Indian Geotechnical Services, New Delhi V. ACIT, Circle- 61(1), New Delhi

ITA 622/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7574 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 29-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Assessee Lawyers: BRIJ KISHOR ANAND
• Keywords: Question of law; TDS; Set aside; FORM 26AS
• Section: 43B; 139(1); 43; 194J; 13; 119; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A. NO.622/DEL/2018 ASSESSMENT YEAR 2014-15 INDIAN GEOTECHNICAL SERVICES, C-91, G.F. SHIVALIK, MALVIYA NAGAR, NEW DELHI. V. ACIT, CIRCLE-61(1), E-2, PRATYAKSHAKAR BHAWAN, CIVIC CENTRE, NEW DELHI. TAN/PAN: AAAFI2029M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BRIJ KISHOR ANAND, C.A. RESPONDENT BY: MS. ANIMA BARNWAL, SR.D.R. DATE OF HEARING: 24 08 2021 DATE OF PRONOUNCEMENT: 27 08 2021 O R D E R PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28.11.2017 OF COMMISSIONER OF INCOME TAX (APP EALS)- XX, NEW DELHI FOR THE ASSESSMENT YEAR 2014-15. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL AS UNDER : 1(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ADDITI ON OF RS.8,20,480 BEING THE DIFFERENCE AS PER THE ACCOUNT S OF THE ASSESSEE AND THE AMOUNT ON WHICH TDS HAD BEEN DEDUC TED BY THE PARTY AS PER FORM 26AS. (B) THAT THE AUTHORITIES BELOW ERRED IN NOT HOLDING THAT INCOME OF A TAXPAYER IS NOT TO BE COMPUTED MERELY WITH THE RE FERENCE TDS CERTIFICATES OR DETAILS BUT THE ASSESSMENT OF INCOM E IS TO BE AS PER THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE TAXPAYER I.T.A. NO.622/DEL/2018 2 AND FURTHER ERRED IN MAKING AN ADDITION OF RS.8,20, 480 ON BASIS OF TDS AMOUNTS APPEARING IN FORM 26AS. (2) THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIRMI NG THE DISALLOWANCE OF RS.1,16,779 OUT OF RS.1,70,120 BEIN G LATE DEPOSIT OF EMPLOYEES SHARE TOWARDS PROVIDENT FUND & ESI CONTRIBUTION NOTWITHSTANDING THAT THE AMOUNTS HAD B EEN DEPOSITED BEFORE THE DUE DATE OF FILING THE TAX RET URN. 2. GROUND NO.1 IS REGARDING ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE OF THE G ROSS RECEIPTS SHOWN IN THE 26AS IN COMPARISON TO THE RETURN OF IN COME FILED BY THE ASSESSEE. DURING THE ASSESSMENT PROCEE DINGS, THE AO NOTED THAT ASSESSEE HAS NOT DECLARED THE INCOME TO THE TUNE OF RS.8,20,480/- RECEIVED FROM TATA CONSULTING ENGINEERS LTD. [TCE] AS APPEARING IN 26AS. THE ASSE SSING OFFICER ACCORDINGLY ADDED THE SAID AMOUNT IN THE IN COME OF THE ASSESSEE. ON APPEAL THE ASSESSEE CONTENDED THAT THE SAID AMOUNT OF RS.8,20,480/- DOES NOT PERTAIN TO ANY OF THE BILL ISSUED BY THE ASSESSEE BUT THE AMOUNT WAS WRONGLY S HOWN IN THE ACCOUNT OF THE ASSESSEE. HOWEVER, THE CIT(A) HA S CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R ON THE GROUND THAT THE ASSESSEE HAS FAILED TO RECONCILE TH E DIFFERENCE OF THE GROSS RECEIPT AS SHOWN IN 26AS. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE ASSESSEE HAS CLEARLY EXPLAINED THE FACT THAT TH IS AMOUNT OF RS.8,20,480/- DOES NOT RELATE TO ANY BILL RAISED BY THE ASSESSEE TO TATA CONSULTING ENGINEERS LTD. THE ASSE SSEE ALSO SUBMITTED THAT THE ASSESSEE HAS WRITTEN VARIOUS MAI LS TO TCE I.T.A. NO.622/DEL/2018 3 BUT THE OTHER PARTY HAS NOT RECTIFIED THE AMOUNT AS SHOWN IN 26AS. THE LD. AR HAS CONTENDED THAT IT WAS NOT IN T HE CONTROL OF THE ASSESSEE TO GET THE MISTAKE RECTIFIED IN 26A S BUT IT WAS SOLE RESPONSIBILITY OF THE TATA CONSULTING ENGINEER S LTD. TO RECTIFY THE MISTAKE BY FILING CORRECT TDS STATEMENT S. THUS, HE HAS CONTENDED THAT THE ASSESSING OFFICER HAS MADE T HE ADDITION WITHOUT CONDUCTING ANY ENQUIRY FROM OTHER PARTY TO GET THE FACTS VERIFIED AND CIT(A) HAS CONFIRMED THE SAID ADDITION EVEN WITHOUT ASKING THE ASSESSING OFFICER TO VERIFY THE FACTS THROUGH REMAND PROCEEDINGS. HENCE, THE LD . AR HAS PLEADED THAT ONCE THE ASSESSEE HAS EXPLAINED THAT T HIS AMOUNT IS WRONGLY SHOWN IN THE PAN OF THE ASSESSEE BY THE TATA CONSULTING ENGINEERS LTD. THEN THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE. 