N.K Saini, A.M:— This is an appeal by the department against the order dated 15/06/2012 of ld. CIT(A), Udaipur. The only ground raised in this appeal reads as under:
“On the facts and in the present circumstances of the case, the learned CIT(A) has erred in deleting the addition of Rs. 19,01,255/- made u/s. 36(1)(va) r.w.s 2(24)(x) of the I.T Act.
The appellant craves to add, amend, alter, delete or modify any or all the grounds of appeal before or at the time of hearing.”
2. During the course of hearing, nobody was present on behalf of the assessee nor any adjournment was sought. We, therefore, proceed to decide the appeal exparte, qua the assessee, after hearing the learned D.R, of course on merit.
3. Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings noted that the assessee made delayed payment of employees contribution to PF and employer-employees contribution to ESI fund. The details of the payments made on account of provident fund of Rs. 18,93,266/- and ESI fund of Rs. 7,989/- along with the date of payments had been given at page No. 3 of the assessment order dated 21/12/2011, for the cost of repetition, the same are not reproduced herein. The Assessing Officer pointed out that the above payments were beyond prescribed due date as per Explanation to 36(1)(va) of the I.T Act, 1961 (hereinafter referred to as “Act”, in short) and the similar delayed payments have been disallowed in the A.Y 2008–2009. Accordingly, the Assessing Officer disallowed Rs. 19,01,255/-.
4. Being aggrieved, the assessee carried the matter to the learned CIT(A) and the submissions made by him as incorporated in para 3.2 of the impugned order are reproduced verbatim as under:—
“That assessee have deposited ESI late by 2 to 4 days Rs. 7989/- but it was deposited before filing of income tax return u/s. 139(1). Similarly PF Rs. 18,93,266/- was also deposited late by 2 to 3 days but the aforesaid amount was deposited before filing of the income tax return u/s. 139(1). That I am submitting details of the PF & ESI monthwise statement & I am also enclosing herewith Challan for payments of PF & ESI whole of the year. That these additions were also made in the earlier assessment 2006–2007, 2007–2008 & 2008–2009. Addition made in these years have also been deleted by your honour.
There are many cases and by the various judgments of the courts u/s. 139(1).
“CIT v. Vinay Cement Ltd., 213 CTR 268 (Commissioner Of Income-Tax v. P.M Electronics Ltd., (2009) 177 Taxman 1 (DEL)
CIT v. Nexus Computers Pvt. Ltd., (2009) 177 Taxman 2002 (MAD)
CIT v. M.N Cherry, (2009) 310 ITR 445 (KAR).”
5. Learned CIT(A) after considering the submissions of the assessee, deleted the addition by observing in para 3.3 of the impugned order, which reads as under:—
“3.3 I have considered the contentions of the appellant as well as assessment order. It is seen that as per the chart submitted on page No. 3 of the assessment order showing the date of payments of ESI and PF funds, there is slight delay while depositing these payments. However, all the payments have been deposited by 16/04/2009 i.e well before the due date of filing the return for A.Y 2009–2010. The appellant has substantiated the fact of payment by way of challans. In fact the A.O has also mentioned that assessee has made the said payments, though in delayed manner. Similar issue has been decided in the A.Y 2006–2007 as under:—
“I have considered the submissions of the learned A/R vis-a-vis the decision of various Courts relied upon by the appellant alongwith the findings of the A.O given in the assessment order. In my view, now it is a settled position of law that where payments on account of contribution to the PF, ESI etc. are made within the due date of filing the return, such deductions are allowable. In the case of appellant, there is no dispute that the P.F contribution and ESI was deposited by the appellant before the due date of filing the return. Therefore, the disallowance made by the A.O deserves to be deleted and I order accordingly. The appellant will get a relief of Rs. 14,61,385/- on this account”
Similar being the facts during this year and assessee's reliance on the above issue in this context especially in the decision in case of CIT v. Vinay Cement Ltd., 213 CTR 268 (SC), the addition made on this account of Rs. 19,01,255/- is deleted. The appeal is allowed on this ground.
Now the department is in appeal.
6. We have considered the submissions of the learned D.R, who mainly relied on assessment order passed by the Assessing Officer and also gone through the material available on record. In the present case, it is an admitted fact that the assessee although made the payments of the provident fund and ESI fund, but the said payments were beyond the prescribed due date as per Explanation to section 36(1)(va) of the Act.
7. On a similar issue, the Hon'ble Karnataka High Court in the case of CIT v. M.N Chari, (2009) 310 ITR 445 has held as under:—
“that the contributions made by the assessee were allowable deductions even though they were made beyond the stipulated period under section 36(1)(va) of the Income-tax Act, 1961, read with section 2(24)(x) and section 43B as the amounts were paid by the assessee on or before the due date for furnishing the return under section 139(1) of the Act.”
8. Now, this issue has been settled by the Hon'ble Supreme Court in the case of Commissioner Of Income Tax v. Alom Extrusions Limited ., (2009) 319 ITR 306, wherein their lordship at pages 315 & 316 have held as under:—
“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 the 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 March, 31 (end of the 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 April, 2004 and who pays the contribution after April 1, 2004, would get the benefit of deduction under section 43B of the Act. In our view, therefore, the Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from April 1, 1988, when the first proviso was introduced. It is true that Parliament has explicitly stated that the Finance Act, 2003, will operate with effect from April 1, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of the Finance Act, 2003.
9. In view of the above, we do not see any merit in this appeal of the department.
10. In the result, appeal is dismissed.