Case Law Details
JCIT Vs Bharat Pumps And Compressors Ltd (ITAT Allahabad)
Facts- Main issue involved in the matter was that Employees contribution to VPF was deposited after due dates under explanation to section 36(1)(va) but before the end of relevant previous year is allowable deduction or not.
Conclusion- Keeping in view strict and literal interpretation of provisions of Section 36(1)(va) of the 1961 Act read with Explanation 1 and Section 2(24)(x) of the 1961 Act , the assessee will not be entitled for deduction as the employee contribution towards PF received by assessee was deposited late beyond the time stipulated under the relevant statute governing PF. But, it is equally true that the Constitutional Courts viz. Hon’be High Courts and Hon’ble Supreme Court in India have powers to read down the provisions of the 1961 Act to make it workable and to avoid absurdity. On perusal of the decision of Hon’ble Supreme Court in the case of Alom Extrusion, it is observed that Hon’ble Supreme Court has elaborately discussed provisions of Section 36(1)(va) ,2(24)(x) and amendments made by Finance Act, 2003 to Section 43B of the 1961 Act, which amendments to Section 43B of the 1961 Act were held to be retrospective in nature. The Hon’ble Supreme Court also referred in its decision in Alom Extrusion to its earlier decision in CIT v. J.H. Gotla [1985] 156 ITR 323(SC) , para 10 that intention of the legislature is to be found out from the language used and if strict literal construction leads to an absurd result i.e. 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. The Hon’ble Delhi High Court and Hon’ble Bombay High Court after considering, analyzing and interpreting the decision in the case of Alom Extrusion has held that it will apply both to employers and employee contribution and if the same is deposited before the due date of filing of return of income u/s 139(1) of the 1961 Act, the deduction shall be allowed, even if the same is deposited beyond the time stipulated as due date as prescribed under the provisions of Statute governing PF/ESI Act. The Hon’ble jurisdictional High Court in the case of Sagun Foundry Private Limited v. CIT, Kanpur has decided this issue in favour of the tax-payer, by holding that Section 43B is applicable to both employer and employee contribution and thus in case employee contribution towards PF received by employer is deposited to the credit of employees with the PF trust prior to due date of filing of return of income u/s 139(1), the tax-employer shall be entitled for deduction u/s 36(1)(va) read with Section 2(24)(x) and 43B of the 1961 Act.
FULL TEXT OF THE ORDER OF ITAT ALLAHABAD
These two appeals, filed by Revenue, bearing ITA Nos. 147 & 148/Alld/2016 for assessment year’s(ay’s) : 2005-06 and 2007-08 respectively are directed against two separate appellate orders, dated 22.01.2016 & 23.02.2016 respectively in two separate appeal no(s). 130/ACIT/R-II/Alld/09-10 and 153/ACIT/R-II/Alld/13-14 , for ay: 2005-06 and 2007-08 respectively , passed by learned Commissioner of Income-tax (Appeals), Allahabad , U.P. (hereinafter called “ the CIT(A)”) . The appellate proceedings had arisen before ld. CIT(A) from two separate assessment orders dated 31.12.2009 and 25.03.2013 for ay: 2005-06 and 2007-08 respectively , passed u/s. 143(1)/148 of the Income Tax Act, 1961 (hereinafter called “the Act”) and 148 of the 1961 Act for ay: 2005-06 and 2007-08 respectively, by learned Assessing Officer(hereinafter called “ the AO”) . We have heard both the appeals through video conferencing mode through Virtual Court. We will deal with both the appeals separately in this common order. First, we shall deal with Revenue’s appeal in ITA no. 147/Alld/2016 for ay:2005-06.
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