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE IS HAVING VARIOUS TRANSACTIONS WITH TATA C ONSULTING ENGINEERS LTD. THE OTHER TRANSACTIONS EXCEPT THESE TWO TRANSACTIONS ARE NOT DISPUTED BY THE ASSESSEE, THER EFORE, THE ONUS IS ON THE ASSESSEE TO RECONCILE THE DIFFERENCE AND PRODUCE THE CORRECT GROSS RECEIPT CONFIRMATION FROM THE OTHER PARTY. SHE HAS RELIED UPON THE ORDER OF THE AUTHORI TIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCES ON THE GROSS RECEIPTS AS SHOWN IN 26AS IN COMPARISON TO THE RETU RN OF INCOME DECLARED BY THE ASSESSEE. THIS DIFFERENTIAL AMOUNT OF RS.8,20,480/- IS SHOWN IN 26AS RECEIPT FROM THE DED UCTOR, I.T.A. NO.622/DEL/2018 4 TATA CONSULTING ENGINEERS LTD. THE ASSESSEE HAS BEE N CONTENDING RIGHT FROM THE BEGINNING THAT THIS AMOUN T DOES NOT PERTAIN TO ANY OF THE BILLS RAISED BY THE ASSES SEE TO TCE BUT IT WAS MISTAKENLY REPORTED IN 26AS. THE CIT(A) WHILE DECIDING THIS ISSUE HAS GIVEN THE DETAILS OF THE RE CEIPTS SHOWN IN 26AS FROM TCE IN PARAGRAPH 4.4.3 AND 4.4.4 AS UN DER: 4.4.3 THE CONTENTION OF THE ASSESSING OFFICER AND THE SUBMISSION OF THE APPELLANT HAS BEEN CONSIDERED AND IT IS GATH ERED THAT AS PER 26AS THE PARTY TATA CONSULTING ENGINEERS LTD. HAS S HOWN THE FOLLOWING:- NAME OF DEDUCTOR TAN OF DEDUCTOR TOTAL AMOUNT PAID/CREDITED TOTAL TAX DEDUCTED TOTAL TDS DEPOSITED TATA CONSULITNG ENGINEERS LIMITED MUMT06 732F 1837922.00 183793.00 183793.00 S. N . SECTION TRANSACTION DATE STATUS OF BOOKING DATE OF BOOKING REMARKS AMOUNT PAID/CREDITED TAX DEDUCTED TDS DEPOSITED 1 194J 31 - MAR - 2014 F 20 - MAY - 2014 ' 462280.00 46228.00 46 228.00 2 194J 31 - MAR - 2014 F 20 - MAY - 2014 ' 358200.00 35820.00 35820.00 3 194J 31 - DEC - 2013 F 15 - JAN - 2014 436856.00 43686.00 43686.00 4 194J 31 - DEC - 2013 F 15 - JAN - 2014 ' 580586.00 58059.00 58059.00 FROM THIS, IT IS APPARENT THAT THIS PARTY HAS SHOWN THE TRANSACTIONS TOTALING RS.18,37,922/- ON WHICH THE TAX OF RS.1,83 ,793/- WAS DEDUCTED AND DEPOSITED IN THE GOVERNMENT ACCOUNT. N OW THE APPELLANT CLAIMS THAT THE BILLS OF RS. 4, 62,280/- AND RS. 36, 58,200/- ARE NOT RAISED BY THE APPELLANT. THIS DISP UTE, THE APPELLANT HAS TO SETTLE WITH THE PARTY TATA CONSULT ING ENGINEERS LTD. AS THE THIRD PARTY IS SHOWING SPECIFIC TRANSAC TION DATE WITH SPECIFIC DATE OF DEDUCTING TDS AND TDS WAS ALSO DEP OSITED IN THE GOVERNMENT ACCOUNT, UNLESS THIS 26AS IS REVISED BY THE SAID PARTY I.T.A. NO.622/DEL/2018 5 THE DIFFERENCE OF 26AS IS NOT RECONCILED BY THE APP ELLANT. THE ONUS IS ON THE APPELLANT TO PROVE THAT SUCH DIFFERENCE H AS OCCURRED BY WRONG ENTRY MADE BY TATA CONSULTING ENGINEERS LTD. NO CONFIRMATION OF THE PARTY TATA CONSULTING ENGINEERS LTD. OR ANY REVISED 26AS TILL THE DATE COULD BE FILED BY THE AP PELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS. THE ONLY EVIDENCE IN SUPPORT OF THE CLAIM WAS AN E-MAIL SENT BY THE APPELLANT TO THE PA RTY OBJECTING THIS. 4.4.4 IN THIS LIGHT, 1 HAVE NO REASON TO INTERFERE IN THE DECISION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 8,20,480/- WHICH IS THE DIFFERENCE OF GROSS RECEIPT AS PER 26A S AND GROSS RECEIPT AS PER RETURN OF INCOME AND THE ADDITION OF RS.8,20,480/- IS CONFIRMED. HOWEVER, THE APPELLANT HAS CLAIMED THAT THE CORRESPONDING TDS WHICH WAS DEDUCTED ON THIS AMOUNT HAS NOT BEEN CLAIMED BY THE APPELLANT IN THE RETURN OF INCO ME. FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER IS ALSO SIL ENT ON THIS ISSUE WHETHER THIS TDS CREDIT WAS GIVEN OR NOT. IN THIS L IGHT, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THIS AND IF THE CREDIT IS NOT GIVEN, THE CORRESPONDING TDS CREDIT OF RS. 82,048/- IS TO BE GIVEN AS THE AMOUNT OF RS.8,20,480/- HAS BEEN ADDED BY TH E ASSESSING OFFICER IN THE TOTAL INCOME. 6. IT IS CLEAR FROM THE IMPUGNED ORDER THAT THE ASS ESSING OFFICER HAS MADE THE ADDITION ON THE PRESUMPTION TH AT THE AMOUNT SHOWN IN 26AS IS THE ACTUAL GROSS RECEIPT OF THE ASSESSEE FROM TCE WITHOUT CONDUCTING ANY VERIFICATI ON OF THE FACTS AND CIT(A) HAS CONFIRMED THIS ADDITION ON THE GROUND THAT ASSESSEE HAS FAILED TO RECONCILE THIS DIFFEREN CE. IT IS PERTINENT TO NOTE THAT ONCE THE ASSESSEE HAS DISPUT ED THE SAID AMOUNT PERTAINING TO ANY OF THE BILLS RAISED BY THE ASSESSEE, THEN A PROPER ENQUIRY OUGHT TO HAVE BEEN CONDUCTED BY THE I.T.A. NO.622/DEL/2018 6 AO TO VERIFY THIS FACT. THE ASSESSEE HAS EXPRESSED ITS INABILITY TO FORCE THE OTHER PARTY TO RECTIFY THE TDS STATEME NT AND CONSEQUENTLY 26AS. THEREFORE, IN THE FACTS AND CIRC UMSTANCES OF THE CASE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR CONDUCTING A PROPER ENQUIRY B Y CALLING UPON THE NECESSARY INFORMATION FROM TCE AND THEN DE CIDE THE ISSUE. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN A PROPER OPPORTUNITY OF HEARING BEFORE PASSING A FRESH ORDER . 7. GROUND NO.2 IS REGARDING DISALLOWANCE MADE BY TH E AO IN RESPECT OF DELAY FOR DEPOSITING THE EMPLOYEES CO NTRIBUTION TO ESI AND PF. THE ASSESSEE HAS DEPOSITED THE EMPLO YEES CONTRIBUTION TO ESI AND PF BELATEDLY BUT BEFORE DUE DATE OF FILING THE RETURN OF INCOME U/S. 139(1) OF THE ACT. THE AO RELIED UPON THE CBDT CIRCULAR NO.22/2015 AS WELL AS SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE INCOME TAX ACT AND HELD THAT THE CONTRIBUTION TO PF AND ESI IS UPTO TH E DUE DATE PROVIDED IN THE RESPECTIVE STATEMENT IS ALLOWABLE D EDUCTION AND NOT UPTO DUE DATE OF FILING OF RETURN. THE ASSE SSING OFFICER ACCORDINGLY DISALLOWED SUM OF RS.1,70,120/- . 8. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER. 9. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THERE ARE BINDING PRECEDENTS ON THIS ISSUE WHEREIN THE HONBLE HIGH COURT AS WELL AS THE HONBLE SUPREME C OURT HAS HELD THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION REG ARDING PF AND ESI BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) IS AN ALLOWABLE CLAIM AS PER THE PROVISI ON OF I.T.A. NO.622/DEL/2018 7 SECTION 43B OF THE INCOME TAX ACT. HE HAS RELIED UP ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. AIMIL LTD. AS REPORTED IN (2009) 321 ITR 508 (DELHI) . 10. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT TH ERE ARE DECISIONS IN FAVOUR OF THE REVENUE WHEREIN THE HON BLE HIGH COURTS HAVE HELD THAT THE AMENDMENT BY FINANCE ACT, 2015 IN SECTION 43B IS RESTRICTED ONLY IN RESPECT OF EMP LOYERS CONTRIBUTION TO PF AND ESI AND IF THE SAME IS PAID ON OR BEFORE THE DUE DATE OF FILING OF INCOME U/S. 139(1) , THE SAME IS ALLOWABLE U/S.43B OF THE INCOME TAX ACT. HOWEVER, T HE SAID AMENDMENT WOULD NOT BE APPLICABLE FOR THE BELATED P AYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI. THE LD. D R HAS FURTHER CONTENDED THAT SINCE THE ASSESSEE HAS RECEI VED THE MONEY AS DEDUCTED FROM THE SALARY OF THE EMPLOYEES AND KEPT WITH HIM WITHOUT MAKING THE PAYMENT TO THE GOVERNME NT ACCOUNT THEREFORE, THE CONCESSION GIVEN IN SECTION 43B IS NOT AVAILABLE WITH RESPECT TO EMPLOYEES CONTRIBUTION. SHE HAS ALSO REFERRED TO THE LATEST AMENDMENT IN THE PROVIS IONS OF SECTION 43B AS WELL AS SECTION 36(1)(VA) AND SUBMIT TED THAT THE EXPLANATION 2 INSERTED BY FINANCE ACT, 2021 CLA RIFIES THAT THE DEFINITION OF INCOME AS PROVIDED IN SECTION 2(2 4)(X) REMAIN UNCHANGED AND PROVISION OF SECTION 43B DOES NOT APP LY AND DEEMED TO NEVER HAVE BEEN APPLIED FOR THE PURPOSE O F DETERMINING THE DUE DATE OF PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI. SHE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND CIT(A). I.T.A. NO.622/DEL/2018 8 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THERE IS NO QUARREL TH AT IF THE STRICT INTERPRETATION IS GIVEN TO SECTION 2(24)(X) R.W.S. 36(1)(VA) AS WELL AS SECTION 43B THE AMOUNT OF EMPLOYEES CONT RIBUTION RECEIVED BY THE ASSESSEE WOULD BE TREATED AS INCOME OF THE ASSESSEE IF THE SAME IS NOT DEPOSITED IN THE GOVERN MENT ACCOUNT WITHIN THE DUE DATE AS PRESCRIBED UNDER THE RESPECTIVE ACTS. THE PROVISION OF SECTION 43B ARE R ESTRICTIVE IN NATURE AND IS NOT AN ENABLING PROVISION TO ALLOW DE DUCTION WHICH IS OTHERWISE NOT ALLOWABLE UNDER THE PROVISIO N OF SECTIONS 28 TO 38 OF THE INCOME TAX ACT. THE EMPLOY EES CONTRIBUTION RECEIVED BY THE ASSESSEE IS FIRSTLY TR EATED AS INCOME U/S.2(24(X) AND THEN A DEDUCTION IS ALLOWED U/S.36(1)(VA) IF THE SAID AMOUNT IS DEPOSITED IN TH E GOVERNMENT ACCOUNT BEFORE THE DUE DATE AS PROVIDED IN CLAUSE (VA) OF SECTION 36(1) AS DEFINED IN EXPLANAT ION-1 WHICH MEANS THE DUE DATE PROVIDED UNDER THE RELEVANT ACT GOVERNING THE RELEVANT FUND. HOWEVER, THE HONBLE HIGH COURTS HAVE CONSIDERED THIS ISSUE AND GIVEN THE BENEFIT OF SECT ION 43B EVEN IN CASE OF EMPLOYEES CONTRIBUTION WHICH WAS PA ID BY THE ASSESSEE ON OR BEFORE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) OF THE ACT. IN THE CASE OF CIT VS. AIMIL LIMITED (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT HAS AGAIN CONSIDERED THIS ISSUE AND HELD IN PARAGRAPHS 14 TO 19 AS UNDER: 14. WHEN WE KEEP THAT PROPOSITION IN MIND AND ALSO TAKE INTO CONSIDERATION VARIOUS JUDGMENTS WHERE VINAY CE MENT I.T.A. NO.622/DEL/2018 9 (SUPRA) IS APPLIED AND FOLLOWED, IT WILL NOT BE POS SIBLE TO ACCEPT THE CONTENTION OF THE REVENUE. 15. IN CIT V. DHARMENDRA SHARMA, 297 ITR 320, THIS COURT SPECIFICALLY DEALT WITH THIS ISSUE AND RELYING UPON THE AFORESAID JUDGMENT OF THE GUWAHATI HIGH COURT, AS A FFIRMED BY THE SUPREME COURT IN VINAY CEMENT (SUPRA), THE A PPEAL OF THE REVENUE WAS DISMISSED. MORE DETAILED DISCUSSION IS CONTAINED IN ANOTHER JUDGMENT OF THIS COURT IN CIT V. P.M. ELECTRONICS LTD. (ITA NO. 475/2007 DECIDED ON 3.11. 2008). SPECIFIC QUESTIONS OF LAW WHICH WERE PROPOSED BY TH E REVENUE IN THAT CASE WERE AS UNDER :- '(A) WHETHER AMOUNTS PAID ON ACCOUNT OF PF/ESI AFTE R DUE DATE ARE ALLOWABLE IN VIEW OF SECTION 43B, READ WIT H SECTION 36(1)(VA) OF THE ACT? (B) WHETHER THE DELETION OF THE 2ND PROVISO TO SECT ION 43B BY WAY OF AMENDMENT BY THE FINANCE ACT, 2003 IS RETROSPECTIVE IN NATURE?' 16. THESE QUESTIONS WERE ANSWERED BY THE DIVISION B ENCH IN THE FOLLOWING MANNER :- '7. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENU E, AS WELL AS, THE ASSESSEE, WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVES TO BE SUSTAINED AS I T IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE S UPREME COURT IN THE CASE OF CIT V VINAY CEMENT LTD: 213 IT R 268 WHICH HAS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. DHARMENDRA SHARMA: 297 ITR 32 0. 8. DESPITE THE AFORESAID JUDGMENTS, THE LEARNED COU NSEL FOR THE TRIBUNAL HAS CONTENDED THAT IN VIEW OF THE JUDG MENT OF I.T.A. NO.622/DEL/2018 10 THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. SYNERGY FINANCIAL EXCHANGE LTD: (2007)288 IT R 366 AND THAT OF THE DIVISION BENCH OF THE BOMBAY HIGH C OURT IN THE CASE OF CIT V. M/S PAMWI TISSUES LTD: (2008) TAXINDIAONLINE.COM 104 (TIOL) THE ISSUE REQUIRES CONSIDERATION. ACCORDING TO US, IN VIEW OF THE DISM ISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF VINAY CEM ENT (SUPRA) BY THE SUPREME COURT BY A SPEAKING ORDER, T HE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE H AS TO BE REJECTED AT THE VERY THRESHOLD. THE REASON FOR THE SAME IS AS FOLLOWS:- 9. THE GAUHATI HIGH COURT IN THE CASE OF CIT V. GEO RGE WILLIAMSON (ASSAM) LTD: (2006) 284 ITR 619 (GAUHATI ) DEALT WITH THE VERY SAME ISSUE. IN THE SAID JUDGMENT THE DIVISION BENCH OF THE GAUHATI HIGH COURT NOTED A CONTRARY VI EW TAKEN BY THE KERALA HIGH COURT IN THE CASE OF CIT V . SOUTH INDIA CORPORATION LTD: (2000) 242 ITR 114. AFTER NO TING THE SAID JUDGMENT THE FACT THAT THE AMENDMENTS HAD BEEN MADE TO THE PROVISIONS OF SECTION 43B OF THE ACT BY VIRTUE OF FINANCE ACT, 2003 W.E.F 1.4.2004 IT AGREED WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT BY VIRTUE OF THE OMISSION OF THE SECOND PROVISO AND TH E OMISSION OF CLAUSES (A), (C), (D), (E) AND (F) WITH OUT ANY SAVING CLAUSE WOULD MEAN THAT THE PROVISIONS WERE N EVER IN EXISTENCE. FOR THIS PURPOSE, IN THE SAID CASE THE A SSESSEE HAD PLACED RELIANCE ON THE JUDGMENT OF A CONSTITUTI ON BENCH OF THE SUPREME COURT IN THE CASE OF KOLHAPUR CANESU GAR WORKS LTD V. UNION OF INDIA: (2000) 2 SCC 536 AND R AYALA CORPORATION P. LTD V. DIRECTOR OF ENFORCEMENT (1969 ) 2 SCC I.T.A. NO.622/DEL/2018 11 412 AND GENERAL FINANCE CO. V. ASST. CIT: (2002) 25 7 ITR 338 (SC) . THE SAID SUBMISSIONS FOUND FAVOUR WITH T HE DIVISION BENCH OF THE GUAHATI HIGH COURT AND RELYIN G ON EARLIER DECISIONS OF ITS OWN COURT IN CIT V. ASSAM TRIBUNE: (2002) 253 ITR 93 AND CIT V. BHARAT BAMBOO AND TIBE R SUPPLIERS: (1996) 219 ITR 212 THE DIVISION BENCH DI SMISSED THE APPEAL OF THE REVENUE. IT TRANSPIRES THAT THE A FORESAID MATTER WAS TAKEN UP IN APPEAL ALONGWITH OTHER MATTE RS INCLUDING VINAY CEMENT (SUPRA). THE ORDER IN VINAY CEMENT (SUPRA) WAS PASSED BY THE SUPREME COURT ON 7.3.2007 WHEREIN IT OBSERVED AS FOLLOWS:- 'DELAY CONDONED. I N THE PRESENT CASE WE ARE CONCERNED WITH THE LAW AS IT ST OOD PRIOR TO THE AMENDMENT OF SECTION 43-B. IN THE CIRCUMSTAN CES, THE ASSESSEE WAS ENTITLED TO CLAIM THE BENEFIT IN SECTI ON 43-B FOR THAT PERIOD PARTICULARLY IN VIEW OF THE FACT TH AT HE HAS CONTRIBUTED TO PROVIDENT FUND BEFORE FILING OF THE RETURN. SPECIAL LEAVE PETITION IS DISMISSED.' 10. IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AN D WHILE DOING SO THE SUPREME COURT HAD NOTICED THE FACT THA T THE MATTER IN APPEAL BEFORE IT PERTAIN TO A PERIOD PRIO R TO THE AMENDMENT BROUGHT ABOUT IN SECTION 43B OF THE ACT. THE AFORESAID POSITION AS REGARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO SECTION 43B HAS BE EN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARME NDRA SHARMA (SUPRA). APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT (SUPRA) A DIVISION BE NCH OF THIS COURT DISMISSED THE APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BENCH OF T HE I.T.A. NO.622/DEL/2018 12 MADRAS HIGH COURT IN THE CASE OF CIT V. NEXUS COMPU TER (P) LTD BY A JUDGMENT DATED 18.8.08 PASSED IN TAX CASE (A) NO. 1192/2008 DISCUSSED THE IMPACT OF BOTH THE DISM ISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD (SUPRA) AND VINAY CEMENT (SUPRA) AS WEL L AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COUR T IN SYNERGY FINANCIAL EXCHANGE (SUPRA). THE DIVISION BE NCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF T HE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN T HE CASE OF KUNHAYAMMED AND OTHERS V. STATE OF KERALA AND ANOTHER: 119 STC 505 AT PAGE 526 IN PARAGRAPH 40 AN D NOTED THE FOLLOWING OBSERVATIONS:- 'IT THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKIN G ORDER, IE., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE ORDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAINED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ARTICLE 141 OF THE CONSTITUTI ON. SECONDLY, OTHER THAN THE DECLARATION OF LAW, WHATEV ER IS STATED IN THE ORDER ARE THE FINDINGS RECORDED BY TH E SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT, TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS SUB SEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY, BUT, THIS DOES NOT AMOUNT TO SAYING THAT THE ORDER OF THE COURT, TRIBU NAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF TH E SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR T HAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDIN G AS RES JUDICATA IN SUBSEQUENT PROCEEDINGS BETWEEN THE PART IES.' I.T.A. NO.622/DEL/2018 13 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COU RT IN KUNHAYAMMED AND OTHERS (SUPRA) THE DIVISION BENCH O F THE MADRAS HIGH COURT IN THE CASE OF NEXUS COMPUTER PVT LTD (SUPRA) CAME TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT (SUPRA) WOULD BIND TH E HIGH COURT AS IT WAS NON DECLARED BY THE SUPREME CO URT UNDER ARTICLE 141 OF THE CONSTITUTION. 12. WE ARE I N RESPECTFUL AGREEMENT WITH THE REASONING OF THE MADR AS HIGH COURT IN NEXUS COMPUTER PVT LTD (SUPRA). JUDICIAL D ISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMENT (SUPRA) AS ALSO THE VIEW OF THE DIVISION BEN CH OF THIS COURT IN DHARMENDRA SHARMA (SUPRA). 13. IN THE SE CIRCUMSTANCES, WE RESPECTFULLY DISAGREE WITH THE AP PROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COUR T IN M/S PAMWI TISSUES LTD (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED.' 17. IT ALSO BECOMES CLEAR THAT DELETION OF THE 2ND PROVISO IS TREATED AS RETROSPECTIVE IN NATURE AND WOULD NOT AP PLY AT ALL. THE CASE IS TO BE GOVERNED WITH THE APPLICATION OF THE 1ST PROVISO. 18. WE MAY ONLY ADD THAT IF THE EMPLOYEES CONTRIBUTION IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELE VANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS I NTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FOR W HICH SPECIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUND ACT AS WE LL AS THE ESI I.T.A. NO.622/DEL/2018 14 ACT. THEREFORE, THE ACT PERMITS THE EMPLOYER TO MAK E THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE AFORESAID CONSEQUE NCES. INSOFAR AS THE INCOME TAX ACT IS CONCERNED, THE ASS ESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE TH E RETURN IS FILED, AS PER THE PRINCIPLE LAID DOWN BY THE SUPREM E COURT IN VINAY CEMENT (SUPRA). 19. WE, THUS, ANSWER THE QUESTION IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. AS A CONSEQUENCE, THE APPE ALS FILED BY THE ASSESSEES STAND ALLOWED AND THOSE FILED BY T HE REVENUE ARE DISMISSED. 12. THUS, IT IS CLEAR THAT THERE ARE SERIES OF DECI SIONS OF VARIOUS HIGH COURTS ON THIS ISSUE WHEREIN IT WAS HE LD THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION IF MADE BEFORE DU E DATE OF FILING OF RETURN OF INCOME U/S.139(1), THE SAME IS ALLOWABLE DEDUCTION AGAINST THE CORRESPONDING INCOME OF THE S AID AMOUNT TREATED AS PER THE PROVISION OF SECTION 2(24 )(X) OF THE INCOME TAX ACT. WE ARE CONSCIOUS ABOUT THE DECISION S OF OTHER HIGH COURT TAKING A DIFFERENT VIEW ON THIS IS SUE. HOWEVER, THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING ON THE TRIBUNAL. BY THE FINANCE AC T, 2021, THE PROVISION OF SECTION 36(1)(VA) AS WELL AS SECTI ON 43B HAVE BEEN AMENDED TO THIS EXTENT BY INSERTING THE EXPLAN ATION-2 WHEREBY IT IS CLARIFIED THAT THE PROVISION OF SECTI ON 43B SHALL NOT APPLY AND SHALL BE DEEMED NEVER TO HAVE BEEN AP PLIED FOR THE PURPOSE OF DETERMINING THE DUE DATE UNDER THIS CLAUSE. FOR READY REFERENCE, WE REPRODUCE THE EXPLANATION-2 TO SECTION 36(1)(VA) AS UNDER: I.T.A. NO.622/DEL/2018 15 SECTION 36(1)(VA) [EXPLANATION 2 FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT THE PROVISIONS OF SECTION 43B SHALL NOT APPLY AND SHALL BE DEEMED NEVER TO HAVE BEEN APPLIED FOR THE PURPOSES OF DETERMINING THE DUE DATE UNDER THIS CLAUSE;] 13. THIS AMENDMENT IS BROUGHT IN THE STATUTE TO PRO VIDE CERTAINTY ABOUT THE APPLICABILITY OF SECTION 43B IN RESPECT OF BELATED PAYMENT OF EMPLOYEES CONTRIBUTION. WE FURT HER NOTED THAT THE MEMORANDUM OF FINANCE BILL, 2021 WHEREBY T HIS AMENDMENT WAS PROPOSED AND THE RELEVANT CLAUSE TO T HE SAID MEMORANDUM CLEARLY INTENDED THE AMENDMENT SHALL TAK E EFFECT FROM 1 ST APRIL, 2021 AND WILL ACCORDINGLY APPLY TO THE ASSESSMENT YEAR 2021-22 AND SUBSEQUENT YEAR. CLAUSE 8 AND 9 OF THE SAID MEMORANDUM IS RELEVANT WHICH ARE REPR ODUCED HEREUNDER: RATIONALISATION OF VARIOUS PROVISIONS PAYMENT BY EMPLOYER OF EMPLOYEE CONTRIBUTION TO A F UND ON OR BEFORE DUE DATE CLAUSE (24) OF SECTION 2 OF THE ACT PROVIDES AN INC LUSIVE DEFINITION OF THE INCOME. SUB-CLAUSE (X) TO THE SAID CLAUSE PROVI DE THAT INCOME TO INCLUDE ANY SUM RECEIVED BY THE ASSESSEE FROM HIS E MPLOYEES AS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR ANY FUND SET UP UNDER THE PROVISIONS OF ESI ACT OR ANY OTHER FUND FOR THE WELFARE OF SUCH EMPLOYEES. SECTION 36 OF THE ACT PERTAINS TO THE OTHER DEDUCTI ONS. SUB-SECTION (1) OF THE SAID SECTION PROVIDES FOR VARIOUS DEDUCT IONS ALLOWED WHILE COMPUTING THE INCOME UNDER THE HEAD PROFITS AND GA INS OF BUSINESS OR PROFESSION. I.T.A. NO.622/DEL/2018 16 CLAUSE (VA) OF THE SAID SUB-SECTION PROVIDES FOR DE DUCTION OF ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOY EES TO WHICH THE PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYE E'S ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DAT E. EXPLANATION TO THE SAID CLAUSE PROVIDES THAT, FOR THE PURPOSES OF THIS CLAUSE, 'DUE DATE TO MEAN THE DATE BY WHICH THE ASSESSEE IS REQ UIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEE'S CONTRIBUTION TO TH E EMPLOYEE'S ACCOUNT IN THE RELEVANT FUND UNDER ANY ACT, RULE, O RDER OR NOTIFICATION ISSUED THERE-UNDER OR UNDER ANY STANDI NG ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE. SECTION 43B SPECIFIES THE LIST OF DEDUCTIONS THAT A RE ADMISSIBLE UNDER THE ACT ONLY UPON THEIR ACTUAL PAYMENT. EMPLO YER'S CONTRIBUTION IS COVERED IN CLAUSE (B) OF SECTION 43 B. ACCORDING TO IT, IF ANY SUM TOWARDS EMPLOYER'S CONTRIBUTION TO ANY PROV IDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER F UND FOR THE WELFARE OF THE EMPLOYEES IS ACTUALLY PAID BY THE AS SESSEE ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF TH E INCOME UNDER SUB-SECTION (1) OF SECTION 139, ASSESSEE WOULD BE E NTITLED TO DEDUCTION UNDER SECTION 43B AND SUCH DEDUCTION WOUL D BE ADMISSIBLE FOR THE ACCOUNTING YEAR. THIS PROVISION DOES NOT COVER EMPLOYEE CONTRIBUTION REFERRED TO IN CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 OF THE ACT. THOUGH SECTION 43B OF THE ACT COVERS ONLY EMPLOYER S CONTRIBUTION AND DOES NOT COVER EMPLOYEE CONTRIBUTION, SOME COUR TS HAVE APPLIED THE PROVISION OF SECTION 43B ON EMPLOYEE CO NTRIBUTION AS WELL. THERE IS A DISTINCTION BETWEEN CONTRIBUTION A ND EMPLOYEES CONTRIBUTION TOWARDS WELFARE FUND. IT MAY BE NOTED THAT EMPLOYEES CONTRIBUTION TOWARDS WELFARE FUNDS IS A MECHANISM T O ENSURE THE COMPLIANCE BY THE EMPLOYERS OF THE LABOUR WELFARE L AWS. HENCE, IT NEEDS TO BE STRESSED THAT THE EMPLOYERS CONTRIBUTI ON TOWARDS WELFARE FUNDS SUCH AS ESI AND PF NEEDS TO BE CLEARL Y DISTINGUISHED I.T.A. NO.622/DEL/2018 17 FROM THE EMPLOYEES CONTRIBUTION TOWARDS WELFARE FU NDS. EMPLOYEES CONTRIBUTION IS EMPLOYEE OWN MONEY AND T HE EMPLOYER DEPOSITS THIS CONTRIBUTION ON BEHALF OF THE EMPLOYE E IN FIDUCIARY CAPACITY. BY LATE DEPOSIT OF EMPLOYEE CONTRIBUTION, THE EMPLOYERS GET UNJUSTLY ENRICHED BY KEEPING THE MONEY BELONGIN G TO THE EMPLOYEES. CLAUSE (VA) OF SUB-SECTION (1) OF SECTIO N 36 OF THE ACT WAS INSERTED TO THE ACT VIDE FINANCE ACT 1987 AS A MEASURES OF PENALIZING EMPLOYERS WHO MIS-UTILIZE EMPLOYEES CON TRIBUTIONS. ACCORDINGLY, IN ORDER TO PROVIDE CERTAINTY, IT IS P ROPOSED TO (I) AMEND CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 OF THE ACT BY INSERTING ANOTHER EXPLANATION TO THE SAID CLAUSE TO CLARIFY THAT THE PROVISION OF SECTION 43B DOES NOT APPLY AN D DEEMED TO NEVER HAVE BEEN APPLIED FOR THE PURPOSES OF DETE RMINING THE DUE DATE UNDER THIS CLAUSE; AND (II) AMEND SECTION 43B OF THE ACT BY INSERTING EXPLANATI ON 5 TO THE SAID SECTION TO CLARIFY THAT THE PROVISIONS OF THE SAID SECTION DO NOT APPLY AND DEEMED TO NEVER HAVE BEEN APPLIED TO A SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS E MPLOYEES TO WHICH PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24 ) OF SECTION 2 APPLIES. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 2 021 AND WILL ACCORDINGLY APPLY TO THE ASSESSMENT YEAR 2021-22 AN D SUBSEQUENT ASSESSMENT YEARS. [CLAUSES 8 AND 9] 14. THEREFORE, THE AMENDED PROVISIONS OF SECTION 43 B AS WELL AS 36(1)(VA) ARE NOT APPLICABLE FOR THE ASSESS MENT YEAR UNDER CONSIDERATION. BY FOLLOWING THE BINDING DECIS ION OF HONBLE JURISDICTIONAL HIGH COURT, THE EMPLOYEES CO NTRIBUTION PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) IS AN ALLOWABLE DEDUCTION. ACCORD INGLY, WE I.T.A. NO.622/DEL/2018 18 DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DELET ED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2021. SD/- SD/- [R.K. PANDA] [VIJAY PAL RAO] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH AUGUST, 2021 PRABHAT: