Shaji P. Chaly, J.:— This appeal is preferred by the Revenue against the order of the Income-tax Appellate Tribunal, Cochin Bench, in I.T.A No. 8 of 2014, dated May 9, 2014, for the assessment year 2010-11, by which the Tribunal has affirmed the order of the Commissioner of Income-tax (Appeals) and deleted an amount of Rs. 34,41,659 added by the Assessing Officer under section 36(1)(va) read with section 2(24)(x).
2. Brief facts necessary for the disposal of this appeal are as follows:
The respondent was engaged in the business of manufacture and sale of Rubber Chemicals. It had filed the return of income for the assessment year 2010-11, disclosing an income of Rs. 9,92,16,240. The return was processed under section 143(1) of the Income-tax Act and scrutiny was conducted under section 143(2) on August 29, 2011. It was found by the Assessing Officer that the remittance of the employees' contribution to the provident fund and ESI has been delayed beyond the due date of payment prescribed under the respective Acts and, therefore, the cumulative figure of all defaulted payments amounting to Rs. 34,41,659 was proposed to be disallowed under section 36(1)(va) read with section 2(24)(x) of the Income-tax Act, 1961 (for short, “the Act”). Thereupon, objections were invited and overruling the objections raised, the Assessing Officer disallowed the deduction of the aforesaid amounts under section 36(1)(va) read with section 2(24)(x) of the Income-tax Act.
3. Aggrieved by the order of the Assessing Officer, the respondent took up the matter before the appellate authority, basically contending that the Assessing Officer was not justified in disallowing the expenditure of the employees' contribution invoking the provisions of section 36(1)(va). It was further contended that the ratio of the decision of the hon'ble apex court in the case of Commissioner Of Income Tax v. Alom Extrusions Limited, (2009) 319 ITR 306 (SC) was not followed by the Assessing Officer. After evaluating the facts and circumstances, following the decision of the hon'ble apex court in CIT v. Vinay Cement Ltd., [2007] 213 CTR (SC) 268; [2009] 313 ITR (St.) 1 (SC), the first appellate authority held that the contribution towards provident fund and ESI were made before the due date of filing of return and, therefore, the same are entitled for deduction under section 43B of the Income-tax Act. Therefore, the addition made by the Assessing Officer in that regard was deleted. Aggrieved by the order of the first appellate authority, the Revenue preferred an appeal before the Tribunal. The Tribunal affirmed the order of the first appellate authority and held that the date of remittance of the contribution was within the due date for filing the return of income under section 139(1) of the Act for the assessment year under consideration. It was further held that admittedly, the second proviso to section 43B was deleted and the entire sub-clauses under section 43B were brought under Explanation 1 to section 43B and, therefore, all payments including the employees' and the employer's contribution to the provident fund and ESI paid on or before the due date for filing the return of income under section 139(1) has to be deducted while computing the taxable income. It was aggrieved by the order of the Tribunal, the Revenue has preferred this appeal. The following questions of law were raised for consideration:
“1.(a) Whether; On the facts and in the circumstances of the case, the assessee whose contribution towards PF/ESI is not in consonance with the provisions of the Explanation to section 36(1)(va) is entitled to claim the deduction of the same under section 43B of the Income-tax Act?
(b) If the answer to the above question is in the negative cannot the Revenue treat the amountas income under section 2(24)(x) of the Income-tax Act?
2. Is not the order of the Tribunal on the issue wrong and lacks perspective for non-consideration of the issue under section 36(1)(va) read with section 2(24)(x) of the Income-tax Act?”
4. Heard the learned senior counsel for the Revenue and the learned counsel for the assessee.
5. The learned senior counsel for the Revenue contended that the finding of the Tribunal that the respondent was entitled to claim deduction under section 43B of the Income-tax Act was not correct in view of section 36(1)(va) and Explanation thereto, read with section 2(24)(x) since a specific provision is made for treating the employees' contribution towards PF, ESI, etc., etc. The learned senior counsel has further contended that the respondent had not credited the sum received towards the employees' contribution to the employees' account in the relevant fund on or before the due date prescribed under the Explanation to section 36(1)(va) and, therefore, the respondent shall not be entitled to deduction as such, though they deposited the amount before the due date prescribed under section 43B, i.e, before filing of the return under section 139(1). It was his further contention that the decision of the hon'ble apex court in Vinay Cement Ltd.'s case (supra) relied on by the Tribunal was not applicable to the facts of this case since the hon'ble apex court considered therein only the question of section 43B of the Act which deals with contribution payable by the employer. The learned senior counsel, on the other hand, relied on the principles laid down by the Gujarat High Court in CTT v. Gujarat State Road Transport Corporation, (2014) 366 ITR 170 (Guj).
6. Learned senior counsel for the Revenue has invited our attention to paragraph 7 of the judgment in Gujarat State Road Transport Corporation's case (supra) and contended that the issue involved therein was with respect to the employees' contribution to the provident fund account, ESI, etc., etc., as provided under section 36(1)(va) and Explanation of the Act. The learned senior counsel contended that the provisions with respect to the employees' contribution and the employer's contribution to the PF, ESI, etc., were governed by different provisions and need not be mixed up with the other. According to the learned counsel with respect to the employer's contribution, section 43B of the Act would be applicable, however with respect to the employees' contribution, section 36(1)(va) and Explanation read with section 2(24)(x) of the Act would be applicable and further that the aforesaid provisions are different and distinct and were governing different situations with respect to the contributions referred supra on account of the employer and employees respectively. Therefore, the learned senior counsel contended that section 43B cannot be made applicable under any circumstances to a situation with respect to section 36(1)(va) of the Income-tax Act and in that view of the matter, the findings of the Appellate Tribunal that the respondent was entitled to get deduction for the employees' contribution as provided under section 43B of the Act could not be sustained.
7. It was also contended that in so far as the decision of the hon'ble apex court in Commissioner Of Income Tax v. Alom Extrusions Limited, (2009) 319 ITR 306 (SC) was concerned, the issues involved therein were with respect to the employer's contribution to the PF account under section 43B, and whether the amendment brought to section 43B as per the Finance Act, 2003, with effect from April 1, 2004, was curative or amendatory and whether it was retrospective or prospective in operation. Therefore, the learned senior counsel contended that the proposition of law laid down in the said judgment could not be taken to have arrived at a conclusion with regard to the payment of the employees' contribution which was provided under section 36(1)(va) of the Act. It was also contended that the judgment of the Gujarat High Court cited supra has taken into account the judgment of the apex court in Alom Extrusions case (supra) and found that so far as the employees' contribution was concerned, section 36(1)(va) read with Explanation alone was applicable and section 43B of the Act had no role to play at all.
8. The learned senior counsel for the Revenue has specifically invited our attention to paragraph 7.06 of the judgment in Gujarat State Road Transport Corporation's case which read thus (page 180 of 170 ITR):
“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 provisions of the ESI Act or any other fund for the welfare of such employees shall be treated as an ‘income’. Section 36 of the Act deals with the deductions in computing the income referred to in section 28 and as per section 36(1)(va) such sum received by the assessee from any of his employees to which the provisions of sub-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 assessee to the employee's account in the relevant fund or funds on or before the ‘due date’, i.e, date by which the assessee is required as an employer to credit the employee's contribution to the employee's account in the relevant fund, in the present case, the provident fund and the ESI Fund under the Provident Funds Act and the ESI Act. Section 43B is with respect to certain deductions only on actual payment. It provides that notwithstanding 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 of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him. It appears that prior to the amendment of section 43B of the Act, vide the Finance Act, 2003, an assessee was entitled to deductions with respect to the sum paid by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees (employer's contribution) provided such sum—employer's contribution is actually paid by the assessee on or before the due date applicable in his case for furnishing 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 and the evidence of such payment is furnished by the assessee along with such return. It also further provided that no deduction shall, in respect of any sum referred to in clause (B), i.e, with respect to the employer's contribution, be allowed unless such sum is actually been paid in cash or by issue of 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 section 36 and where such sum has been made otherwise that in cash, the sum has been realised within 15 days from the due date. By the Finance Act, 2003, the second proviso to section 43B of the Act has been deleted and the first proviso to section 43B has also been amended which is reproduced hereinabove. Therefore, with respect to the employer's contribution as mentioned in clause (b) of section 43B, if any sum towards the 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 the assessee on or before the due date applicable in his case for furnishing the return of the income under sub-section (1) of section 139, the assessee would be entitled to deduction under section 43B 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 amendment in section 36(1)(va). Deletion of the second proviso to section 43B, vide the Finance Act, 2003, would be with respect to section 43B and with respect to any sum mentioned in section 43B(a) to (f) and in the present case, the employer's contribution as mentioned in section 43B(b). Therefore, the deletion of the second proviso to section 43B and the amendment in the first proviso to section 43B by the Finance Act, 2003, is required to be confined to section 43B alone and the deletion of the second proviso to section 43B, vide the amendment pursuant to the Finance Act, 2003, cannot be made applicable with respect to section 36(1)(va) of the Act. Therefore, any sum with respect to the employees' contribution as mentioned in section 36(1)(va), the assessee shall be entitled to the deduction of such sum towards the employees' 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 to the employees' accounts in the relevant fund or funds on or before the ‘due date’ under the Provident Funds Act, ESI Act, rule, order or notification issued thereunder or under any standing order, award, contract or service or otherwise. It is required to be noted that as such there is no amendment in section 36(1)(va) and even the Explanation to section 36(1)(va) is not deleted and is still on the statute and is required to be complied with. Merely because with respect to the employer's contribution the second proviso to section 43B which provided that even with respect to the employer's contribution (section 43B(b)), the assessee was required to credit the amount in the relevant fund under the PF Act or any other fund for the welfare of the employees on or before the due date under the relevant Act, is deleted, it cannot be said that section 36(1)(va) is also amended and/or the Explanation to section 36(1)(va) has been deleted and/or amended. It is also required to be noted at this stage that as per 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 or any fund set up under the provisions of the 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 with respect to such employees' contribution. section 2(24)(x) refers to any sum received by the assessee from his employees as contribution and does not refer to the 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 the provisions of subclause (x) of clause (24) of section 2 applies, the assessee shall not be entitled to deduction of such sum in computing the income referred to in section 28 unless and until such sum is credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as mentioned in the Explanation to section 36(1)(va). Therefore, with respect to the employees contribution received by the assessee if the assessee has not credited the said sum to the employees' account in the relevant fund or funds on or before the due date mentioned in the Explanation to section 36(1)(va), the assessee shall not be entitled to deductions of such amount in computing the income referred to in section 28 of the Act.”
9. It was further contended that, on a reading of the above extracted portion of the judgment of the Gujarat High Court, it was clear that so far as the amount recovered by the assessee towards the contribution of the employees to the provident fund and ESI are concerned, section 36(1)(va) was applicable and if the contributions are not paid within the period specified under the relevant statute as provided under Explanation thereto, the assessee would not be entitled to deduction. It was also contended that there was no amendment made to section 36(1)(va) and the Eocplanation to section 36(1)(va) was not deleted and was still on the statute book and, therefore, the same was required to be complied with, and further that merely the second proviso to section 43B which provided that the assessee was entitled to credit the employer's contribution under section 43B(b) in the relevant fund for the welfare of the employees on or before the due date under the relevant Act, was deleted, it cannot be said that section 36(1)(va) was also amended and Explanation to section 36(1)(va) has been deleted/or amended.
10. Learned senior counsel for the Revenue has also invited our attention to the decisions reported in Commissioner Of Income-Tax v. South India Corporation Ltd., [2000] 242 ITR 114 (Ker), Commissioner Of Income-Tax v. G.T.N Textiles Ltd., (2004) 269 ITR 282 (Ker), CIT v. Jairam and Sons, (2004) 269 ITR 285 (Ker) and contended that the said question was considered by this court and held that so far as the contribution received from the employees were concerned, section 36(1)(va) and the Explanation thereto was the applicable provision and the amounts received towards employees' contribution shall be credited to the relevant account of the employee within the due date prescribed under the PF and ESI Acts.
11. Even though the assessment years considered in those judgments were before the Finance Act, 2003, was introduced, these judgments have clearly drawn a distinction between section 36(1)(va) and section 43B of the Act. In South India Corporation Ltd.'s case (supra), at page 118 held as follows:
“Learned counsel for the assessee submitted that if payment is permissible to be made with damages after a prescribed period, the same is not unauthorised payment and in view of the broad language employed in clause (va) of sub-section (1) of section 36, it shall be deemed as if the payment was made within the due date. The expression ‘due date’ means the time stipulated for payment. As per the Explanation to clause (va) for the purpose of the clause, ‘due date’ means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund. The amount is deductible only if the assessee credits the amount to the employee's account in the relevant fund on or before the date by which he is legally or contractually required to do so. The right to deduction would be lost even if the sum is credited after the due date. It cannot be an indefinite date left to the choice of the assessee. It is to be noted that under the main provision of section 43B of the Act, the payments made during the currency of the financial year relevant to the assessment year qualify for deduction in certain cases. But in the case of payments relating to provident fund, etc., stress has been made on payment within the ‘due date’. Therefore, it cannot be said that payment made beyond the due date also qualifies for deduction, in view of the prescription in the main provision itself. Had that been the legislative intent, there was no necessity to enact the proviso. The Legislature in its wisdom has incorporated the proviso and it cannot be said to be without a purpose. There is nothing repugnant between the main provision and the proviso. They operate in different situations. The view of the Tribunal that payment having been made before the close of the financial year, qualifies for deduction is indefensible.”
12. On the contrary learned counsel for the respondent contended that the respondent was paying the salary and wages during the second week of every month and in the case of contribution towards PF and ESI, the amount would become due for payment within 15 days plus 5 days towards the grace period from the end of the month in which wages or salary were paid. Thus, for the respondent, due dates for the payment of such contribution arose in the month subsequent to the month in which wages/salary actually disbursed and, therefore, the liability to deduct the employees' contribution arises only on paying salary to the employees and not as and when wages and salaries are earned by the employees. It was further contended by the learned counsel that the respondent can claim deduction under the head subject to the condition that the outstanding statutory payments as shown in the balance as at the end of the relevant previous year were made within the time permitted under section 139(1) as prescribed under section 43B of the Income-tax Act.
13. Learned counsel for the respondent further contended that since section 43B takes in both employees' as well as the employer's contribution, even if the statutory deductions are made by the respondent during the relevant deduction period, the respondent was entitled to get deduction, if the same was tendered to the statutory authority before filing of the return under section 139(1) of the Act.
14. Learned counsel for the respondent has also contended that if the short-fall on the provident fund or ESI Fund was deposited or made good before the filing of the return, the assessee shall be entitled to deduction under section 36(1)(va) in the same year. It was further contended by the learned counsel for the assessee that consequent to the deletion of the second proviso to section 43B of the Act with effect from April 1, 2004, by the Finance Act, 2003, which stipulated that contributions to the provident fund and ESI should be made within the time mentioned under section 36(1)(va), was retrospective from April 1, 1989, as held in Alom Extrusions (supra) and that the PF and ESI contribution received from the employees were remitted before the due date for filing of the return under section 139 of the Income-tax Act, there shall not be any disallowance of the contribution so made. Learned counsel also contended that the payments due under the aforesaid Acts were made by the assessee on or before the due date for the filing of the return and, therefore, they shall be entitled to deduction in the same year as rightly held by the Appellate Tribunal. In that context, the learned counsel has invited our attention to the decision of the hon'ble apex court in Alom Extrusions Ltd. (supra) and contended that since the apex court held that the Finance Act, 2003, will operate retrospectively with effect from April 1, 1988, when the first proviso stood inserted, the respondent was entitled to get deduction for the contributions of the employees received since the same were paid before the filing of the return under section 139(1) of the Act. Learned counsel has invited our attention to paragraph 10 of the judgment and contended that even though in the decision cited supra, the hon'ble apex court was considering the question of retrospective operation of the amendment so made to section 43B as per the Finance Act, 2003, the court considered the said question after appreciating the entire scheme of the Act, as it existed prior to April 1, 1984, and, therefore, the application of section 43B read with section 36(1)(va) was considered by the apex court and in such circumstances the findings rendered thereunder is a binding precedent so far as the question considered in this case was concerned.
15. Learned counsel has also invited our attention to CIT v. AIMIL Ltd., (2010) 321 ITR 508 (Delhi), CIT v. State Bank of Bikaner and Jaipur, (2014) 363 ITR 70 (Raj), Essae Teraoka P. Ltd. v. Deputy CIT, (2014) 366 ITR 408 (Karn), Commissioner Of Income-Tax v. South India Corporation Ltd., (2000) 242 ITR 114 (Ker), CIT v. Ghatge Patil Transports Ltd., (2014) 368 ITR 749 (Bom) and CIT v. Spectrum Consultants India P. Ltd., [2014] 2 ITR-OL 622 (Karn) and canvassed the proposition that if the employees' contribution received by the assessee was paid actually before the filing of the return under section 139(1), the same could not be disallowed under section 43B or section 36(1)(va).
16. In order to answer the questions of law raised in this appeal, we think it appropriate that section 36(1)(va) Explanation and section 43B and subsection (b) are extracted.
“36. Other deductions.—(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28—…
(va) any sum received by the assessee 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 the assessee to the employee's account in the relevant fund or funds on or before the due date: Explanation.— For the purposes of this clause, ‘due date’ means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise
“43B. Certain deductions to be only on actual payment.— Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of—…
(b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees, or… shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him:
Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before 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.”
17. On a reading of section 36(1)(va), what we find is that any sum received by the assessee from his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply was credited by the assessee to the employees' account in the relevant fund or funds on or before the due date prescribed under Explanation to section 36(1)(va), is entitled to deduction. According to us, it thus means that section 36(1)(va) takes care of contribution received on account of the employees and credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as provided under the relevant statute alone will be entitled to get deduction. In this context, the definition of income contained under section 2(24)(x) is relevant, which read thus:
“any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees.”
18. Therefore, income of the assessee includes any sum received by the assessee from his employee as contribution to any provident fund or superannuation fund or funds set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees. According to us, on a reading of section 36(1)(va) along with section 2(24)(x), it is categoric and clear that the contribution received by the assessee from the employee alone was treated as income for the purpose of section 36(1)(va) of the Act and, therefore, we are of the considered opinion that the assessee was entitled to get deduction for the sum received by the assessee from his employees towards contribution to the fund or funds so mentioned only if, the said amount was credited by the assessee on or before the due date to the employees account in the relevant fund as provided under Explanation to section 36(1)(va) of the Act. According to us, so far as section 43B(b) is concerned, it takes care of only the contribution payable by the employer/assessee to the respective fund. Therefore, in that circumstances, section 36(1)(va) and section 43B(b) operate in different fields, i.e, the former takes care of the employee's contribution and the latter employer's contribution. The assessee was entitled to get the benefit of deduction under section 43B(b) as provided under the proviso thereto only with regard to the portion of the amount paid by the employer to the contributory fund. Such an understanding of section 43B is further exemplified by the phraseology used in the proviso, which reads thus:
“Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before 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.”
Further, in Explanation 1 to section 43B also, the phraseology used persuade us to think that section 43B can be applied to the contribution payable by the assessee as an employer, which reads thus:
“For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983, or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him.”
Therefore, according to us, since the respondent has admittedly not paid the deduction so made within the due date as provided under section 36(1)(va), the respondent was not entitled to get deduction of the amounts deducted thereunder for and on behalf of the employees.
19. In view of the reliance placed by various High Courts in Alom Extrusions (supra), to arrive at a conclusion that the assessees therein were liable to pay both the employees' as well as the employer's contribution on or before filing of return under section 139(1) only, we thought that if Alom Extrusions (supra) is discussed in detail, the question raised in this case can be made clear. In paragraph 3 of the said judgment, the question considered was formulated as follows (page 310 of 319 ITR):
“A short question which arises for determination in this batch of civil appeals is whether omission (deletion) of the second proviso to section 43B of the Income-tax Act, 1961, by the Finance Act, 2003, operated with effect from 1st April, 2004, or whether it operated retrospectively with effect from 1st April, 1988?”
20. Therefore, the question that was considered in Alom Extrusions’ case was whether the omission of the second proviso to section 43B of the Income-tax Act by the Finance Act, 2003, operated with effect from 1st April, 2004, or retrospectively with effect from 1st April, 1988. Therefore, the question raised in this appeal has nothing to do with the question considered in the said decision. It is true that section 2(24)(x) as well as section 36(1)(va) were discussed in paragraphs 10 and 11 of the said judgment. But it was for the sole purpose of understanding the scheme of the Income-tax Act, 1961, as it existed prior to 1st April, 1984, and as it stood after 1st April, 1984. After discussing the aforesaid provisions and section 43B, the apex court held in paragraph 14 of the judgment as follows (page 313 of 319 ITR):
“On reading the above provisions, it becomes clear that the assessee(s)-employer(s) would be entitled to deduction only if the contribution stands credited on or before the due date given in the Provident Fund Act. However, the second proviso once again created further difficulties. In many of the companies, financial year ended on 31st March, which did not coincide with the accounting period of R.P.F.C For example, in many case, the time to make contribution to R.P.F.C ended after due date for filing of returns. Therefore, the industry once again made representation to the Ministry of Finance and, taking cognizance of this difficulty, Parliament inserted one more amendment vide Finance Act, 2003, which, as stated above, came into force with effect from 1st April, 2004. In other words, after 1st April, 2004, two changes were made, namely, deletion of the second proviso and further amendment in the first proviso, quoted above. By the Finance Act, 2003, the amendment made in the first proviso equated in terms of the benefit of deduction of tax, duty, cess and fee on the one hand with contributions to employees; provident fund, superannuation fund and other welfare funds on the other. However, the Finance Act, 2003, bringing about this uniformity came into force with effect from 1st April, 2004.
21. Therefore, on a reading of the afore-extracted portion of the judgment, it is clear that the apex court had considered only the question relating to the effect of the amendment so made and found that the amendment was curative in nature and, therefore, that it operated retrospectively from 1st April, 1988.
22. Thereafter, in paragraph 15 of the judgment, it was held that the amendments were brought about under the Finance Act, 1983, for the purpose of ensuring that the relaxation/incentive was restricted only to tax, duty, cess and fee under section 43B in order to ensure that it did not apply to contributions to labour welfare funds. Further, it was held that the reason appears to be that the employers should not sit on the collected contributions and deprive the workmen of the rightful benefits under social welfare legislations by delaying payment of contributions to the welfare funds. It was also held that consequent to the implementation problems of the second proviso to section 43B resulted in enactment of the Finance Act, 2003, deleting the second proviso and bringing about the uniformity in the first proviso by equating tax, duty, cess and fee with contributions to welfare funds and, therefore, the Finance Act, 2003, which was made applicable by Parliament only with effect from 1st April, 2004, would become curative in nature and, hence, it would apply retrospectively from April, 1988.
23. So also, the learned counsel for the assessee contented that since section 43B commences with a non obstante clause, Explanation to section 36(1)(va) was excluded. But in Alom Extrusions' case (supra), the apex court had held that the underlying object of the non obstante clause was to disallow deductions claimed merely by making the book entry under the mercantile system of accounting. Therefore, the contention of the learned counsel for the assessee that since section 43B commences with a non obstante clause, section 36(1)(va) stood excluded, cannot be sustained. According to us, the findings of the apex court towards the latter part of paragraph 15 makes the intention and purpose behind the amendment brought about to section 43B clear and it reads thus (page 315 of 319 ITR):
“Accordingly, we hold that Finance Act, 2003, will operate retrospectively with effect from 1st April, 1988 (when the first proviso stood inserted). Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(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 present case, the respondents have deposited the contributions with the 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 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 the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under section 43B of the Act for all times. They would 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 to pay the contribution to the welfare fund right up to 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under section 43B of the Act.”
24. According to us, it is thus clear that the decision rendered by the apex court in Alom Extrusions (supra) did not consider the question involved in this case.
25. So also, in paragraph 16 of the judgment supra, the apex court had quoted with approval the judgment in Commissioner Of Income Tax, Bangalore v. J.H Gotla, Yadagiri., (1985) 156 ITR 323 (SC), which read thus (page 339 of 156 ITR):
“We should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result, i.e a result not intended to be subserved by the object of the legislation found in the manner indicated before, then if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction.”
26. Therefore, in our view, when section 43B, as it stood prior to the amendment, and section 36(1)(va) Explanation thereto read with section 2(24)(x) are considered together, it is clear that they operate in different fields. So far as the employees' contribution received is concerned, it should have been paid on or before the due date prescribed under the relevant statutes. Then again the learned counsel contended that on a reading of section 43B(b), any sum “payable by the assessee as an employer” by way of contribution to any provident fund meant payment of both the employees' contribution and the employer's contribution, by the employer and, therefore, the assessee was entitled to pay both contributions together on or before the filing of the return under section 139(1) of the Act. We are unable to accept the said contention advanced by the learned counsel. If such a contention is accepted, that would make section 36(1)(va) and the Explanation thereto otiose. According to us, there was no indication in section 43B, as it stood prior to the amendment and thereafter also to deface section 36(1)(va) and the Explanation thereto from the Income-tax Act. Thus, it means that both provisions are operative and the contributions have to be paid in accordance with the mandate contained under section 36(1)(va) and the Explanation thereto and under section 43B, respectively.
27. So far as the decisions cited by the learned counsel for the assessee referred to in paragraph 15 of this judgment were concerned, it is true that in the said judgments, the High Courts were considering the question of remittance of the contributions received from the employees as well as the employer and held that the contributions received from the employees were also liable to be paid to the respective statutory authorities under the PF and ESI Act on or before the filing of the return under section 139(1). was alone sufficient to be eligible for deduction. For the reasons stated, we are unable to subscribe to the views expressed by the High Courts in the decisions cited supra by the learned counsel for the assessee. That apart, we are reminded of the judgment of the hon'ble apex court in Padmasundara Rao v. State of Tamil Nadu, (2002) 255 ITR 147 (SC); (2002) 3 SCC 533 paragraph 9 which reads as follows:
“It is also a settled proposition of law that courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v. British Railways Board, [1972] 2 VVLR 537 (HL). Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.”
28. In that view of the matter, we are of the considered opinion that the view taken by the Tribunal which affirmed the decision of the first appellate authority that the respondent was entitled to get deduction of the contributions received from the employees if paid on or before the filing of the return under section 139(1) was not correct. We are inclined to agree with the judgment of the Gujarat High Court in Gujarat State Road Transport Corporation's case (supra). We are also of the opinion that the judgments of the other High Courts referred to by the learned counsel for the respondent do not lay down the law correctly.
29. Learned counsel for the respondent has also contended that when two views are possible, one in favour of the assessee shall be adopted and our attention was drawn to the decisions in CIT v. Podar Cement Pvt. Ltd., (1997) 226 ITR 625 (SC), Manish Maheshwari v. Asst. CIT, [2007] 289 ITR 341 (SC) and Indore Construction P. Ltd. v. CIT, (2007) 289 ITR 341 (SC) and canvassed for the said proposition. But since we are of the clear opinion that the assessee was entitled to get the deduction of the amounts as provided under section 36(1)(va) only if the amounts so received from the employee was paid within the due date as provided under the relevant statute, we do not think that this is a case to which such a principle is applicable. Therefore, the questions of law raised by the Revenue is answered affirmatively in favour of the Revenue. In the facts and circumstances of the case, we set aside the order of the Tribunal in I.T.A No. 8 of 2014, dated May 9, 2014, so far as the questions raised herein are concerned and restore the order of the Assessing Officer.
30. Accordingly, the appeal is allowed.
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