONTRIBUTION AS WELL AS EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI DEPOSITED AFTER THE DUE DATE, AS PRESCRIBED UNDER THE RELEVA NT RULES BUT BEFORE THE DUE DATE FOR FILING THE RETURN UNDER THE INCOME TAX ACT, NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SEC. 43B AS AMENDED BY THE FINANCE ACT, 2003 AS A MATTER OF FACT, THIS HAS LAID DOWN AS A PRINCIPLE WHERE EMPLOYEES C ONTRIBUTION HAVE ALSO BEEN COVERED FOR THE DEPOSIT BY THE DUE DATE AS DEFINED IN SECTION 13(1) OF THE AC T. IN ANY C A SE, IN VIEW OF THE DELETION OF SECOND PROVISO TO SECTION 43B, SUCH PAYMENTS IF MADE BEFORE THE DUE DATE OF FILING THE RETURN, THE SAME ARE ALLO WABLE. ITA NO 275/C/2014 3 5 REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD DR SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED BY THE RECENT JUDGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF; (I) CIT VS SOUTH INDIA COR PORATION LTD REPORTED IN (2015) 58 TAXMANN.COM 208(KERALA) & (II) CIT VS MERCHEM LTD., REPORTED IN (2015) 61 TAXANN.COM 119(KERALA) 6 ON THE OTHER HAND, T HE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EMPLO YEES CONTRIBUTION OF PF/ESI WAS REMITTED WELL BEFORE THE DUE DATE OF FILING OF RETURN U / S 139(1) OF THE A CT ; HENCE, THE SAME IS ALLOWABLE DEDUCTION . THE LD COUNSEL RELIED ON THE FOLLOWING JUDGMENTS : I) CIT VS VINAY CEMENT LTD ( 213 CTR 268(SC) II) DECISION OF THE HON BLE KERALA HIGH COURT IN THE CASE OF KERALA STATE WAREHOUSING CORPON VS CIT IN ITA NO. 1035 OF 2009 III) DECISION OF KERALA HIGH COURT IN KERALA STATE WAREHOUSING CORPN LTD VS CIT IN ITA NO.280 OF 2010 7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, THE DISALLOWANCE MADE IS WITH REFERENCE TO THE EMPLOYEES CONTRIBUTION TO PF /ESI . THE ASSESSEE HAS GIVEN THE REMITTANCE DATE OF THE EMPLOYEES CONTRIBUTIONS, WHICH IS WELL BEFORE THE D ATE OF FILING OF RETURN U/S 139(1) OF THE ACT. HOWEVER, THE REMITTANCE IS ADMITTEDLY BEYOND THE DUE DATE MENTIONED IN SEC. 36(1)(VA) OF THE ACT. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF CIT VS SOUTH INDIA CORPORATION AND CIT VS MERCHEM LTD (SUPRA) HAS CATEGORICALLY HELD WITH REFERENCE TO EMPLOYEES CONTRIBUTION , IN ORDER TO CLAIM IT AS A DEDUCTION, THE SAME HAS TO BE REMITTED WITHIN THE DUE DATE SPECIFIED UNDER SECTION 36(1)(VA) OF THE ACT. THE RELEVANT FINDINGS OF THE ITA NO 275/C/2014 4 HONBLE JURISDICT IONAL HIGH COURT IN THE CASES OF SOUTH INDIA CORPORATION LTD.(SUPRA) READ AS UNDER: 4. G O I N G B Y THE M A T E RI A L FINDIN GS OF F AC T S, IT CA NN O T B E DI S PUTED THAT TH E PA Y M E NT S WE R E M A D E B Y TH E AS S E SS EE A F T E R TH E D A T E B Y W HI C H TH E A SSESSEE WAS R E QUIR E D A S T H E E MPL OYE R T O C R E D I T AN E MP L OYE E 'S C O NTR I BUTI O N T O TH E E MPL O Y EES' AC CO UNT IN TH E P ROV I DE NT F UND . T HER EF O R E, I N TE R M S O F T H E EX P L A N A TI O N T O C L A U SE ( VA ) OF SEC TI O N 36 ( I ) O F TH E IN CO M E TAX AC T , S UCH S UM S P A I D A F T E R T H E DU E D A T E C A NN O T B E CL A IME D AS O THER D E DUCTI O N S IN T E RM S OF SEC TI O N 36 O F TH E INC O M E T AX AC T . T HI S I S P O I N TE DL Y SO B E CA U S E IN TERM S OF S EC TI O N 4 3 B O F T H E IN C O ME TAX AC T , DE DUCTI O N S A R E TO BE O NL Y O N AC T U A L P AY M EN T . T H ESE T WO PR OV I S I O N S WE R E C O N S I D E R E D B Y TH E H O N ' BL E A NDHR A PR A D ES H HI G H C O U RT I N HIT EC H ( I NDIA ) ( P . ) LTD . V. U NION OF I NDIA L19 97] 2 2 7 I T R 44 6 / 94 T AX MA N 454 IN W HI CH IT WAS H E LD TH A T A CO MB INE D R EA DIN G OF C L A U SE (VA ) O R S EC T I O N 36 ( I ) AND S EC TI O N 43B O F TH E I NC O ME T AX AC T M AKE S IT C L EA R TH A T I F TH E A S S E SS EE (E MPL OYE R ) C R EDITED A N Y S UM R ECE I V E D B Y H I M F R O M A N Y O F H I S E M PL OYEES O N O R B E F O R E TH E D U E DA TE, TH A T I S , TH E D A T E B Y W HI C H TH E A SS E S SEE ( E M P L OYER) I S R EQ UIR ED T O CRED IT TH E E M P L OY E E S' C O N T R IBUTI O N T O THE E MPL O Y EE S' A CC O UNT IN TH E R E L EVA NT F UND ( IN C LUDIN G TH E P R O V ID EN T F U ND ) , HE W IL L BE E NTITL E D T O D E DUCT TH E SA ID A M O UNT IN C O MPUT I N G HI S BU S INE SS IN CO M E. BUT , SE CTI O N 43 B C O NTR O L S TH E A LL O WA BILIT Y O F DEDU C TI O N O R P AY MENT S PECIFI E D IN C LAU S ES (A) T O ( D ) TH E R EOF A N D PR O VIDE S C ERT A IN C O NDITION S S UBJECT T O WHICH A L O N E TH E D E DU C TI O N S M A Y BE P E RM I S S IBL E . E NUN C I A TI N G TH E P O I NT . IT W A S HELD THAT DEDUCTION W O ULD B E AVA IL A BL E O NL Y IF TH E R E MITT A NC E T O TH E F UND I S M A D E W I T HIN TH E D U E DA T E FI XE D FOR MAKING SUCH REMITT A N CE INT O THE FUND ; IN TH E C ASE IN H A ND , THE PR OV ID E NT F UND . S O M UC H SO , TH E QUE S TI O N R EFERRED IS T O BE ANSWERED IN FAV O UR O F TH E REVENUE. HENCE W E A N SWE R TH E R E F E R E N CE B Y HOLDING THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION OF THE BELATED PAYMENT TO THE PROVIDENT FUND IN VIEW OF THE PROVISIONS OF THE EXPLANATION TO CLAUSE (VA) OF SECTION 36(1) AND 43B OF THE INCOME TAX ACT, IN THE LIGHT OF THE LAW LAID IN HITECH (INDIA) P LTDS CASE (SUPRA) 8 FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MERCHEM LTD (SUPRA) FOLLOWING THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS GUJARAT STATE ROAD TRANSPORT CORPORATION REPORTED IN 366 ITR 179(GUJ) HAVE ELABORATELY EXAMINED THE ISSUE AND DECIDED THE MATTER IN FAVOUR OF THE REVENUE. THE RELEVANT FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MERCHEM LTD (SUPRA) READ AS UNDER: 18. ON A READIN G O F SEC . 36 ( I )(VA), W H A T WE F IND I S THAT A N Y S UM R E CEIVED BY TH E ASSESSEE F R O M HI S E M PL OY EE S T O W HICH TH E PR O VI S I O N S OF S UB - C L A U SE (X ) O F ITA NO 275/C/2014 5 C L A U S E ( 2 4) OF SEC.2 APPLY WAS CRED I TED BY TH E A SS E SSE E T O TH E EMPL O YEES ' ACC O UNT IN THE REL E VANT FUND O R F UND S O N O R B E F O RE TH E DU E DAT E PR E S C RIB ED UND E R EXPLANATION I TO SEC . 36( I )(V A), I S ENTITLED T O DEDUCTI O N . ACC O RDIN G T O U S, IT THU S M EA N S TH AT S E C .36( I )(V A ) TAK ES CARE O F CO NTRIBUTI O N RE CE I V ED O N A CCO UNT O F TH E E MPL OYEES A ND C R EDI T E D BY THE ASS E SSE E T O TH E EMPL OY EE S' AC C O UNT IN THE REL EVA NT F UND O R FUND S O N OR BE F O R E TH E DU E D A T E AS P R OVIDE D UNDER THE RELEVANT S TATUTE AL O NE WILL BE ENTITLED T O GET DEDU C TI O N . IN THI S CO NT EX T , TH E D EF INI T I O N OF INCOME CONTAINED UNDER SEC . 2(24) (X) IS RELEVANT , WHICH READ THU S: ' AN Y SUM RECEIVED B Y THE ASSESSEE FROM HIS EMPLOYEES AS C O NTRIBUTION S T O A N Y PR OV IDENT FUND ON S UPERANNUATI O N FUND OR AN Y FUND SET UP UNDER THE PRO V ISI O N S O F THE E MPL OYEES' S T A T E IN S UR A NC E ACT , 1948 (34 OF 1948) , O R A N Y OTHER FUND F O R TH E WELFARE OF S UC H EMPL OY EE S.' 19. THEREFORE, INCOME OF THE ASSESSEE INCLUDED ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEE AS CO NTRIBUTI O N T O AN Y PROVIDENT FUND O R S UPERANNUATI O N FUND O R FUND S SE T UP UND E R TH E P R OV I S I O N S OF TH E E MPL OY EE S' STATE IN S URANCE A C T , 194 8 ( 34 O F 1 9 48 ) O R AN Y O THER F UND FO R TH E WE L FA R E O F S UCH E MPLO Y EE S. A CC O RDIN G T O U S, O N A RE A DIN G OF S E C .3 6 ( 1 )(VA) A L O N G W ITH SCC.2(24)(X), IT I S CA T EGO RI C A N D CLEAR THAT THE CONTRIBUTION RECEIVED B Y THE A SS E S SEE FR O M THE EMPL OY EE AL O NE W AS TREATED AS INC O M E FOR THE PURPO S E OF SE C.3 6 ( I ) ( V A) OF TH E A C T A ND TH E R E F O R E W E A R E O F TH E CONSIDERED OPINION T H A T THE A SS E SS EE WAS E NTITLED T O GE T DEDU C TI O N FO R TH E S UM R ECEIVE D B Y TH E ASSESSEE F R O M HI S E MPL OYEES TOWARDS CO NTRIBUT IO N T O TH E FUND O R F UND S SO M E NTI O N ED O NL Y IF TH E SA ID A M O UN T WAS CREDI T ED BY T HE ASS E SSE E ON O R B E F O RE TH E DUE D A T E T O THE EMPL OYEES A C CO UNT I N TH E REL EV ANT FUND A S PR OV I DE D UN DE R EXPLA N A TI O N 1 TO S EC . 36( I )(VA) OF THE ACT . ACCORDING T O US, S O FAR A S SEC . 43B (B) IS CONCERNED, IT TAKE S C A R E O F O NL Y THE CO NTRIBUTION PAYABLE BY THE EMPLOYER / ASSESSEE TO THE RESPECTIVE FUND . TH E REF O RE , IN THAT C IR C UM S T A N CES S E C. 36 ( 1) ( V A) AND SEC . 43B ( B ) O PER A TE IN DIFFERENT FIELD S I.E . THE F O RMER TAK ES CA R E OF E MPL OYEE'S CO NTRIBUTI O N AND THE LATTER EMPL OY ER 'S C O NTRIBUTI O N. TH E A S SE SSEE WAS E NTITL E D T O GE T T H E BEN EFI T OF DEDUCTION UNDER SEC . 43B ( B ) AS PR O VIDED UNDER THE PR O VIS O THERET O O NL Y W ITH R EGA RD T O THE P O RTI O N OF TH E A M O UNT PAID BY THE EMPLO Y ER T O THE CONTRIBUTORY FUND . SUCH AN UND E R S T A NDING OF SE C . 43 B I S F URTHER EX EMPLIFIED B Y THE PHRASEOLO GY U S ED IN THE PR O VIS O, WHICH READS THU S: PR OV ID E D THAT N O THIN G C O NT A IN E D IN THI S SE C TI O N S H A LL A PPL Y IN R E L A TI O N T O A N Y SU M W H IC H IS A CTUALL Y PAID B Y THE ASS E SSEE O N O R B E F O R E THE DUE D A TE A PPLIC A BL E I N HI S CASE FO R F URNI S HI NG TH E RETURN O F IN CO ME UND E R S UB - SE CTI O N (I ) OF S EC T I O N 1 39 IN R ES P E CT O F TH E PR EV I O U S YEAR IN W HI C H THE LI A BILIT Y T O P AY S U C H S UM WAS IN C URR E D AS A F O R ESA ID A ND TH E EV I DE N CE OF S U CH P AYMEN T I S ITA NO 275/C/2014 6 FURNI S H ED BY TH E ASSESSEE A L O N G W ITH S U C H R E TURN .' F URTH E R , IN EX PLAN A TI O N I T O S EC . 43 B A L SO TH E PHRA SEO L OGY U S ED P E R S U A D E U S T O TH INK TH A T SEC. - 43B CAN BE A PPLI E D T O THE C O NTRIBUTI O N PA Y ABL E B Y TH E A S S E SS EE A S A N EMPL OY ER, WHICH R E AD S THU S: FOR THE REM O VAL OF DOUBT S, IT I S HEREB Y DECLARED TH A T WH E RE A D E DUCTI O N I N R ES P EC T OF A N Y SUM REFERRED TO IN C L AUSE (A) OR CLAUSE (B) OF THIS SECTION IS ALLOWED IN C O MPUTING TH E INC O M E REFERR E D TO IN SECTION 28 O F THE PRE V I O US Y EAR ( BEING A PREVIOUS Y EAR R EL E VANT T O TH E A SSESS MENT YE A) CO MMENCING O N THE IST D AY O F APRIL , 1 9 8 3 O R A N Y EA RLIER ASSESS MENT Y E A R ) IN W HI C H T H E LI A BILIT Y TO PAY SUCH SUM W A S INCURR ED B Y T HE ASSESS EE, TH E ASSESS EE S HALL N O T B E E NTITL ED T O ANY DE DU C TI ON UNDER THIS SECTION IN RESPECT O F S UCH S UM IN C O MPUTIN G TH E INCOM E O F TH E PR EV I O U S YEA R IN W HICH THE SUM IS ACTUALLY PAID B Y HIM . ' T H E R E F O RE , A C CO RDIN G T O U S, S INC E THE R ES P O ND E NT H AS A DMITT E DL Y N O T P A ID TH E D ED U C T IO N SO MA D E W ITHI N THE DUE D A TE A S PR O VIDED UND E R SE C.3 6( I )(VA), TH E R ES P O ND E NT WAS N O T E NTITL ED T O GE T D ED U C TI O N O R TH E AM O UNT S DEDUCTED THER E UN D ER FO R A ND O N BEH A L F OF TH E E MPL OY E ES . 20. IN V I EW O F TH E R E LI A N C E PL ACE D B Y V AR IO U S HI G H CO UR TS IN 'ALOM EXTRUSIONS' (SUPRA ), TO ARRIVE A T A CO N C LU S I O N TH A T TH E ASSESS EE S TH E R E IN WER E L IA BL E T O P AY B O TH THE EMPL OYEES AS WE LL AS E MPL OYE R ' S CO NTRIBUTI O N O N O R BEF O RE FILIN G O F RETURN UND E R SEC. 1 39( I ) O NL Y, WE TH O U G HT T H A T IF 'AL OM EX TRU S I O N S' (S UPRA) I S DISCUS S ED IN DETAIL ; TH E QUE S TION R A I SE D IN THI S CASE CA N B E M ADE C L EA R . IN PA R AG RAPH 3 O F THE SA ID JUD G M E NT , THE QUE S TI O N CO N S ID E RED WAS FOR MUL A T E D AS FO LL OWS: '3 . A S H O RT QU ES T IO N W H IC H AR I SES FO R DETERM IN AT I O N I N TH I S B A T C H OF CIVI L APPEAL S I S WHE TH ER O M ISSION (DELETI O N ) OF T HE S ECOND PROVI SO T O S EC T ION 43B O F T HE I NC O ME - TAX ACT . 1961 BY T H E FI N ANCE AC T 2003 O P ERATED WITH EFFECT FROM 1 S T APRI L . 2004 O R WHET H ER IT O PER A TED RE TR OSPEC T IVELY W ITH E F FEC T FRO M 1S T A PR IL I . 1988 ? '. 21 . T H E R EFO R E, T H E QU ES TI O N TH A T WAS CO N S ID ERED I N ALOM EX T RUSIONS' CASE' WAS WHET H ER O M ISSIO N OF SECO ND PR OV IS O T O SE C . 43B O F TH E IN CO ME TAX AC T B Y T H E F IN A N CE AC T , 2003 O P ERA T ED WITH EFFECT FROM 1S T APRIL , 2004 OR R E TR OS PECTIV E L Y WITH EFFE C T F R O M 1 S T A P RIL , 1 9 88. T H E R EFO R E, TH E QU E S T IO N R A I SED IN THI S APPEAL HA S NOTHIN G ITA NO 275/C/2014 7 TO DO WITH THE QUESTI O N CO N S IDER E D IN TH E S AID D EC I S I O N . IT I S T RU E TH AT SEC . 2 (24 , (X) AS W ELL AS SEC . 36 ( I ) ( VA ) WERE DI S CUSS E D IN P ARAG RAPH S 10 A ND II OF TH E S AID J UD G M EN T . B U T I T WAS F OR TH E SO L E PURP OS E OF UNDER S T A NDIN G THE SC H E M E OF THE I NC OME TAX A C T , 1 96 1 AS I T EXISTED PR IO R T O 1 ST A PRIL , 1 984 A ND AS IT S T OO D A FT E R I S T APRIL , 1 9 8 4. AFTE R DI SC U SS IN G TH E AFO R ESA ID PR OV I S I O N S AN D SEC . 43 B THE A P EX CO URT H E LD IN P A R AG R A PH 14 OF T HE J UD G M E N T AS FOL L OWS : ' 1 4. ON RE ADIN G T H E A B OVE PR OVIS I O N S , I T BECO M ES CLEA R T H AT THE ASSESSEE( S ) - EMPLO YER ) WOU LD BE E NTITL E D TO D E DU CT I O N O NL Y IF TH E CO NTRIBU TIO N STA ND S CRE DIT E D O N OR BEFORE T H E D U E DATE GIVE N IN THE PR OV ID E NT FUND AC T . H OWEVE R , TH E SECO N D PR OV I SO O N CE AGA IN C R EA T ED FURTH ER DI FF I C UL TIES. IN MANY O F TH E C O MPANI ES, FINANCI A L YEA R E NDE D O N 3 1 S T M A R C H , W HI C H D I D NO T COI N C ID E W ITH TH E ACCO UNTING PERI O D O R R .P.F.C. FO R EXA MPL E, I N M ANY CA S E TH E T IM E T O M AKE CO NT RI B U TI ON T O R . P .F . C ENDED AF T E R DU E D A T E OF F ILIN G OR RE TU RNS. T H ER E F O RE, TH E I ND U S T R Y ONCE AGAIN MA D E REPRE S EN T A T ION T O TH E M I NI S TR Y O F F IN ANCE A ND TA KIN G COG N IZA N CE OF TH IS D I FF I C UL TY, TH E PAR L IAM E NT IN S ERTED O N E MORE A M E NDM E NT VI D E F IN A N CE AC T 2003 , W H ICH, AS S T A T E D A B OVE, CAME I N T O F O RCE W.E.F . I S T APRIL 2004. IN O TH E R WO RD S, A FT E R I S T A PR I L , 2004 , TWO C H A N GES WE R E MADE, N A M E L Y, DELETION O F THE SECOND PR OVISO A ND F URTH E R A M E NDM E NT I N THE F I RST PR OV I SO , Q U O T E D A B OVE. B Y T H E FINA N CE ACT 2003, T H E A M E ND ME NT M A D E IN TH E F IR ST PR OV I SO EQU A T E D IN T E RM S OF TH E B E N EFI T OF DE DU CTIO N OF TAX, DUTY, CESS A ND FEE O N TH E O N E H A ND W ITH CO NTRIBUTI O N S TO E MPL OYEES ; PR OV ID E N T F UN D , S U PERA N N U ATION F UN D O N E O TH E R WE LF A RE F UNDS ON THE O THE R . H O W EVER , TH E FIN A N CE AC T , 2 0 03, B RIN GI N G A B O UT T HIS UN I F ORMITY CA M E INT O F O R CE W. E .F. I S T APRIL , 2 004 . 22. THEREFO R E , O N A READI N G OF T H E AFORE - EXTRACTED PO RT ION OF T H E JUDGMEN T , IT I S C L EAR T HA T THE APEX COURT HAD CONSIDE R ED ONLY THE QUE S TI O N RELA T IN G TO T HE EFF E CT OF THE AMENDMENT SO MADE A ND FOUND THAT A M ENDME NT WAS CURATIVE IN NAT U RE AN D T HEREFORE THAT I T OPE R ATED R E TR OSPEC T IVELY FR O M 1 S T A PRIL . 1988 . 23. T H E R EAF T ER, IN PA R AG R A PH 1 5 OF TH E J UD G M ENT, IT WAS H E LD TH A T T H E A M ENDME NT S WERE B R OUG HT ABOUT U ND ER TH E FI N A N CE AC T , 198 3 FO R TH E PURP OSE OF E N S URIN G TH A T TH E RE L AXA T IO N / IN CE N T I VE WAS REST RI C T ED O NL Y T O T AX, DUT Y, CESS A ND F EE UND E R SEC . 4 3 B IN O RD E R T O E N S UR E TH A T IT DID N O T A PPL Y T O CO N T RIBUT IO N S T O LA B O UR WE L FA R E F UND S. F URTH ER , IT WAS HE LD TH A T T H E REA S O N AP P EA R S T O BE T HA T THE EMP L OY ER S S H O ULD N O T SIT : O N THE CO LL EC T E D CO N T RI B UT I O N S A N D DEPRIVE THE WORK M EN O F TH E RIGH T FU L BEN E F IT S UNDER S O CIAL WE L FARE LEGIS L A TI O N S B Y D E L AY IN G PA Y M E N T OF CO NTR I BU TIONS TO TH E WE L FA R E FU N DS. IT WAS A L S O HE L D T HAT CONSEQUENT TO THE IMP LE MENT A T IO N PR O BLEM S OF TH E SECO ND P ROV I SO T O SEC . 4 3 B R ES UL TE D I N E N AC TM E N T OF FINA N CE ACT 2003 , DEL E TIN G TH E SECO ND PR OV I SO A ND B R IN G IN G A B OUT U NI FO RMIT Y I N TH E F IR S T PR OV I SO BY EQ U A TIN G TAX D UT Y, C E SS AND FEE W ITH C O NTRIBUTI O N S TO WE L FA R E F UND S AND TH E R EFO RE T H E F IN A N CE AC T , 2003 W HI CH WA S M A D E APPLIC A BLE B Y TH E PARLI A M E NT O NL Y WIT H EFFEC T FR O M I S T A PRIL , 2004 WO UL D B ECOME C U RA TI VE IN N A TURE A ND HENCE IT WO ULD APPL Y R E TR OS P EC TI VE L Y F R O M A PRIL , ITA NO 275/C/2014 8 1 988. 24. S O A L SO , THE LE A RN E D C O UN SE L FO R TH E A SSESSEE CO NT E NT E D TH A T S IN CE SEC . 43 B CO MM E N C E S ' WI TH A NON O B S T A NT E C L A U S E , EX PL A NATI O N I T O SEC.36( I )(VA) WAS EXC LUD E D . BUT I N ALOM EX T RUS I ONS ' CASE ' (S U PRA) THE AP EX COU RT H A D H E LD TH A T TH E UND E RL Y I NG OBJEC T OF TH E N O N - O B S T A NT E C L AUSE W AS T O D I S A LL O W DED U CT I O N S C L AI M E D M E R E L Y BY M AKI N G T HE BO O K ENTRY U NDER MERCANTI L E SYS TEM O F ACC O U NTING TH E R E FORE , THE CONTENTI O N OF THE LEARNED COUNSEL FOR THE A S SESSEE THAT SINCE SEC . 4 3 B C O MMENCES W ITH , N O N - OBSTANTE CLAUSE , SEC . 36( I ) (VA) STOOD EXCLUDED, CANN O T BE SUSTAINED . A C C O RDIN G T O U S , THE F INDIN G OF THE APEX COURT TOWARDS THE LATTER PART OF PARAGRAPH 15 MAKE S THE I NTENTI O N A ND PURP OSE B E HIND TH E A M E NDMENT BR O UGHT ABOUT T O SEC . 43B CLEAR AND IT READ S THU S: ACC O RDIN G L Y, W E ' H O LD TH A T F IN A NCE ACT , 2003 W I L L O P E R A T E R E TR OS P E CTI VE L Y W.E.F . IS T A PRIL 19 88 (WHEN THE FIRST PR O VI SO S T OO D IN S ERTED ). L AS TL Y, WE MA Y P O INT O UT THE H A RD S H IP A N D TH E IN V IDI O U S DI S CRIMINATION WHICH W O ULD BE CAUSED T O THE ASS E SSEE ( S) IF THE C ONTENTI O N OF ' T H E D EPA RTM E NT I S TO BE ACCEPTED THAT FINANCE ACT, 2003, TO THE ABO VE EXT E NT, O PERATED PR O SP E CTI VE L Y. TAKE A N EX AMPL E - IN THE PRESENT CASE , THE RE S PONDENTS HAVE DEP OS ITED THE CONTRIBUTI O NS WITH TH E R . P . F .C AFTER 3 1 ST MARCH (END OF ACCOUNT ING Y EAR) BUT BEFORE FILING O F THE RETURN S UNDER THE I T ACT A ND 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 TH E S TATUT E B O O K AT THE RELEVANT TIME , EACH OF SUCH ASSESSEE(S) WOULD NOT BE ENTITLED TO DEDUCTION UNDER S E C . 43B O F THE ACT F O R ALL TIMES . THE Y WOULD LOSE THE BENEFIT OF D E DUCTION EVEN IN THE Y E A R O F ACC O UNT IN WHICH THE Y PA Y THE C O NTRIBUTI O N S T O THE WELF A RE FUND S, W HERE A S A D EFA ULT E R W H O FA IL S T O PA Y THE C O NTRIBUTION TO THE WELF A R E F UND RIGHT UP T O IST APRIL , 2 004 A ND W H O P AYS TH E CO NTRI B UTI O N A LTER IST APRIL , 2004 , WOULD G ET THE B E NEFIT O F DEDUCTI O N UNDER S E C . 4 3 B O F TH E AC T . ' AC C O RD I N G T O U S, IT I S THU S CLE A R THAT TH E D EC I S I O N R E ND E RED B Y TH E A P EX C O URT IN ALOM EX TRUSI O NS ' (SU PR A ) D I D N O T C O N S ID E R TH E QUE S TI O N I N VO L VE D IN T HI S CASE. 25 . S O A L SO. I N P A R AG R A PH 16 OF TH E JU D G M E NT S U PRA, TH E A P EX CO U RT H AD Q UOTED WITH APPROVAL THE J UD G M E NT I N C O M MI S SI O N ER OF I NCO M E TA XV. V J H GOTLA L ( 1 985) 1 56 1 T R 323 (SC) W HI CH READ TH US: ITA NO 275/C/2014 9 ' WE S H O ULD FIND O UT TH E INTENTI O N FR O M THE L A N G U AGE U SE D B Y TH E L EG I S L A TUR E A N D I F S TRICT LITER AL C O N S TRUCTI O N LEAD S T O AN AB S URD R ES ULT , I . E . A RE S ULT N O T INTEND E D T O BE S UBSE RVED B Y TH E OB J EC T OF THE L E GI S LATI O N F O UND IN THE M A NNER INDICATED BEF O RE , THEN IF AN O THER C O N S TRU C TI O N I S POSS IBLE A P PEA R FROM STRICT LITERAL C O NSTRUCTI O N , THEN THAT C O N S TRUCTION S H O ULD B E PREFERR E D T O TH E S TRI C T LI TE R AL C ONSTRUCTI O N. TH O U G H E QUIT Y AND TAXATI O N A R E O FT E N S TR AN GE R S, A TTEMPT S S H O ULD B E MA D E THAT TH ES E DO N O T REMAIN ALWAYS S O AND IF A CONSTRUCTION RESULT S IN EQUIT Y RATHER TH A N IN INJU S TIC E, THEN S UCH CONSTRUCTI O N SHOULD BE PREFERRED TO THE LITERAL CONSTRUCTION . ' 26. THEREFORE , IN OUR VIEW , WHEN SE C . 43B A S IT S T OO D PRIOR T O THE AM E NDM E NT A ND S E C .3 6(1)(VA)) EX PL A NATI O N I THERET O R L W S E C .2( 24 ) (X ) ARE C O N S IDER E D T OG ETHER , IT I S CLEAR TH A T TH EY O P E R A TE IN DIFF E R E N T F IE LD S. S O F A R AS THE E MPL OYEE'S CO NTRIBUTI O N R ECEIVE D I S CO N CE RN E D, IT S H O ULD H AVE BEE N PAI D ON OR B EF O R E TH E DU E D A T E PR ESC RI BE D U ND E R TH E R E L EVA NT S T A TUT ES. T H E N AGA IN T H E L EARNED CO U N S E L CO NT EN D ED TH A T O N A R EA DIN G OF SEC . 4 3 B (B), A N Y S UM ' P AYA BL E BY TH E ASSESSEE AS AN EMPLOYE R ' BY WAY CO NTRIBUTI ON T O A N Y P ROV ID E NT F UND M EA NT P AY M E NT O F BO TH E MPL OYEES C O NTRIBUTI O N A N D E MPL OYE R 'S CO NTR I BUTI O N B Y THE E MPL OYE R A ND TH E R EFO RE TH E ASSESSEE WAS E NTITL ED T O P AY B O TH CO NTR IBUT I ONS T OGE T HER ON O R B EFO R E THE F I LIN G OF TH E R E TURN UNDER S EC. 1 39( I ) OF THE AC T . WE ARE UN AB L E T O ACCE PT TH E SAID CON T EN TI O N A D VA NC E D BY T H E L EA RN E D COU N SE L . I F SUCH A CON T E NT IO N IS ACCEP T ED , T HA T WO UL D MAKE SEC .36(1) (VA) AND TH E EX PL A N A TI O N THERE T O O TI OSE . ACCO RD I N G T O U S, T H E R E WAS NO INDICA T ION IN SEC.43B AS IT ' STOO D PRI O R T O THE AM E NDM E NT A ND TH E REAFT E R A L SO T O D EFAC E S E C.36( I )(VA) A N D THE EX PL A N A TI O N TH ERE TO F R O M THE INC O ME TA X ACT . T HU S, IT MEAN S TH A T B O TH PR OV I S I O N S AR E O PER A TI VE A ND TH E CO NTRIBUTI O N S H AVE T O BE PAID IN ACCORDANCE W ITH THE M A NDATE C O NT A INED UND E R SE C.3 6 (1)(VA) AND EX PL A N A TI O N TH E RET O A ND UNDER SEC . 43B, RESPECTIVEL Y . 27. S O FAR A S THE DECI S I O N S CIT E D B Y TH E LEARN E D CO UN S EL F O R TH E ASSESSEE R E F ER R E D T O IN PA R AG R A PH 1 5 OF THI S JUDGMENT WERE C O NC E RN E D , IT I S TRUE THAT IN TH E SA ID J UD G M E NT S, TH E HI G H CO URT S WE R E CO N S I DE RIN G TH E QUESTION O F REMITTANCE O F TH E CO NTRIB UTI O N S R E CEIV E D F R O M THE E MPL OY E E AS W ELL AS TH E E MPL OYE R A N D H E LD THAT THE CONTRIBUTIONS R E CEIVED FROM THE EMPL O YEE WERE AL S O LIABLE T O B E P A ID T O TH E RE S P E CTIV E S TATUT O R Y AUTHORITIE S UNDER THE PF AND ESI A C T O N O R B E F O RE TH E FILIN G O F RETURN UND E R SEC. 1 3 9( I ) W AS ALO NE S UFFICI E NT T O BE E LI G IBLE F O R DEDUCTION . F O R TH E RE ASO N S S TATED, WE A RE UN A BL E T O S U BSC RIB E T O TH E VIE W S EXPRE S SED B Y THE HI G H CO URT S I N TH E D E CI S I O N S C IT E D S U PRA B Y TH E L EA R NED CO UN SE L FO R TH E AS S E S SEE . THAT APART, WE ARE REMINDED OR THE J UDGMENT OR THE HON'BLE APEX COURT IN P AD M A S UN DARA RAO AND OTHERS V . STATE OF T.N . AND OTHERS [(2002) 3 SCC 533] PARAGRAPH 9 WHICH R E AD S AS F O LL OWS: ITA NO 275/C/2014 10 'IT IS ALSO A SETTLED PROPOSITION OF LAW THAT COURTS SHOULD NOT PLACE RELIANCE O N D E CI S I O NS WITH O UT DISCU SSING AS TO HOW THE FACTUAL SITUATI O N FITS IN WITH THE FACT SITUATI O N O F THE D E CI S I O N O N WHI C H RELIANCE I S PLACED . THERE I S ALWA Y S PERIL IN TRE A TIN G THE W O RD S O F A S P EE CH O R J UD G M E NT A S TH O U G H THEY ARE WORD S IN A LEGI S LATIVE ENACTMENT AND IT I S T O B E R E M E M B E R E D TH A T JUDI C I A L UTT E R A N CES A R E MADE IN THE SE TTING O F TH E F A CT S O F A P A RTI C UL A R C A SE SA ID L OR D M O RRI S IN ' H ARR IN G T ON V . BRITI S H RAILW AYS B O ARD '. CIRCUM S TANTIAL FLEXIB I LIT Y, O NE ADDITI O N A L O R D IF F E R E NT FACT M AY M AKE A WO RLD O F DIFFEREN C E BET WE EN CONCLU S I O N S IN TWO C A S E S. ' 28. WE ARE ALSO CONSCIOUS OF THE FACT THAT IF THE INTENTION OF A PARTICULAR PROVISIONS OF STATUTE CAN BE GATHERED FROM THE LANGUAGE USED B Y THE LEGI S L A TION , THEN WE AR E B O UND T O A BIDE B Y TH E L A N G U AG E U SE D THEREIN IN ORDER TO ASCERT AIN THE INTENTION. WE ARE ALSO O F THE O PINI O N TH A T THERE W AS A CLEAR L OG IC BEHIND SEC.36( I )(VA) AND EXPLANATION THERETO SINCE THE LEGISLATURE INTENDED THAT THE AM O UNT RECEIVED TOWARDS CONTRIBUTION OF THE EMPLOYEE WAS MONEY BELONGING TO THE EMPLOYEE AND T HE ASSE SSEE WA S NOT ENTITLED TO UTILIZE THE SAID FUND AND ENRICH HIMSELF . SO ALSO , B O TH THE PROVISIONS S UPRA W ILL C O - E X I S T HARM O NIOUSL Y WITH O UT DISTURBING EACH O THER. THEREF O RE , THE DI S TINCTI O N DR AW N T O CR E DIT TH E A M O UNT OF THE EMPL OY ER AND TH E EMPLO Y EE W A S WITH A C L EA R O BJ E CTI V E AN D THER E I S N O ILL EGA L ITY OR O TH E R L EGA L INFIRMIT Y IN C LA S SIF Y IN G THE C O NTRIBUTI O N S O F E MPL OY EE S A ND EMPL OYE R IN TH E M A TT E R O F C R E DITIN G TH E S AM E T O THE APPROPRIATE STATUT O R Y AUTH O RITIES . 29. IN THAT VIEW O F THE M A TTER , WE AR E OF THE CO N S ID E RED O PINI O N THAT TH E V I EW TAK E N B Y TH E TRIBUN A L WHICH AFFIRMED THE D E CISI O N O F THE I S T APP E LL A TE AUTH O RIT Y TH A T THE RE S P O ND E NT WAS E NTITL E D T O G ET DEDUCTION O F ' THE CO NTRIBUTI O N S R ECE I VE D FR O M TH E E MPL OY EE S IF PAID O N O R B E F O R E TH E F ILIN G OF TH E RETURN UNDER SEC . 1 39 (I) WA S N O T C O RRECT . WE A R E IN C LIN E D T O AG R E E W ITH TH E JUD G M EN T O R TH E GUJ A R A T HIGH CO URT IN 'G UJ AR AT S TAT E R OAD T RA N S P O RT CO RP O RA/I O N 'S CASE (S U P R A). WE ARE A L SO OF TH E O PINI O N TH A T TH E JUDGM E NT S O F THE O TH E R HIGH C OURT S R E F E RRED T O B Y THE LEARNED CO UN SE L F O R TH E R ES P O NDENT D O N O T L AY DOWN THE LAW CORRECTL Y. 30. LEARN E D COUN S EL F O R THE RE S P O ND E NT HA S A L SO C O NTEND E D THAT W H E N T WO V I EWS ARE P OS S I B L E. O N E I N FAV O UR O F THE A SSESS EE S H A LL BE A DOPTED A ND O UR A TTENTI O N WAS DR AW N T O TH E DEC I S I O N S IN ' C OMMI SS IONER OF IN CO ME - TAX V . PODAR C EM E NT PVT . LTD. A ND OTH E R S ' [ ( 1997 ) 2 2 6 I T R 62 5] , 'M ONI S H MAH E SHW A RI V. A SS T . C OMMIS S ION E R OF INCOM E TAX AND ANOTH E R ' [(2007 ) ITA NO 275/C/2014 11 289 ITR 341 (SC)] A ND IND O R E CO NSTRU C TION P . LTD. V. CO MMI S SIONER OF INCOME - TA X ' [(2007) 289 ITR 341] A ND CA NV ASS ED F O R THE SA ID PR O P O SITI O N . BUT SINCE WE ARE OF THE C LEAR OPINI O N THAT THE A SS E SS EE WA S ENTITL E D T O G ET THE DEDUCT IO N O F THE AM O UNTS A S PR O VID E D UNDER S EC . 36 ( I ) ( V A ) O NL Y IF TH E A M O UNT S SO R ECE I VE D FR O M TH E EMPL OY EE WAS PAID W ITHIN TH E DU E D A T E AS PR OV ID E D UND E R TH E R ELEVA NT S T A TUT E. WE DO N O T THINK T H A T T H I S I S A C ASE T O W HI C H S UCH A PRIN C IPL E I S A PPLI CA BL E . 31 . THE RE FO R E. TH E QU ES TI O N S OF L AW R AIS ED B Y TH E R EV ENU E I S A N SW E RE D A FFIRMATI VE L Y IN FAVO UR O F ' TH E R EVE NU E. IN TH E F AC T S AND CIR C UM S T A N C E S O F TH E C A S E , W E SE T AS ID E TH E OR D E R O F ' TH E TRIBUN AL IN ITA NO.8/2014 D A TED 09. 05 . 2014 SO F A R AS THE QU ES TI O N S RAI SE D HEREIN A R E C O NC ER NED AND R ES T O R E TH E O RD E R OF TH E ASS E SS IN G OFFICER . ACC O RDINGL Y , THE APP E AL I S ALL O W E D . 9 THE LD AR HAS REFERRED TO A UNREPORTED JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE KERALA STATE WAREHOUSING CORPORATION VS CIT IN ITA NO.1035 OF 2009(JUDGMENT DATED 2 ND DEC 2009) AND IN THE CASE OF KERALA STATE WAREHOUSING CORPORATION LTD VS CIT IN ITA NO.280 OF 2010 (JUDGMENT DATED 13 TH AUG 2010) , WHICH ARE UNDOUBTEDLY IN FAVOUR OF THE ASSESSEE. HOWEVER, THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF I) SOUTH INDIA CORPORATION LTD AND (II) MERCHEM LTD. (CITED SUPRA) BEING MORE RECENT, WE ARE BOUND TO FOLLOW THE LATEST JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WH ICH HAS CONSIDERED THE ISSUE IN DETAIL. THEREFORE, THE ORDER OF THE CIT (A) IS REVERSED AND THAT OF THE AO WITH REFERENCE TO THE DISPUTE IS RESTORED. IT IS ORDERED ACCORDINGLY. ITA NO 275/C/2014 12 1 0 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY 2016 . SD/ - SD/ - B P JAIN GEORGE GEORGE K (ACCOUNTANT MEMBER ) (JUDICIAL MEMBER ) COCHIN: DATED 19 TH JULY 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) , KOCHI 4 . CIT, KOCHI 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN