M/s.The Ernakulam District Co-opMilk producers Union Ltd, Ernakulam V. The JTDIT(OSD), Cochin

ITA 541/COCH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7479 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 15-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMARSR
• Assessee Lawyers: RADHESH BHATT
• Section: 43B; 143(3); 28; 139

Judgement Text

ITA NO . 541/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO . 541/COCH/2015 (ASST YEAR 2009 - 10 ) ERANKULAM REGIONAL COOP MILK PRODUCERS UNION LTD EDAPALLY KOCHI VS THE JT DIRECTOR OF INCOME TAX (OSD) (EXEMPTION) KOCHI ( APPELLANT) (RESPONDENT) PAN NO. AAAAE0621L ASSESSEE BY SH RADHESH BHATT REVENUE BY SH K P GOPAKUMAR,SR. DR DATE OF HEARING 3 RD MARCH 2016 DATE OF PRONOUNCEMENT 3 RD MARCH 2016 OR D ER PER GEORGE GEORGE. K. J M: THIS AP PEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 30.9.2015. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. 2 THE GROUND RAISED READ AS UNDER: 1 . THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER (AO) AND LEARNED COMMISSIONER O F INCOME TAX - APPEALS [CIT(A)) IS AGAINST LAW, EQUITY AND JUSTICE. 2 . THE LEARNED AO AND LEARNED CIT (A) ERRED IN TREATING THE EMPLOYEES' SHARE OF ESI AND PF COLLECTED AGGREGATING TO RS . 4,89,710/ - REMITTED IN THE IMMEDIATE SUCCEEDING MONTH WITH MINOR DELAYS, AS INCOME OF THE APPELLANT U/S . 2(24)(X) , R.W.S . 36(1)(V) OF THE IT ACT. THE AO AND CIT(A) DID NOT CONSIDER THE FACT THAT THE SAID REMITTANCES MADE AS STATED ABOVE WERE WELL WITHIN THE DUE DATE OF FILING OF RETURN OF INCOME AND HENCE OUGHT TO HAVE BEEN A LLOWED AS EXPENSE. ITA NO . 541/C/2015 2 THE DECISIONS OF H'ONBLE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENTS LTD (213 CTR 268), H'ONBLE KERALA HIGH COURT IN THE CASE OF KERAIA STATE WAREHOUSING CORPORATION LTD (RENDERED RE L YING ON THE ABOVE DECIS I ON OF THE APEX COURT AND OF SEVERAL OTHER HIGH COURTS RENDERED IN FAVOUR OF THE APPELLANT IN THIS REGARD WERE NOT CONSIDERED BY THE AO/CIT(A) FOR THESE AND OTHER GROUNDS THAT MAY BE FURTHER ADDUCED AT THE TIME OF HEARING, THE ORDER OF THE LD AO REQUIRE TO BE MODIFIED SUITABLY. 2 BRIEFLY STATED THE FACTS IN THIS CASE ARE AS FOLLOWS: THE AO , VIDE ORDER UNDER 143(3) DATED 28.11.2011 HAD MADE AN ADDITION OF RS. 4,89,710/ - U/ S 2(24)(X) R.W.S 36(1)(VA) OF THE INCOME TAX 1961. THE AO HELD THAT THE PAYMENT OF EMPLOYEES CONTRIBUTI O N TO PF/ESI WERE NOT REMITTED TO THE PF/ESI WITHIN THE DUE DATE PRESCRIBED U/S 2(24((X) R.W.S 36(1)(VA) OF THE ACT. 3 AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. IT WAS SUBMITTED THAT THE P AYMENTS WERE MADE TO THE PF/ESI WIT HIN THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT AND THEREFORE, THE DISALLOWANCE IS TO BE DELETED. THE CIT(A) DECIDED THE ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MERCHEM LTD REPORTED IN 378 ITR 443 . 4 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE, APART FROM REITERATING THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES , RELIED ON THE UNREPORTED JUDGMENT OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF KERALA STATE WAREHOUSING CORPORATION VS CIT , IN WHICH CASE ITA NO . 541/C/2015 3 THE HONBLE HIGH COURT HELD THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF BEFORE THE DATE OF FILING OF RETURN IS SUFFICIENT COMPLIANCE OF SECTION 43B OF THE I T ACT. 4.1 THE LD DR, ON THE OTHER HAND SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MERCHEM LTD (SUPRA). 5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL .ON RE CORD. ADMITTEDLY, IN THIS CASE, THE DISALLOWANCE MADE IS WITH REFERENCE TO THE EMPLOYEES CONTRIBUTION TO PF /ESI . THE ASSESSEE HA D REMITTED THE EMPLOYEES CONTRIBUTIONS TO GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF THE RETURN. HOWEVER, THE REMITTA NCE 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 (2015) 58 TAXMANN.COM 208 (KERALA) AND CIT VS MERCHEM LTD 378 ITR 443 HAVE CATEGORICALLY H ELD 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 HONBLE JURISDICTIONAL 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 ITA NO . 541/C/2015 4 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 VE D B Y H I M F R O M A N Y O F H I S E M PL O YEES 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 U NT 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 RMI 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 REFERRED IS T O BE ANSWERED IN FA V 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) 6 FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MERCHEM LTD (SUPRA) FOLLOWING THE JUDGMENT OF THE HONBLE GUJ ARAT 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 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 E D 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: ITA NO . 541/C/2015 5 ' 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 N C E ACT , 1948 (34 OF 1948) , O R A N Y OTHER FUND F O R TH E WELFARE OF S UCH 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 , 1948 ( 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 H I 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 RME R 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 FURTHER 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 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 ITA NO . 541/C/2015 6 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 E AR REL 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 RESPE CT OF 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 I 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 PRIL , 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 TO DO WITH THE QUESTI O N CO N S I DER 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 FOR 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 ) - EM PLO 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 . ITA NO . 541/C/2015 7 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 NDED 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 INI 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, NA 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 N TRIBUTI 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 RCE W. E .F. I S T APRIL , 2 004 . 22. THEREFO R E , O N A READI N G OF T H E AFORE - EXTRACT ED 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 AND T HEREFORE THAT I T OPE R ATED R E TR OSPEC T IVELY FR O M 1 S T A PRIL . 19 88 . 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 UTI 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 CI AL 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 V E 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 , 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 RU S 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 ITA NO . 541/C/2015 8 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 N DMENT 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 C RIMINATION 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 CONTRI BUTI O NS WITH TH E R . P . F .C AFTER 3 1 ST MARCH (END OF ACCOUNTING 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 OK 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 WH ICH THE Y PA Y THE C O NTRIBUTI O N S T O THE WELF A RE FUND S, W HEREA 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 UOTE D 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 TAXV. V J H GOTLA L ( 1 985) 1 56 1 T R 323 (SC) W HI CH READ TH US: ' 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 TRAN 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 CONSTRU CTION . ' ITA NO . 541/C/2015 9 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 EFO 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 CO 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 TH 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 ND 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 NTRIBUTI 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 39( 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 JUDGMENT 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: 'IT IS ALSO A SETTLED PROPOSITION OF LAW THAT C OURTS SHOULD NOT PLACE RELIANCE O N D E CI S I O NS WITH O UT DISCUSSING 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 MB 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 I F 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 ITA NO . 541/C/2015 10 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 UN D T O A BIDE B Y TH E L A N G U AG E U SE D THEREIN IN ORDER TO ASCERTAIN 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 THE 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 A W N T O CR E DIT TH E A M O UNT OF THE EMPL OY ER AND TH E EMPLO Y EE WA 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 PI NI 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 SS ESS 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 ) 289 ITR 341 (SC)] A N D 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 ITA NO . 541/C/2015 11 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 . 7 THE ASSESSEE 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), WHICH IS 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 LATE ST JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WHICH HAS CONSIDERED THE ISSUE IN DETAIL. THEREFORE, WE HOLD THAT THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR . IT IS ORDERED AC CORDINGLY. 8 IN THE RE SULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF MARCH 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 3 RD MARCH 2016 RAJ* ITA NO . 541/C/2015 12 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN