Case Law Details
Amendment to Section 43B on deduction of contribution for PF, superannuation fund, gratuity fund etc is retrospective
Whether amendment to Section 43B (Section) of Income Tax Act,1961, enacted with effect from 1 April 2004, is retrospectively applicable? This amendment was introduced to rationalize the tax deduction of the employer’s contribution to provident fund, superannuation fund, gratuity fund and such other funds for the welfare of employees (social security contributions). The SC held that the amendment, being curative in nature, should be construed as retrospectively applicable from 1 April 1988.
This SC ruling is a reiteration of the rule of interpretation of statutes that an amendment to the statute, which is remedial or curative in nature, can be construed as retrospective in its effect from the date of introduction of the pre-amended provision of the statute, though the amendment may have been stated by the legislature to be prospective.
This ruling will put an end to the controversy on the deductibility of the social security contributions which were paid belatedly during the period 1 April 1988 to 1 April 2004.
It needs be noted that this ruling is in the context of tax deduction of the employers’ contribution to the social security schemes which is distinct from the tax deduction of the employees’ contribution to such schemes which are governed by other provisions of the ITL.
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