DCIT-Central Circle-1(3), Kolkata, Kolkata V. M/s Rungta Mines Ltd., Kolkata

ITSSA 39/KOL/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2591 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2015
• Court: TRIBUNAL
• Department Lawyers: R S BISWAS CIT LD
• Assessee Lawyers: SUBASH AGARWAL LD
• Keywords: Business income; Earning of tax free income
• Section: 43B; 153A; 14A; 132; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL,A BENCH KOLKATA BEFORE : SHRI M.BALAGANESH, ACCOUNTANT MEMBER, AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER IT(SS) NOS. 39 & 40/KOL/2015 A.YS 2012-13 & 2011-12 D.C.I.T, CC-1(3), KOLKATA VS. M/S. RUNGTA MINES LTD PAN: AABCR 6463N [APPELLANT] [RESPONDENT] APPELLANT REVENUE BY : SHRI R.S BISWAS, CIT, LD.DR RESPONDENT ASSESSEE BY : SHRI SUBASH AG ARWAL, ADVOCATE, LD.AR DATE OF HEARING : 17-10-2016 DATE OF PRONOUNCEMENT : 30-11-2016 ORDER SHRI S.S.VISWANETHRA RAVI, JM: BOTH THESE APPEALS BY THE REVENUE ARE ARISING OUT O F ORDER DATED 12 TH DECEMBER, 2014 PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS), 20, KOLKATA FOR THE ASSESSMEN T YEARS 2012-13 AND 2011-12. 2. SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS AR E COMMON, THEREFORE, HEARD TOGETHER AND FOR THE SAKE OF CONVE NIENCE CONSOLIDATED ORDER IS BEING PASSED. FIRST, WE SHALL TAKE UP IT(SS) 39/KOL/2015 AY 2012- 13 BY THE REVENUE 3. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- (1) IN THE FACTS AND CIRCUMSTANCES AND LAW OF THE CASE, LD. CIT(A) IS ERRED IN DELETING THE ADDITION WITHOU T GOING INTO PROVISION OF IT ACT AND IT RULE. IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 2 (2) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT OF THE CASE, LD. CIT(A) IS ERRED IN DELETING THE ADDITIONS DEPENDING ON THE ITATS CASE LAW IGNORING THE PROVI SION OF IT ACT AND IT RULE. (3) THE APPELLANT CRAVE LEAVE TO MAKE ANY ADDITION, ALTERNATION, MODIFICATION ETC OF GROUND OR GROUNDS BEFORE OR IN COURSE OF APPELLATE PROCEEDINGS. 4. THE ONLY ISSUE IS TO BE DECIDED IS AS TO WHETHER THE CIT-A IS JUSTIFIED IN DELETING THE ADDITION MADE U/S. 14 OF THE ACT R/ W RULE 8D OF RULES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY DEALING IN MINING AND MANUFACTURING OF SPONGE IRON. THE ASSESS EE FILED ITS RETURN DECLARING TOTAL INCOME AT RS.2016,96,54,780/- ON 25 -09-2012. PRIOR TO FILING OF SAID RETURN A SEARCH & SEIZURE OPERATION WAS CON DUCTED U/S. 132 OF THE ACT ON 06-02-2012 IN THE RESIDENTIAL & BUSINESS PRE MISES OF THE VARIOUS PERSONS BELONGING TO THE RUNGTA GROUP. NOTICES U/S. 153A OF THE ACT FOR THE AY 2006-07 TO 2011-12 AND NOTICES U/S. 143(2) AND 1 42(1) OF THE ACT FOR THE AY 2012-13 I.E. THE YEAR UNDER CONSIDERATION WE RE ISSUED. IN RESPONSE TO WHICH THE ASSESSEE FILED WRITTEN SUBMISSION, BOO KS OF ACCOUNT, BANK ACCOUNTS, DOCUMENTS AND OTHER EVIDENCES RELATING T O RETURN OF INCOME. THE AO FOUND THAT THE ASSESSEE EARNED DIVIDEND INCOME AND NOT OFFERED ANY AMOUNT OF EXPENDITURE IN RELATION TO SUCH DIVIDEND AMOUNT AS EXEMPT U/S. 10(34). THE AO, HOWEVER, COMPUTED SUCH EXPENDITURE UNDER THE METHOD AS PROVIDED IN RULE 8D OF THE RULES AND DISALLOWED AN AMOUNT OF RS.43,61,378/- TOWARDS INDIRECT EXPENSES UNDER RULE 8D(2)(III) R/W SEC 14A AND THE ASSESSMENT WAS COMPLETED DETERMINING THE IN COME AT RS.2017,43,73,216/- BY MAKING OTHER DISALLOWANCES B Y AN ORDER U/S. 143(3)/153D OF THE ACT. 6. AGGRIEVED BY SUCH DISALLOWANCE AS MADE BY THE AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT-A. BEFORE HIM TH E SPECIFIC CONTENTION OF THE ASSESSEE WAS THAT THE INVESTMENTS WERE MADE OUT OF ITS OWN FUND AND YIELDED NO DIVIDEND INCOME DURING THE YEAR UNDER CO NSIDERATION AND AGITATED IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 3 THE DISALLOWANCE AS MADE BY THE AO UNDER RULE 8D(2) (III) IS NOT JUSTIFIED. CONSIDERING THE SAME, THE CIT-A DIRECTED THE AO TO VERIFY THE CONTENTION OF THE ASSESSEE AS MADE BEFORE HIM AND ALSO DIRECTED T HE AO TO RE-COMPUTE THE DISALLOWANCE IN VIEW OF DECISION OF THE JURISDI CTIONAL ITAT IN THE CASE OF REI AGRO LTD . 7. AGGRIEVED BY SUCH ORDER OF THE CIT-A, NOW THE RE VENUE IS IN APPEAL BEFORE US BY RAISING THE AFOREMENTIONED GROUNDS OF APPEAL 8. BEFORE US THE LD.DR SUBMITS THAT THE AO FOUND TH AT THE ASSESSEE HAS EARNED DIVIDEND INCOME AND OFFERED NO DISALLOWABLE EXPENSES IN EARNING SUCH EXEMPT INCOME AND COULD NOT PRODUCE ANYTHING B EFORE THE AO TO SHOW THAT THE INVESTMENT AS MADE BY THE ASSESSEE DID NOT YIELD ANY DIVIDEND. HE FURTHER SUBMITS THAT THE CIT-A RELYING ON THE SUBMI SSIONS AS MADE BY THE ASSESSEE BEFORE HIM DIRECTED THE AO TO VERIFY THE C ONTENTION OF THE ASSESSEE AND DID NOT UTILIZE THE PROCEDURE AS CONTEMPLATED A S ESTABLISHED UNDER LAW. HE SUPPORTED THE ORDER OF THE AO. 9. ON THE CONTRARY, THE LD. AR OF THE ASSESSEE SUBM ITS THAT IT IS COVERED BY THE ORDER OF THIS TRIBUNAL IN THE CASE OF REI AGRO LTD SUPRA IN ITA NO. 1331/KOL/2011 REPORTED IN 144 ITD 141 (KOL). 10. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE FIND THAT EXCEPT OBSERVING THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME AND NOTHING WAS SHOWN BY THE AO IN HIS ORDER THAT T HE ASSESSEE EARNED INCOME AS DIVIDEND INCOME AND RESORTED TO APPLY THE METHOD AS PROVIDED UNDER RULE 8D(2) AND COMPUTED THE EXPENSES BASING O N TOTAL AVERAGE INVESTMENT AS OPENING AND CLOSING BALANCE RESPECTIV ELY AND DISALLOWED THE IMPUGNED AMOUNT. THE CONTENTION OF THE ASSESSEE BEF ORE THE CIT-A AS WELL AS BEFORE US WAS THAT THE ASSESSEE DID NOT YIELD AN Y DIVIDEND INCOME AND SUCH INVESTMENTS WERE MADE OUT OF ITS OWN FUND. IN THIS REGARD WE MAY REFER TO THE SAID DECISION AS RELIED BY THE LD.AR I N THE CASE OF SUPRA, WHEREIN IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 4 THE TRIBUNAL HELD THAT THE DIVIDEND EARNED OUT OF I NVESTMENTS WOULD BECOME THE SUBJECT MATTER TO BE CONSIDERED FOR COMPUTING T HE EXPENSES BY THE METHOD AS PROVIDED UNDER RULE 8D WHEN SUCH INVESTME NT YIELDS DIVIDEND INCOME. IT MEANS TO SHOW THAT WHEN THERE IS NO DIVIDEND INC OME APPLICATION OF RULE 8D DOES NOT ARISE AT ALL. FOR BETTER UNDERS TANDING RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELOW:- 8.1 THUS, NOT ALL INVESTMENTS BECOME THE SUBJECT-MA TTER OF CONSIDERATION WHEN COMPUTING DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D IS TO BE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND THIS CAN BE DONE ONLY BY TAKING INTO CONSIDERATION THE INVESTMENT WH ICH HAS GIVEN RISE TO THIS INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME . UNDER THE CIRCUMSTANCES, THE COMPUTATION OF THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2)(II), WHICH IS ISSUE IN THE ASSESSEE S APPEAL, IS RESTORED TO THE FILE OF THE AO FOR RECOMPUTATION IN LINE WITH THE D IRECTION GIVEN ABOVE. NO DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2) (I) AND (II) CAN BE MADE IN THIS CASE. 11. IN THE PRESENT CASE, THE CIT-A EXAMINED AND FOU ND THAT NO DIVIDEND WAS EARNED BY THE ASSESSEE, IN VIEW OF THE SAME, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT-A AND IT IS JUSTIFIED IN DELETING THE DISALLOWANCE AS MADE BY THE AO UNDER RULE 8D(2)(III) OF THE RULE S FOR THE PURPOSE OF SECTION 14A OF THE ACT. THUS, SOLE GROUND RAISED BY THE REVENUE FAILS AND IS, ACCORDINGLY DISMISSED. 12. THE APPEAL FILED BY THE REVENUE IN IT(SS) NO.39 /KOL/2015 FOR THE AY 2012-13 IS DISMISSED. NOW WE SHALL TAKE UP THE APPEAL IN IT(SS) NO.40/KOL /2015 FOR THE AY 2011-12 BY THE REVENUE. 13. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- (1) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT OF THE CASE, LD. CIT(A) IS ERRED IN DELETING THE ADDITION WITHOUT GOING INTO PROVISION OF IT ACT AND IT RULE. (2) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT OF TH E CASE, LD. CIT(A) IS ERRED IN DEPENDING ON THE CASE LAW VIJAY SHREE LTD, WHICH IS BEST ON ANOTHER CASE LAW ALOM EXTRUSION LTD, WHEREAS THE ISSUE INVOLVED IN ALOM EXTRUSIONS LTD IS QUITE DIFFERENT FROM THE PRESENT ISSUE. IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 5 (3) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT OF THE CASE, THE ORDER OF THE CIT(A) IS ERRONEOUS BECAUSE IT RELIED ON THE SEC. 43B(B) OF THE ACT WHEREAS, THE P RESENT ISSUE IS INVOLVED WITH SEC. 36(1)(VA) READ WITH 2(2 4)(X) OF THE ACT. (4) THE APPELLANT CRAVE LEAVE TO MAKE ANY ADDITION, ALTERNATION, MODIFICATION ETC OF GROUND OR GROUNDS BEFORE OR IN COURSE OF APPELLATE PROCEEDINGS. 14. GROUND NO.1 RELATES TO DISALLOWANCE MADE BY THE AO BY APPLYING RULE 8D(2)(III). SINCE WE HAVE DECIDED THE SIMILAR ISSUE IN AFOREMENTIONED IT(SS) NO. 39/KOL/2015 FOR THE AY 2012-13 FILED BY THE REV ENUE WHERE WE DISMISSED THE SIMILAR GROUND BY FOLLOWING THE DECIS ION IN THE CASE OF REI AGRO LTD OF KOLKATA TRIBUNAL. BY ADOPTING THE SAME VIEW AS R ENDERED IN IT(SS) NO.39/KOL/2015, THE GROUND NO-1 RAISED IN IT (SS) NO.40/KOL/2015 FOR THE AY 2011-12 IS ALSO DISMISSED. 15. GROUND NOS. 2 & 3 ARE ONE AND THE SAME QUESTION ING THE ORDER OF THE CIT-A IN DELETING THE ADDITION AS MADE BY THE AO U/ S. 36(VA) R.W.S 2(24)(X) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. 16. THE AO FOUND THAT THE ASSESSEE HAS PAID AN AMOU NT OF RS.69,23,797/- BEING EMPLOYEES CONTRIBUTION TO PROVIDENT FUND BEY OND THE DUE DATE. THE CIT-A DELETED THE SAID ADDITION BASING ON THE DECIS ION OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF VIJAY SHREE LTD IN ITAT NO. 245 OF 2011 IN GA NO.2607/2011. 17. THE LD. DR RELIED ON THE ORDER OF THE AO. ON TH E OTHER HAND, THE LD.AR SUBMITS THAT THE ISSUE IN HAND IS COVERED BY THE SA ID DECISION OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF VIJAY SHREE LTD SUPRA AND THE HONBLE HIGH COURT OF CALCUTTA WHILE DISPOSING OFF SUCH APP EAL CONSIDERED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION LTD REPORTED IN 390 ITR 319 (SC). 18. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE AO DISALLOWED AN AMOUNT OF RS.69,2 3,797/- BEING IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 6 EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND BY I NVOKING THE PROVISION OF SECTION 224(X) R/W SEC 36(1)(II) OF THE ACT. BUT, T HE CIT-A DELETED SUCH AMOUNT IN VIEW OF AMENDMENT AS MADE TO 1 ST PROVISO TO SECTION 43B OF THE ACT. WE FIND THAT THE HONBLE HIGH COURT OF CALCUTT A IN THE CASE OF VIJAY SHREE LTD SUPRA HAS UPHELD THE FINDING OF THE TRIBUNAL BASING ON T HE RATIO OF DECISION AS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION LTD SUPRA WHEREIN THE HONBLE SUPREME COURT HAD AN OCCASION T O DETERMINE THE EFFECT OF DELETION OF 2 ND PROVISO AND EFFECT OF AMENDMENT TO 1 ST PROVISO TO SECTION 43B BY FINANCE ACT 2003 FROM 01 -04-2004 OR RETROSPECTIVELY I.E FROM 01-04-1988. 19. IN THAT CASE, THE CONTENTION OF THE REVENUE WA S THAT BEFORE THE HONBLE SUPREME COURT, THE EFFECT OF DELETION OF THE 2 ND PROVISO AND AMENDMENT THERETO TO 1 ST PROVISO AS IT WERE CAUSED EFFECT BY FINANCE ACT 20 03 CAME INTO EFFECT FROM 01-04-2004, ON OTHER HAND, THE EMPLOYER S BY WAY OF ASSESSEES, CONTENDED THAT AMENDMENT TO 1 ST PROVISO SHALL OPERATE RETROSPECTIVELY WITH EFFECT FROM 01-04-1988. 20. THE SUPREME COURT FOUND THAT THE AMENDMENT TO 1ST PROVISO TO SECTION 43B EXTENDED THE BENEFIT OF DEDUCTION OF TA X TO CONTRIBUTIONS TO EMPLOYEES PROVIDENT FUND, SUPERANNUATION FUND AND OTHER WELFARE FUNDS ON PAR WITH DUTY, CESS AND FEE AND, WHEREBY, THE HONB LE SUPREME COURT HELD THAT BRINGING THE UNIFORMITY TO THE CONTRIBUTIONS O F EMPLOYEES PROVIDENT FUND, SUPERANNUATION FUND AND OTHER WELFARE FUNDS O N PAR WITH DUTY, CESS AND FEE CAME INTO FORCE WITH EFFECT FROM 01-04-2004 BY FINANCE ACT, 2003, WAS CURATIVE IN NATURE AND SHOULD BE READ AS RETROS PECTIVE AND SHALL OPERATE FROM 01-04-1988 WHEN THE 1 ST PROVISO WAS ACTUALLY INSERTED. THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELOW: 9. WE FIND NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT FOR THE FOLLOWING REASONS: FIRSTLY, AS STATED ABOVE, SECTIO N 43-B [MAIN SECTION], WHICH STOOD INSERTED BY FINANCE ACT, 1983, WITH EFFECT FR OM 1ST APRIL, 1984, EXPRESSLY COMMENCES WITH A NON-OBSTANTE CLAUSE, THE UNDERLYING OBJECT BEING TO DISALLOW DEDUCTIONS CLAIMED MERELY BY MAKING A B OOK ENTRY BASED ON MERCHANTILE SYSTEM OF ACCOUNTING. AT THE SAME TIME, SECTION 43-B [MAIN SECTION] MADE IT MANDATORY FOR THE DEPARTMENT TO GR ANT DEDUCTION IN COMPUTING THE INCOME UNDER SECTION 28 IN THE YEAR I N WHICH TAX, DUTY, CESS, IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 7 ETC., IS ACTUALLY PAID. HOWEVER, PARLIAMENT TOOK CO GNIZANCE OF THE FACT THAT ACCOUNTING YEAR OF A COMPANY DID NOT ALWAYS TALLY W ITH THE DUE DATES UNDER THE PROVIDENT FUND ACT, MUNICIPAL CORPORATION ACT [ OCTROI] AND OTHER TAX LAWS. THEREFORE, BY WAY OF FIRST PROVISO, AN INCENTIVE/RE LAXATION WAS SOUGHT TO BE GIVEN IN RESPECT OF TAX, DUTY, CESS OR FEE BY EXPLI CITLY STATING THAT IF SUCH TAX, DUTY, CESS OR FEE IS PAID BEFORE THE DATE OF FILING OF THE RETURN UNDER THE INCOME TAX ACT [DUE DATE], THE ASSESSEE(S) THEN WOULD BE ENTITLED TO DEDUCTION. HOWEVER, THIS RELAXATION/INCENTIVE WAS R ESTRICTED ONLY TO TAX, DUTY, CESS AND FEE. IT DID NOT APPLY TO CONTRIBUTIONS TO LABOUR WELFARE FUNDS. THE REASON APPEARS TO BE THAT THE EMPLOYER(S) SHOULD NO T SIT ON THE COLLECTED CONTRIBUTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTF UL BENEFITS UNDER SOCIAL WELFARE LEGISLATIONS BY DELAYING PAYMENT OF CONTRIB UTIONS TO THE WELFARE FUNDS. HOWEVER, AS STATED ABOVE, THE SECOND PROVISO RESULTED IN IMPLEMENTATION PROBLEMS, WHICH HAVE BEEN MENTIONED HEREINABOVE, AND WHICH RESULTED IN THE ENACTMENT OF FINANCE ACT, 200 3, DELETING THE SECOND PROVISO AND BRINGING ABOUT UNIFORMITY IN THE FIRST PROVISO BY EQUATING TAX, DUTY, CESS AND FEE WITH CONTRIBUTIONS TO WELFARE FU NDS. ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PROVISO, THEN, IN OUR V IEW, THE FINANCE ACT, 2003, WHICH IS MADE APPLICABLE BY THE PARLIAMENT ONLY WIT H EFFECT FROM 1ST APRIL, 2004, WOULD BECOME CURATIVE IN NATURE, HENCE, IT WO ULD APPLY RETROSPECTIVELY WITH EFFECT FROM 1ST APRIL, 1988. SECONDLY, IT MAY BE NOTED THAT, IN THE CASE OFALLIED MOTORS (P) LIMITED VS. COMMISSIONER OF INC OME TAX, REPORTED IN [1997] 224 I.T.R.677, THE SCHEME OF SECTION 43-B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUESTION WHICH AROSE FO R DETERMINATION WAS, WHETHER SALES TAX COLLECTED BY THE ASSESSEE AND PAI D AFTER THE END OF THE RELEVANT PREVIOUS YEAR BUT WITHIN THE TIME ALLOWED UNDER THE RELEVANT SALES TAX LAW SHOULD BE DISALLOWED UNDER SECTION 43-B OF THE ACT WHILE COMPUTING THE BUSINESS INCOME OF THE PREVIOUS YEAR? THAT WAS A CASE WHICH RELATED TO ASSESSMENT YEAR 1984-1985. THE RELEVANT ACCOUNTING PERIOD ENDED ON JUNE 30, 1983. THE INCOME TAX OFFICER DISALLOWED THE DED UCTION CLAIMED BY THE ASSESSEE WHICH WAS ON ACCOUNT OF SALES TAX COLLECTE D BY THE ASSESSEE FOR THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEAR. THE D EDUCTION WAS DISALLOWED UNDER SECTION 43-B WHICH, AS STATED ABOVE, WAS INSE RTED WITH EFFECT FROM 1ST APRIL, 1984. IT IS ALSO RELEVANT TO NOTE THAT THE F IRST PROVISO WHICH CAME INTO FORCE WITH EFFECT FROM 1ST APRIL, 1988 WAS NOT ON T HE STATUTE BOOK WHEN THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIED MOTORS (P) LIMITED (SUPRA). HOWEVER, THE ASSESSEE CONTENDED THAT EVEN THOUGH TH E FIRST PROVISO CAME TO BE INSERTED WITH EFFECT FROM 1ST APRIL, 1988, IT WA S ENTITLED TO THE BENEFIT OF THAT PROVISO BECAUSE IT OPERATED RETROSPECTIVELY FR OM 1ST APRIL, 1984, WHEN SECTION 43-B STOOD INSERTED. THIS IS HOW THE Q UESTION OF RETROSPECTIVITY AROSE IN ALLIED MOTORS (P) LIMITED (SUPRA). THIS CO URT, IN ALLIED MOTORS (P) LIMITED (SUPRA) HELD THAT WHEN A PROVISO IS INSERTE D TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, A PR OVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND WHICH PROVISO I S REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERP RETATION, IT COULD BE READ RETROSPECTIVE IN OPERATION, PARTICULARLY TO GIVE EF FECT TO THE SECTION AS A WHOLE. ACCORDINGLY, THIS COURT, IN ALLIED MOTORS (P) LIMIT ED (SUPRA), HELD THAT THE FIRST PROVISO WAS CURATIVE IN NATURE, HENCE, RETROSPECTIV E IN OPERATION WITH EFFECT FROM 1ST APRIL, 1988. IT IS IMPORTANT TO NOTE ONCE AGAIN THAT, BY FINANCE ACT, 2003, NOT ONLY THE SECOND PROVISO IS DELETED BUT EV EN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRINGING ABOUT AN UNIFORMIT Y IN TAX, DUTY, CESS AND FEE ON THE ONE HAND VIS-A-VIS CONTRIBUTIONS TO WELF ARE FUNDS OF EMPLOYEE(S) ON THE OTHER. THIS IS ONE MORE REASON WHY WE HOLD THAT THE FINANCE ACT, 2003, IS RETROSPECTIVE IN OPERATION. MOREOVER, THE JUDGEMENT IN ALLIED MOTORS (P) LIMITED (SUPRA) IS DELIVERED BY A BENCH OF THREE LE ARNED JUDGES, WHICH IS BINDING ON US. ACCORDINGLY, WE HOLD THAT FINANCE AC T, 2003, WILL OPERATE RETROSPECTIVELY WITH EFFECT FROM 1ST APRIL, 1988 [W HEN THE FIRST PROVISO STOOD INSERTED]. LASTLY, WE MAY POINT OUT THE HARDSHIP AN D THE INVIDIOUS IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 8 DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSE E(S) IF THE CONTENTION OF THE DEPARTMENT IS TO BE ACCEPTED THAT FINANCE ACT, 2003, TO THE ABOVE EXTENT, OPERATED PROSPECTIVELY. TAKE AN EXAMPLE - IN THE PR ESENT CASE, THE RESPONDENTS HAVE DEPOSITED THE CONTRIBUTIONS WITH T HE R.P.F.C. AFTER 31ST MARCH [END OF ACCOUNTING YEAR] BUT BEFORE FILING OF THE RETURNS UNDER THE INCOME TAX ACT AND THE DATE OF PAYMENT FALLS AF TER THE DUE DATE UNDER THE EMPLOYEES' PROVIDENT FUND ACT, THEY WILL BE DEN IED DEDUCTION FOR ALL TIMES. IN VIEW OF THE SECOND PROVISO, WHICH STOOD ON THE S TATUTE BOOK AT THE RELEVANT TIME, EACH OF SUCH ASSESSEE(S) WOULD NOT BE ENTITLE D TO DEDUCTION UNDER SECTION 43-B OF THE ACT FOR ALL TIMES. THEY W OULD LOSE THE BENEFIT OF DEDUCTION EVEN IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE CONTRIBUTIONS TO THE WELFARE FUNDS, WHEREAS A DEFAULTER, WHO FAILS T O PAY THE CONTRIBUTION TO THE WELFARE FUND RIGHT UPTO 1ST APRIL, 2004, AND WH O PAYS THE CONTRIBUTION AFTER 1ST APRIL, 2004, WOULD GET THE BENEFIT OF DED UCTION UNDER SECTION 43-B OF THE ACT. IN OUR VIEW, THEREFORE, FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, SHOULD BE READ AS RETROSPECTIVE. IT WOULD, T HEREFORE, OPERATE FROM 1ST APRIL, 1988, WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE THAT THE PARLIAMENT HAS EXPLICITLY STATED THAT FINANCE ACT, 2003, WILL OPERATE WITH EFFECT FROM 1ST APRIL, 2004. HOWEVER, THE MATTER BEFORE US INVOLVES THE PRINCIPLE OF CONSTRUCTION TO BE PLACED ON THE PROVISIONS OF FINA NCE ACT, 2003. 21. APPLYING THE PRINCIPLE AS LAID DOWN BY THE HO NBLE SUPREME COURT IN THE AFOREMENTIONED CASE AS FOLLOWED BY THE HONBLE HIGH COURT OF CALCUTTA TO THE PRESENT CASE, WE MAY USEFULLY READ THE 1 ST PROVISO AS AMENDED BY FINANCE ACT 2003 AS UNDER: 'PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BE FORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN.' 22. A PLAIN READING OF THE AFOREMENTIONED PROVISO E XPLAINS THAT THE DEDUCTION IS AVAILABLE THAT IF THE EMPLOYER DEPOSIT S THE CONTRIBUTIONS COLLECTED FROM ITS EMPLOYEES TO ANY FUND CREATED FO R THE WELFARE OF THE EMPLOYEES BEYOND DUE DATE IN TERMS OF THE AMENDMENT TO 1 ST PROVISO TO SECTION 43B OF THE ACT. 23. IN THE PRESENT CASE, THE LD.AR SUBMITS THAT T HE AO DISALLOWED THE IMPUGNED AMOUNTS AS HE FOUND THE SAME WERE DUE TO B E PAID ON 15-07- 2010 FOR THE MONTHS OF JUNE RELEVANT TO FY 2010 BUT THE ASSESSEE PAID THE SAME ON 21-07-2010, LIKEWISE FOR THE MONTH OF FY 20 10 THE ASSESSEE PAID IT(SS) NOS. 39 & 40/KOL/2015 M/S. RNGTA MINES LTD 9 THE SAME ON 21-10-2010 AND FOR THE MONTHS OF JANUAR Y AND MARCH FY 2010 THE ASSESSEE DEPOSITED THE SAME BEYOND DUE DATE AS IT WERE EVIDENT FROM THE ANNEXURE-C ATTACHED TO FORM 3CD WHICH ARE PLACE D ON BEFORE US. IN VIEW OF THE DECISION OF THE HONBLE HIGH COURT OF CALCUT TA IN THE CASE OF VIJAY SHREE LTD SUPRA, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDU CTION AS PER 1 ST PROVISO TO SECTION 43B OF THE ACT AND THE ORDER OF THE CIT-A IS JUSTIFIED AND NEEDS NO INTERFERENCE AND ACCORDINGLY , THE GROUND NOS- 2 AND 3 RAISED BY THE REVENUE ARE DISMISSED. 24. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER,2016 SD/- SD/- M. BALAGANESH S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 30-11-2016 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/DEPARTMENT: THE DCIT, CC-1(3), AAYKAR BH AWAN POORVA, 3 RD FLOOR, 110 SHANTIPALLY, KOLKATA-700 0107. 2 RESPONDENT/ASSESSEE : M/S. RUNGTA MINES LTD 8A EXP RESS TOWER, 42A, SHAKESPARE SARANI, KOLKATA-700 017. 3. CIT, 4. CIT(A), 5. DR, KOLKATA BENCHES, KOLKATA **PP/SPS [ TRUE COPY] BY ORDER, ASSTT REGISTRAR