Appeal Details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 5082 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-07-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
17-02-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.324/CHD/2017 (ASSESSMENT YEAR : 2012-13) M/S BIOGENETIC DRUGS PVT. LTD., VS. THE D.C.I.T., VILLALGE JHARMAJRI, TEHSILL BADDI, CIRCLE PARWANOO, DISTT. SOLAN (HP). (HP). PAN: AACCB3897K AND ITA NO.325/CHD/2017 (ASSESSMENT YEAR : 2012-13) M/S SMILAX HEALTHCARE PVT. LTD., VS. THE D.C.I.T., 54, EPIP AREA, VILL.JHARMAJRI, CIRCLE PARWANOO, TEHSILL BADDI, DISTT. SOLAN (HP). (HP). PAN: AAJCS5602G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JASPAL SHARMA RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 08.06.2017 DATE OF PRONOUNCEMENT : 04.07.2017 O R D E R PER BENCH : BOTH THE ABOVE APPEALS HAVE BEEN FILED BY DIFFERENT ASSESSEES AGAINST SEPARATE ORDERS OF CIT (APPEALS), FARIDABAD DATED 18.11.2016 RELATING TO ASSESSMENT Y EAR 2012-13. 2. SINCE IT WAS COMMON GROUND BETWEEN BOTH THE PARTIES THAT THE ISSUE INVOLVED IN BOTH THE APPEALS IS IDENTICAL, THE SAME WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OFF BY THIS CONSOLIDATED AND COMMON ORDER. FOR THE SAKE OF CONVENIENCE, WE SHALL BE DEALING WITH THE FACTS IN ITA NO.324/CHD/2017. 2 ITA NO.324/CHD/2017 (M/S BIOGENETIC DRUGS PVT. LTD. ): 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE IMPUGNED ORDER IS BOTH AGAINST FACTS AND ER RONEOUS IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS) HAS ERRED IN HAVING CONFIRMED THE DISALLOWANCE/ADDITION AMOUNTING TO RS.3,59,648/- MADE BY THE LD.AO ON ACCOUNT OF LATE DEPOSIT OF EMPLOYEE'S CONTRIBUTION TO PF AND ESI DUES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS) HAS ERRED IN HAVING CONFIRMED THE ACTION OF THE AO IN HAVING REDUCED THE DEDUCTION U/S 80IC TO THE EXTENT OF DISALLOWANCE/ADDITION OF RS.3,59,648/-. 4. THE ONLY ISSUE IN THE PRESENT APPEAL PERTAINS T O DISALLOWANCE MADE ON ACCOUNT OF LATE DEPOSIT OF EMP LOYEES CONTRIBUTION TO PF AND ESI AMOUNTING TO RS.3,59,648 /-. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R NOTICED THAT THE ASSESSEE HAD DEPOSITED EMPLOYEES CONTRIBUTION TO PF AMOUNTING TO RS.3,15,957/-AND EMPLOYEES CONTRIBUTION TO ESI AMOUNTING TO RS.43,69 1/-, AFTER THE DUE DATE AS PRESCRIBED UNDER THE RESPECTI VE ACTS. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE SA ME U/S 2(24)(X) R.W.S. 36(1(VA) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT). 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO UPHELD THE ADDITION MADE RELYIN G UPON THE DECISION OF THE ITAT CHANDIGARH BENCH IN THE CA SE OF M/S HYCRON ELECTRONICS VS. DCIT IN APPEAL NO.IT.310 /14- 15/SML DATED 9.2.2016 WHEREIN IDENTICAL ADDITION M ADE HAD BEEN UPHELD FOLLOWING THE DECISION OF THE HON'B LE HIGH 3 COURT OF GUJARAT IN THE CASE OF CIT VS. GUJARAT STA TE ROAD TRANSPORT CORPORATION REPORTED AT 41 TAXMANN.COM 10 0 (GUJ). THE FINDINGS OF THE LD.CIT(APPEALS) AT PARA 5.2 OF HIS ORDER ARE REPRODUCED HEREUNDER: 5.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF AR OF THE APPELLANT AND PURSUED THE ORDER PASSED BY THE A O. I FIND THAT THE ISSUE IS SQUARELY COVERED BY THE HON' BLE CHANDIGARH BENCH OF ITAT IN THE CASE OF APPEAL NO.LT/310/14-15/SML DATED 09/02/2016 IN THE CASE OF M/S HYCRON ELECTRONICS VS DCIT CIRCLE, PARWANOO AND THE RELEVANT PART OF THE SAME IS AS BELOW: 'THE FACTS OF THE CASE AND THE CONTENTION OF THE AP PELLANT HAS BEEN CONSIDERED. THE DELAY IN DEPOSITING AN AMOUNT O F RS. 6500S/- ON ACCOUNT OF PF AND ESIC AS DETAILED SUPRA PERTAINS TO THE EMPLOYEE CONTRIBUTION. THIS IS A VERY VITAL AND PERTINENT FACT. THE JUDGMENT RELIED ON BY THE APPELLANT HAS BEEN P ERUSED ALONGWITH THE JUDGMENT OF THE PUNJAB AND HARYANA HIG H COURT IN THE CASE OF CIT VS. NUCHEM LTD. IN ITA NO. 323 O F 2009. THE SAID JUDGMENTS ARE NOT APPLICABLE TO THE CASE UNDER CONSIDERATION AS THE SAID JUDGMENTS PERTAINED TO TH E DELAY IN PAYMENT OF EMPLOYERS CONTRIBUTION BEFORE THE DUE DA TE. IN THE CASE UNDER CONSIDERATION, THE ISSUE INVOLVED IS THE DELAY IN REMITTING THE EMPLOYEES CONTRIBUTION BEFORE THE DUE DATE. THE SAID ISSUE HAS BEEN CONSIDERED BY THE HIGH COURT OF GUJARAT IN THE CASE CIT VS. GUJARAT STATE ROAD TRANSPORT CORPO RATION REPORTED AT 41 TAXMANN.COM WO(GUJARAT). THE RELEVAN T EXTRACT OF THE JUDGMENT IS REPRODUCED AS UNDER: '7. HEARD THE LEARNED ADVOCATES APPEARING ON BEHALF OF THE RESPECTIVE PARTIES AT LENGTH. 7.1 SHORT QUESTION WHICH IS POSED FOR CONSIDERATION OF THIS COURT IS WITH RESPECT TO THE DISALLOWANCE OF THE AMOUNT BEI NG EMPLOYEES' CONTRIBUTION TO PF ACCOUNT/ESI CONTRIBUTI ON WHICH ADMITTEDLY WHICH THE CONCERNED ASSESSEE DID NOT DEP OSIT WITH THE PF DEPARTMENT / DSI DEPARTMENT WITHIN DUE DATE UNDER THE PF ACT AND/OR ESI ACT. 7.2 TO ANSWER THE ABOVE CONTROVERSY, THE RELEVANT PROVISIONS OF INCOME TAX ACT, 1961 ARE REQUIRED TO BE REFERRED TO. 7.3 'INCOME' HAS BEEN DEFINED UNDER SECTION 2(24) OF THE ACT. UNDER SECTION 2(24)(X), ANY SUM RECEIVED BY THE ASSE SSEE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND OR 4 SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE EM PLOYEES' STATE INSURANCE ACT, 194S, OR ANY OTHER FUND FOR WELFARE OF SUCH EMPLOYEES, CONSTITUTE INCOME. SECTION 2(24)(X) READ S AS UNDER : 'SECTION 2(24)(X) : ANY SUM RECEIVED BY THE ASSESS EE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE EM PLOYEES' STATE INSURANCE ACT, 1948, OR ANY OTHER FUND FOR WELFARE OF SUCH EMPLOYEES.' 7.4 SECTION 36 OF THE ACT PROVIDES FOR DEDUCTION IN COMPUTING THE INCOME REFERRED TO IN SECTION 2B. THE RELEVANT PROVISIONS APPLICABLE TO THE PRESENT CASE SWOULD BE SECTION 36(L) (VA). AS PER SUB-SECTION 36(L)(VA), ASSESSEE SHALL BE ENTITLED TO THE D EDUCTION IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 W ITH RESPECT TO ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOY EES 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 T HE EMPLOYEES' ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON O RBEFORE THE 'DUE DATE'. AS PER EXPLANATION TO SECTION 36(L)(VA) FOR THE PURPOSE OF THE SAID CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT THE E MPLOYEES' CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVA NT FUND UNDER THE ACT, RULE, ORDER OR NOTIFICATION ISSUED T HEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OR SER VICE OR OTHERWISE. SECTION36(L)(VA) READS AS UNDER: 'SECTION 36(1) : THE DEDUCTIONS PROVIDED FOR IN THS FOLLOWING CLAUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEAL T WITH THEREIN, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 SECTION 36(1) (VA): ANY SUM RECEIVED BY THE ASSESSE E FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY TH E ASSESSEE TO THE EMPLOYEE'S ACCOUNT IN THE RELEVANT FUND OR FUNDS O N OR BEFORE THE DUE DATE. EXPLANATION : FOR THE PURPOSE OF THIS CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS A N EMPLOYER TO CREDIT AN EMPLOYEE'S CONTRIBUTION TO TH E EMPLOYEE'S ACCOUNT IN THE RELEVANT FUND UNDER ANY A CT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHERWISE.' 7.5 ANOTHER PROVISION WHICH IS REQUIRED TO BE CONSI DERED WHILE CONSIDERING THE ABOVE CONTROVERSY WOULD BE SECTION 4 3B OF THE ACT, WHICH STOOD PRIOR TO THE AMENDMENT OF SECTION 4 36 OF THE ACT VIDE FINANCE ACT, 2003 AND AFTER THE AMENDMENT T O SECTION 5 43B OF THE ACT BY FINANCE ACT, 2003. SECTION 43B OF THE ACT PRIOR TO THE AMENDMENT OF SECTION 43B OF THE ACT VI DE FINANCE ACT, 2003 READS AS UNDER: 'PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM REFERRED TO IN CLAUSE (A) OR CLAUS E (C) OR CLAUSE (D) OR CLAUSE (E) OR CLAUSE (F), WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HI S CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION ( 1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIAB ILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY TH ASSESSEE ALONG WITH SUCH RETU RN: PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPECT OF ANY S UM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH S UM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECT ION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE, OTHERWISE THA N IN CASH, THE SUM HAS BEEN REALISED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' BY THE FINANCE ACT, 2003, SECOND PROVISO TO SECTION 43B OF THE ACT CAME TO BE DELETED AND EVEN THE FIRST PROVISO T O SECTION 43B OF THE ACT CAME TO BE AMENDED. THE FIRST PROVISO TO SECTION 438 OF THE ACT, AFTER ITS AMENDMENT BY THE FINANCE ACT, 2003 READS AS UNDER : 'PROVIDED THAT BATHING CONTAINED IN THIS SECTION AP PLY IN RELATION NO ANY SUM WHICH IS ACTUALLY PAID BY THE AS SESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR F URNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 1 39 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYM ENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN.' 7.6 CONSIDERING THE AFORESAID PROVISIONS OF THE ACT , AS PER SECTION 2(24)(X), ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE PR OVISIONS OF ESI ACT OR ANY OTHER FUND FOR THE WELFARE OF SUCH E MPLOYEES SHALL BE TREATED AS AN 'INCOME'. SECTION 36 OF THE ACT DEA LS WITH THE DEDUCTIONS IN COMPUTING THE INCOME REFERRED TO IN S ECTION 28 AND AS PER SECTION 36(L)(VA) SUCH SUM RECEIVED BY T HE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH PROVISIONS OF SU B-CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION OF SUCH .AMOUNT IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 IF SUCH SUM IS CREDITED BY THE ASSESS EE TO THE 6 EMPLOYEE'S ACCOUNT IN THE RELEVANT FUND OR FUNDS'ON OR BEFORE THE 'DUE DATE' I.E. DATE BY WHICH THE ASSESSEE IS R EQUIRED AS AN EMPLOYER TO CREDIT THE EMPLOYEE'S CONTRIBUTION TO TH E EMPLOYEE'S ACCOUNT IN THE RELEVANT FUND, IN THE PRESE NT CASE, THE PROVIDENT FUND AND ESI FUND UNDER THE PROVIDENT FUND ACT AND ESI ACT. SECTION 438 IS WITH RESPECT TO CERTAIN DEDUCTIONS ONLY ON ACTUAL PAYMENT. IT PROVIDES THAT NOTWITHSTA NDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THE ACT , A DEDUCTION OTHERWISE LIABLE UNDER THE ACT IN RESPECT OF (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY O F CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF T HE EMPLOYEES IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF TH AT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM. IT APPEARS THAT PRIOR TO THE AMENDMENT OF SECTION 438 OF THE ACT VIDE FINANCE ACT, 2003, AN ASSESSEE WAS ENTITLED TO DEDUCTIONS W ITH RESPECT TO THE SUM PAID BY THE ASSESSEE AS AN EMPLOYER BY W AY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF T HE EMPLOYEES (EMPLOYER'S CONTRIBUTION) PROVIDED SUCH SUM - EMPLOYER'S CONTRIBUTION IS ACTUALLY PAID BY THE ASSE SSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISH ING RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESP ECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AND THE EVIDENCE OF SUCH PAYMENT IS FURNIS HED BY THE ASSESSEE ALONG WITH SUCH RETURN. IT ALSO FURTHER PR OVIDED THAT NO DEDUCTION SHALL, IN RESPECT OF ANY SUM REFE RRED TO IN CLAUSE (B) I.E. WITH RESPECT TO THE EMPLOYER'S CONTRIBUTION, BE ALLOWED UNLESS SUCH SUM IS ACTUALLY BEEN PAID IN CA SH OR BY ISSUE OF CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN EXPLANATION BELOW CLAUSE (VA) OF SUB- SECTION (1) OF SECTION 36 AND WHERE SUCH SUM HAS BE EN MADE OTHERWISE THAT IN CASH, THE SUM HAS BEEN REALISED WI THIN 15 DAYS FROM THE DUE DATE. BY THE FINANCE ACT 2003, SEC OND PROVISO OF SECTION 438 OF THE ACT HAS BEEN DELETED AND FIRST PROVISO TO SECTION 438 HAS ALSO BEEN AMENDED WHICH IS REPRODUCED HEREINABOVE. THEREFORE, WITH RESPECT TO E MPLOYER'S CONTRIBUTION AS MENTIONED IN CLAUSE (B) OF SECTION 43 (8), IF ANY SUM TOWARDS EMPLOYER'S CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES IS ACTUALLY PAID BY TH E ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF THE INCOME UNDER SUB-SECTION (1) OF SECT ION 139 ASSESSEE WOULD BE ENTITLED TO DEDUCTION UNDER SECTI ON 436 ON ACTUAL PAYMENT AND SUCH DEDUCTION WOULD BE ADMISSIBLE FOR THE ACCOUNTING YEAR. HOWEVER, IT IS REQUIRED TO BE NOTED THAT AS SUCH THERE IS NO CORRESPONDING 7 AMENDMENT IN SECTION 36(1) (VA). DELETION OF SECOND PROVISO TO SECTION 43B VIDE FINANCE ACT 2003 WOULD BE WITH RESP ECT TO SECTION 43B AND WITH RESPECT TO ANY SUM MENTIONED IN SECTION 43(B) (A TO F) AND IN THE PRESENT CASE, EMP LOYERS CONTRIBUTION AS MENTIONED IN SECTION 43B(B). THEREF ORE, DELETION OF SECOND PROVISO TO SECTION 43B AND AMEND MENT IN FIRST PROVISO TO SECTION 43B BY FINANCE ACT 2003 IS REQUIRED TO BE CONFINED TO SECTION 43B ALONE AND DELETION OF SECO ND PROVISO TO SECTION 43B VIDE AMENDMENT PURSUANT TO T HE FINANCE ACT, 2003 CANNOT BE MADE APPLICABLE WITH RESPECT TO SECTION 36(L)(VA) OF THE ACT. THEREFORE, ANY SUM WITH RESPECT TO THE EMPLOYEES' CONTRIBUTION AS MENTIONED IN SECTION 36( L)(VA), ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION OF SUCH S UM TOWARDS THE EMPLOYEE'S CONTRIBUTION IF THE SAME IS DEPOSITED IN THE ACCOUNTS OF THE CONCERNED EMPLOYEES AND IN THE CONCERNED FUND SUCH AS PROVIDENT FUND, ESI CONTRIBUTION FUND, ETC. PROVIDED THE SAID SUM IS CREDITED BY THE ASSESSEE T O THE EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE 'DUE DATE UNDER, PROVIDENT FUND ACT, ESI ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHER WISE IT ,S REQUIRE, TO BE NOTED THAT AS SUCH THERE IS NO AMENDM ENT IN SECTION 36(1) (VA) AND EVEN EXPLANATION TO SECTION 36( L)(VA) IS NOT DELETED AND IS STILL ON THE STATUTE AND ,S REQU IRED TO BE COMPLIED WITH. MERELY BECAUSE WITH RESPECT TO EMPLO YERS CONTRIBUTION SECOND PROVISO TO SECTION 43B WHICH PR OVIDED THAT EVEN WITH RESPECT TO EMPLOYERS' CONTRIBUTION [(SECTION 43(B)B], ASSESSEE WAS REQUIRED TO CREDIT AMOUNT IN THE RELEVAN T FUND UNDER THE PF ACT OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES ON OR BEFORE THE DUE DATE UNDER THE RELEV ANT ACT, IS DELETED, IT CANNOT BE SAID THAT SECTION 36(L)(VA) IS ALSO AMENDED AND/OR EXPLANATION TO SECTION 36(L)(VA) HAS BEEN DELETED AND/OR AMENDED. IT IS ALSO READER! TO BE NOTED AT THIS STAGE THAT AS P ER THE DEFINITION OF 'INCOME' AS PER SECTION 2(24)(X), ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OF ANY FUND SET UP UNDER THE PROVISIONS OF ESI, ACT OR ANY OTHER FUND FOR THE WELFARE OF THE SUCH EMPLOYEES IS TO BE TREATED AS INCOME AND ON FULFILLING THE CONDITION AS MENTIONED UNDER SECTION 36(1) (VA), THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION W ITH RESPECT TO SUCH EMPLOYEES' CONTRIBUTION. SECTION 2(24)(X) REFERS TO ANY SUM RECEIVED BY THE ASSESSEEFROM HIS EMPLOYEES AS CONTRIB UTION AND DOES NOT REFER TO EMPLOYER'S CONTRIBUTION. UNDER THE CIRCUMSTANCES AND SO LONG AS AND WITH RESPECT TO ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH 8 PROVISIONS OF SUB-CLAUSE (X) OF SUB-SECTION 24 OF S ECTION 2 APPLIES, ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTION OF SUCH SUM IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 UNLE SS AND UNTIL SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ' ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DAT E AS MENTIONED IN EXPLANATION TO SECTION 36(L)(VA). THEREFO RE, WITH RESPECT TO THE EMPLOYEES CONTRIBUTION 'RECEIVED BY T HE ASSESSEE IF THE ASSESSEE HAS NOT CREDITED THE SAID SUM TO TH E EMPLOYEES' ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE T HE DUE DATE MENTIONED IN EXPLANATION TO SECTION 36(1) (VA), THE A SSESSEE SHALL NOT BE ENTITLED TO DEDUCTIONS OF SUCH AMOUNT IN COM PUTING THE INCOME REFERRED TO IN SECTION 28 OF THE ACT. 7.7 NOW SO FAR AS THE RELIANCE PLACED UPON THE DECISION OF THE HON'BLE SUPREME COURT, IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA), BY THE LEARNED ITAT AS WELL AS LEARNED ADVO CATES APPEARING ON BEHALF OF THE ASSESSEE IN SUPPORT OF T HEIR SUBMISSION THAT IN VIEW OF AMENDMENT IN SECTION 438 PURSUANT TO FINANCE ACT, 2003, BY WHICH THE SECOND PROVISO TO SEC TION 438 HAS BEEN DELETED AND THEREFORE EVEN WITH RESPECT TO EMP LOYEES CONTRIBUTION DESPITE SECTION 36(L)(VA), AND EXPLANATIO N TO SECTION 36(L)(VA), IF THE EMPLOYEES' CONTRIBUTION IS CR EDITED AFTER THE DUE DATE MENTIONED IN THE* PARTICULAR ACT BUT CREDITE D ON OR BEFORE THE DUE DATE BY FILING RETURN UNDER SECTION 139 OF THE ACT, ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION OF SUCH AMOUNT, IS CONCERNED, ON CONSIDERING THE CONTROVERSY BEFORE TH E HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. ( SUPRA), THE SAID DECISION WOULD NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID CASE BEFORE ALOM EXTRUSIONS LTD., THE CONTROVERSY WAS WHETHER THE AMENDMENT IN SECTION 438 OF THE ACT, VIDE FINANCE ACT, 2003 WOULD OPERATE RETROSPECTIV ELY W.E.F. 1/4/1988 OR NOT. IT IS ALSO REQUIRED TO BE NO TED THAT IN THE CASE BEFORE THE HON'BLE SUPREME COURT, THE CONTRO VERSY WAS WITH RESPECT TO EMPLOYERS' CONTRIBUTION AS PER SECTION 43(B)(B) OF THE ACT AND NOT WITH RESPECT TO EMPLOYE ES' CONTRIBUTION UNDER SECTION 36(1)(VA). BEFORE THE HON 'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. ( SUPRA) THE HON'BLE SUPREME COURT HAD NO OCCASION TO CONSIDER D EDUCTION UNDER SECTION 36(L)(VA) OF THE ACT AND WITH RESPECT TO EMPLOYEES' CONTRIBUTION. AS STATED ABOVE, THE ONLY CONTROVERSY BEFORE THE HON'BLE SUPREME COURT WAS WITH RESPECT TO AMENDMENT (DELETION) OF THE SECOND PROVISO TO SE CTION 43(B) OF THE INCOME TAX ACT, 1961 BY THE FINANCE ACT, 1963 OPERATES W.E.F. 1/4/2004 OR WHETHER IT OPERATES RETROSPECTIVELY W.E.F. 1/4/1988. UNDER THE CIRCUMSTA NCES, THE LEARNED TRIBUNAL HAS COMMITTED AN ERROR IN RELYI NG UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF ALOM 9 EXTRUSIONS LTD. (SUPRA) WHILE PASSING THE IMPUGNED JUDGEMENT AND ORDER AND DELETING DISALLOWANCE OF THE RESPECTIVE SUMS BEING EMPLOYEES' CONTRIBUTION TO PF ACCOUNT / ESI ACCOUNT, WHICH WERE MADE BY THE AO WHILE CONSIDE RING THE PROVISO TO SECTION 36(1} (VA) OF THE INCOME TAX ACT. 7.8 NOW, SO FAR AS THE RELIANCE PLACED UPON THE DECI SION OF THE DIVISION BENCH OF THIS COURT IN THE CASE OF ALEMBI C GLASS INDUSTRIES LTD. (SUPRA) IS CONCERNED, ON FACTS AND CO NSIDERING THE PROVISIONS OF SECTION 36(L)(VA) OF THE ACT AS IS ST ANDS, THE SAID DECISION WOULD NOT BE APPLICABLE TO THE FACTS O F THE CASE ON HAND AND THE CONTROVERSY IN QUESTION. 7.9 NOW, SO FAR AS THE RELIANCE PLACED UPON THE DEC ISION OF THE KARNATAKA HIGH COURT IN THE CASE OF SABARI ENTERPR ISES (SUPRA) IS CONCERNED, ON FACTS AND CONTROVERSY RAISED IN THE PRESENT APPEALS, THE SAID DECISION WOULD NOT BE ANY ASSISTANCE TO THE ASSESSEE. IN THE CASE BEFORE THE KARNATAKA HIGH COURT, THE DISPUTE WAS WITH RESPECT TO THE EMP LOYER'S CONTRIBUTION AND THE CONTROVERSY WAS WHETHER THE AMENDMENT TO SECTION 43B OF THE ACT WOULD BE RETROS PECTIVE IN NATURE OR NOT. IN THE AFORESAID CASE BEFORE THE KARNATAKA HIGH COURT, THERE WAS NO DISPUTE WITH RESPECT TO EMP LOYEES' CONTRIBUTION AS IS THERE IN THE PRESENT CASE. 7.10 SIMILARLY, THE DECISION OF THE BOMBAY HIGH COUR T IN THE CASE OF PAMWI TISSUES LTD. (SUPRA) ALSO WOULD NOT B E APPLICABLE TO THE FACTS OF THE CASE ON HAND. IN THE C ASE BEFORE THE HON'BIE BOMBAY HIGH COURT, THE DISPUTE WAS WHETHER DELETION OF SECOND PROVISO TO SECTION 43B WOULD BE AP PLICABLE RETROSPECTIVELY OR NOT AND IN THAT CASE THE DISPUTE WCS ALSO WITH RESPECT TO EMPLOYER'S CONTRIBUTION. 7.11 NOW, SO FAR AS THE RELIANCE PLACED UPON THE DE CISION OF THE HIMACHAL PRADESH HIGH COURT IN THE CASE OF NI PSO POLYFABRIKS LTD. (SUPRA); DECISION OF THE KARNATAKA HIG H COURT IN THE CASE OF SPECTRUM CONSULTANTS INDIA (P.) LTD. (S UPRA); DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF UDAIPUR DUGDH UTPADAK SAHAKARI SANDG LTD. (SUPRA) AND DECISIO N OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HERNIA EMBROIDERY MILLS (P.) LTD. (SUPRA) TAKING VIEW THAT WHERE THE ASSESSEE DEPOSITED EMPLOYEES' CONTRIBUTION TO ESI A ND PROVIDENT FUND BEFORE THE DUE DATE OF FILING THE RETURN UNDER SECTION 139(1) OF THE ACT, THE SAME WOULD BE ALLOWABLE AS DEDUC TION, ARE CONCERNED, WITH RESPECT AND FOR THE REASONS STA TED HEREINABOVE, WE ARE NOT IN AGREEMENT WITH THE VIEW TAKEN BY THE AFOREMENTIONED HIGH COURTS. AS DISCUSSED .HEREINABOVE, AS THERE IS NO AMENDMENT IN SECTION S ECTION 10 36(L)(VA) OF THE INCOME TAX ACT AND CONSIDERING SEC TION 36(1) (VA) OF THE INCOME TAX ACT AS IT STANDS, WITH RESPECT TO ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOY EES TO WHICH THE PROVISIONS OF CLAUSE (X) OF SUB-SECTION ( 24) OF SECTION 2 APPLIES, ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTIO N OF SUCH AMOUNT IN COMPUTING THE INCOME REFERRED TO IN SECTI ON 28 IF SUCH SUM IS NOT CREDITED BY THE ASSESSEE TO THE EMP LOYEES' ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE T HE DUE DATE AS PER EXPLANATION TO SECTION 36(L)(VA) OF THE ACT. MERELY BECAUSE SECOND PROVISO TO SECTION 43B OF THE ACT IN WHICH THERE WAS A REFERENCE TO DUE DATE AS DEFINED IN EXPLANATIO N BE'OW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36, IT CAN NOT BE HELD THAT EVEN SECTION 36(L)(VA) IS AMENDED AND/OR EVEN EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTI ON 36 IS ALSO DELETED. IT CAN BE SAID THAT THERE WAS A REFER ENCE TO EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 IN SECOND PROVISO OF SECTION 43B (WHICH HAS BEEN DELETE D BY FINANCE ACT, 2003), ONLY FOR THE PURPOSE OF DEFINING D UE DATE AS PER EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36. THEREFORE, BY DELETING SECOND PROVISO TO SE CTION 43B BY FINANCE ACT, 2003, IT CANNOT BE SAID THAT SECTION 36(1) (VA) IS AMENDED AND/OR EXPLANATION BELOW CLAUSE (VA) OF SUB - SECTION (1) OF SECTION 36 IS DELETED, WHICH IS WITH RE SPECT TO EMPLOYEES' CONTRIBUTION. UNDER THE CIRCUMSTANCES, W E ARE NOT IN AGREEMENT WITH THE VIEW EXPRESSED BY THE HIMACHAL P RADESH HIGH COURT; KARNATAKA HIGH COURT; RAJASTHAN HIGH CO URT AND PUNJAB AND HARYANA HIGH COURT IN THE CASES REFEREED TO HEREINABOVE. 7.12 NOW, SO FAR AS THE RELIANCE PLACED UPON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SARABHAI SONS LTD. (SUPRA), BY THE LEARNED COUNSEL APPEARING ON BEHALF OF THE A SSESSEE AND HIS SUBMISSION THAT IF TWO VIEWS ARE POSSIBLE AND DIFFER ENT HIGH COURTS HAVE TAKEN A PARTICULAR VIEW, THIS COURT MAY NOT TAKE A DIFFERENT VIEW, IS CONCERNED, WE ARE OF THE OPINION THAT IN THE PRESENT CASE, AND AS DISCUSSED HEREINABOVE, ONLY ONE VIEW IS POSSIBLE AS CANVASSED ON BEHALF OF THE REVENUE AND AS OBS ERVED BY UNDER SECTION HEREINABOVE AND WE ARE NOT IN AGRE EMENT WITH THE VIEW TAKEN BY THE HIMACHAL PRADESH HIGH CO URT; KARNATAKA HIGH COURT; RAJASTHAN HIGH COURT AND PUNJA B AND HARYANA HIGH COURT IN THE CASES REFEREED TO HEREINA BOVE, AND THEREFORE, THE SUBMISSION MADE ON BEHALF OF THE ASS ESSEE TO FOLLOW THE DECISIONS OF THE DIFFERENT HIGH COURTS R EFEREED TO HEREINABOVE AND/OR NOT TO TAKE A CONTRARY VIEW CANN OT BE ACCEPTED. 11 8. IN VIEW OF THE ABOVE AND FOR THE REASONS STATED ABOVE, AND CONSIDERING SECTION 36(L)(VA) OF THE INCOME TAX ACT, 1961 READ WITH SUB-CLAUSE(X) OF CLAUSE 24 OF SECTION 2, IT IS HE LD THAT WITH RESPECT TO THE SUM RECEIVED BY THE ASSESSEE FR OM ANY OF HIS EMPLOYEES TO WHICH PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24) OF SECTION (2) APPLIES, THE ASSESSEE SHALL BE ENTI TLED TO DEDUCTION IN COMPUTING THE INCOME REFERRED TO IN SE CTION 28 WITH RESPECT TO SUCH SUM CREDITED BY THE ASSESSEE TO THE EMPLOYEES' ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE 'DUE DATE' MENTIONED IN EXPLANATIO N TO SECTION 36(L)(VA). CONSEQUENTLY, IT IS HELD THAT THE LEARNED TRIBUNAL HAS ERRED IN DELETING RESPECTIVE DISALLOWANCES BEING EMPLOYEES' CONTRIBUTION TO PF ACCOUNT,/ ESI ACCOUNT MADE BY THE AO AS, AS SUCH, SUCH SUMS WERE NOT CREDITED BY THE RESPECTIVE ASSESSEE TO THE EMPLOYEES' ACCOUNTS IN THE RELEVANT FUND OR FUNDS (IN THE PRESENT CASE PROVIDENT FUND AND/OR ESI FUND ON OR BEFORE THE DUE DATE AS PER THE EXPLAN ATION TO SECTION 36(L)(VA) OF THE ACT I.E. DATE BY WHICH THE CONCERNED ASSESSEE WAS REQUIRED AS AN EMPLOYER TO CREDIT EMPLOYEES' CONTRIBUTION TO THE EMPLOYEES' ACC OUNT IN THE PROVIDENT FUND UNDER THE PROVIDENT FUND ACT AND/OR IN THE ESI FUND UNDER THE ESI ACT. 9. CONSEQUENTLY, ALL THESE APPEALS ARE ALLOWED AND THE IMPUGNED JUDGEMENT AND ORDERS PASSED BY THE TRIBUNA L IN DELETING THE DISALLOWANCES MADE BY THE AO ARE HEREBY QUASHED AND SET ASIDE AND THE DISALLOWANCES OF THE RESPECTIVE SUMS WITH RESPECT TO THE PROVIDENT FUND / ESI FUND MADE BY THE AO IS HEREBY RESTORED. THE QUESTIONS RA ISED IN PRESENT APPEAL ARE ANSWERED IN FAVOUR OF THE REVENU E. WITH THIS, ALL THESE APPEALS ARE ALLOWED.' 6. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR ASSESSEE STATED THAT THE ISSUE WAS SQUA RELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HON'BLE HIMACHAL PRADESH HIGH COURT,THE JURISDICTIO NAL HIGH COURT OF THE ASSESSEE, IN THE CASE OF CIT VS. NIPSO POLYFABRIKA LTD., 2350 ITR 327 (HP). SEVERAL OTHER DECISIONS WERE ALSO RELIED UPON BY THE LD. CO UNSEL FOR ASSESSEE AS UNDER: 12 1) CIT VS. HEMLA EMBROIDERY MILLS (P) LTD, 366 ITR 167 (P&H) 2) CIT VS. NUCHEM LTD., 59 TAXMANN.COM 455(P&H 3) SAGUN FOUNDRY (P)LTD. VS. CIT, 78 TAXMANN.COM 47(ALLAHABAD) 4) CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD., 366 ITR 163(RAJ.) 5) SPECTRUM CONSULTANTS INDIA (P) LTD VS. CIT, 34TAXMANN.COM 20(KAR) 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES. WE FIND MERIT IN THE CONTENTIONS RAISED B Y THE LD. COUNSEL FOR ASSESSEE. WE HAVE GONE THE ORDER OF TH E HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIPSO POLY FABRIKA LTD. (SUPRA) CITED BEFORE US BY THE LD. COUNSEL FOR ASSESSEE AND FIND THAT IT WAS CATEGORICALLY HELD IN THE SAID CASE THAT THE EMPLOYEES CONTRIBUTION PAID BEFORE FURNISHING OF RETURN OF INCOME WAS TO BE ALLOWED DEDUCTION. THE RELEVAN T FINDINGS OF THE HON'BLE HIGH COURT AT PARA 22 OF TH E ORDER ARE AS UNDER: 22. WE ARE DEALING WITH CASES WHERE THOUGH THE AMOU NT WAS NOT DEPOSITED BY THE DUE DATE UNDER THE WELFARE ACTS, IT WAS DEFINITELY DEPOSITED BEFORE FURNISHING THE RE TURNS. WE SEE NO REASON TO MAKE ANY DISTINCTION BETWEEN THE EMPLOYEES' CONTRIBUTION OR THE EMPLOYERS' CONTRIBUTIO N. ONCE THE CONTRIBUTION IS THERE, WHETHER BY THE EMPLOYEE OR BY THE EMPLOYER, IT IS A CONTRIBUTION TO A WELFARE FUND HELD I N TRUST BY THE EMPLOYER, WHO IS BOUND TO DEPOSIT THE SAME. WHE N THE EMPLOYER DOES NOT DEPOSIT THE SAME WITHIN THE TIME PRES CRIBED UNDER THE WELFARE ACTS, SUCH AS THE PROVIDENT FUND A CT, ESI ACT ETC., HE MAY FACE CRIMINAL PROSECUTION UNDER THE SA ID ACT. HE MAY ALSO BECOME LIABLE TO PAY INTEREST OR PENALTY. HOWEVER, THAT IS NO REASON TO DENY HIM THE BENEFIT OF SECTION 43B , WHICH STARTS WITH A NON OBSTANTE CLAUSE AND WHICH CLEARLY LAYS DOWN THAT THE ASSESSEE CAN TAKE BENEFIT OF DEDUCTION OF SUCH CONTRIBUTIONS, IF THE SAME ARE PAID BEFORE FURNISHI NG OF THE 13 RETURN. 9. IN VIEW OF THE SAID DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT WE FIND NO REASON WHY THE ASSESSEE SHOULD NOT BE ALLOWED DEDUCTION OF THE EMP LOYEES CONTRIBUTION TO PF AND ESI AMOUNTING TO RS.3,49,648 /- WHICH ADMITTEDLY HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, THE SAID FACT BEING EVIDENT F ROM THE DETAILS OF THE IMPUGNED ESI AND PF REPRODUCED IN TH E ASSESSMENT ORDER. 10. RELIANCE PLACED BY THE LD.CIT(APPEALS) ON THE DECISION OF ITAT CHANDIGARH BENCH IN THE CASE OF M/ S HYCRON ELECTRONICS VS. DCIT, CIRCLE PARWANOO (SUPRA ) IS MISPLACED. A PERUSAL OF THE SAID ORDER, REPRODUCED ABOVE, REVEALS THAT THE ADDITION IN THE SAID CASE HAS BEE N UPHELD RELYING UPON THE DECISION OF THE HON'BLE GUJARAT HI GH COURT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION, 41 TAXMANN.COM 100 (SUPRA). THE DECISI ON OF THE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSE SSEE HAS BINDING FORCE AND THEREFORE THE SAME WILL APPLY IN THE PRESENT CASE. MOREOVER, THE HONBLE GUJARAT HIGH CO URT, WE FIND, TOOK NOTE OF THE DECISION OF THE HON'BLE HIM ACHAL PRADESH HIGH COURT IN THE CASE OF NIPSO POLYFABRIKA LTD. (SUPRA) BUT DID NOT AGREE WITH THE PROPOSITION LAID DOWN THEREIN. THE LD CIT(A) WAS THEREFORE NOT UNAWARE OF THE DECISION OF THE JURISDICTIONAL HIGH COURT AND THERE FORE THERE WAS NO REASON AT ALL FOR THE LD.CIT(APPEALS) TO HAV E PLACED RELIANCE ON THE CONTRARY DECISION OF THE TRIBUNAL . 14 11. IN VIEW OF THE ABOVE, THE GROUNDS OF APPEAL NO .2 &3 RAISED BY THE ASSESSEE ARE ALLOWED. 12. THE APPEAL OF THE ASSESSEE THEREFORE STANDS ALLOWED. ITA NO.325/CHD/2017 ( M/S SMILAX HEALTHCARE PVT. LTD.): 13. IT IS RELEVANT TO OBSERVE HERE THAT THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS IN ITA NO.324/CHD/20167AND THE FINDINGS GIVEN IN ITA NO.324/CHD/2017 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. 14. THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWE D. 15. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04 JULY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH
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