Brief of the Case:
It was held in the case of CIT v/s South India Corporation Ltd. by Kerla High Court That the assessee is not entitled to claim deduction of the belated payments to the Provident Fund in view of the section 36(1)(va) and 43B of the Income tax Act.
Brief facts of the case:
The assessee has paid Provident fund amount of Rs. 7,69,232/- after the prescribed due date. The department took the stand that the assessee is not entitled to deduction on the ground that the payment has not been made on the due date as defined in the Section 36(1)(va) of the Act.
Question of Law:
Whether delayed payment of employees’ contribution to the respective fund is allowed as deduction in light of the section 36(1)(va) and section 43B read with the decision reported in 227 ITR 446 Hitech India Pvt. Ltd V/s Union of India and others?
Contention of the Assessee:
It was contended by assessee in the case referred supra, that U/s 145 of the act, chargeability of tax is based on the method of accounting and in these cases the assessee has followed the mercantile method of accounting and thus, though payment is not made within the due date, the same must be allowed as deduction. It was also contended that there is no rational basis to treat the situation mentioned in cls. (a), (c) and (d) different from the one mentioned in cls.(b) and that the proviso (1) and (2) to Sec. 43B are discriminatory and provisions are bad for double jeopardy.
Contention of the Revenue:
It was held in the case of Hitech India Private Limited V/s Union of India and others
“ the intention of legislature in introducing section 43B read with explanation to S.36(1)(va), is to encourage payment of dues to the exchequer before the due dates. The IT department is not levying any penalty or any prosecution. It is not disputed that U/s 14B of the EPF act and Sec. 85 and 86 of the ESIC act the defaulters are liable for damages and penalty. These welfare legislations are enacted with an avowed objective of advancing the cause of employees. It has socio-economic prospectivity. It has been noticed that a few employers have been dishonestly misappropriating the deductions made from the salaries of workers towards provident fund and are defaulting in contributing their matching share too. So to check such malpractice parliament enacted the above provisions. Therefore, the provision cannot be said to be expropriatory.
Section 43B of the Income Tax Act,1961, for the assessment year 1992-93 reads as under:
Notwithstanding anything contained in any other provisions of the act, a deduction Sudame otherwise allowable under this act in respect of-
