Draft Written Submission before CIT(A), Faceless related to PF & ESI late deposited after due date but before due date of ITR

Appeal filed against the order of rectification u/s 154 made by Assistant Director of Income Tax, CPC dated XX.XX.20XX [Jurisdictional ITO: Ward No. X (X), XXXX]

Most respectfully submitted before the Hon’ble CIT(A), Faceless. my written submissions

My case on Merit

Fact of the Case

The assessee is a private limited company doing business of Manpower Supply Work under the name and style of “M/s. XXXXX Private Limited” (Referred as Assessee Company). Assessee company has filed Income Tax Return for the Assessment Year 2018-19 on XX.XX.20XX declaring total income of Rs. 8,01,500. In the Income Tax Return filed, Assessee Company claimed deduction towards contributions of sum to provident fund and Employees’ state Insurance on behalf of employees. However, The ld. AO (CPC) has added Rs. 15,53,610 to the total Income on account of late deposit of Employee’s share of contribution in Provident Fund and ESI after the due date u/s 36(1)(va) being Rs. 15,53,614 and having tax impact Rs. 4,00,055. On account of this, refund of Rs. 1,98,530 got cancelled and net demand of Rs. 2,51,997 is created. The assessee company moved an application for rectification in respect of above assessment intimation dated XX-XX-20XX u/s 143(1) before the CPC, but the said rectification was not done and same intimation order was passed in rectification order u/s 154 dated XX-XX-20XX. Being aggrieved by the above said rectification order; the assessee company preferred an appeal before the Hon’ble CIT (A), Faceless.

About return of the assessee company

Assessee Company has filed Income Tax Return for Assessment Year 2018-19 declaring total income of Rs. 8,01,500, tax liability Rs. 2,06,386, TDS deducted Rs. 4,04,920 and hence, claimed tax refund of Rs. 1,98,530.

Demand raised by the AO

Assessing Officer, CPC while processing the Income Tax Return, disallowed the expenditure Employees contribution towards Provident Fund and ESI not deposited on or before the due date u/s 36(1)(va) being Rs. 15,53,614 and having tax impact Rs. 4,00,055. On account of this, refund of Rs. 1,98,530 got cancelled and net demand of Rs. 2,51,997 is raised.

Assessing Officer, CPC was not justified in making addition of Rs. 15,53,614 in total income on account of Employees Share of Contribution in Provident Fund and ESI being deposited late but before due date of filing of ITR u/s 139(1).

Assessee Company denies its liability to be assessed at total income of Rs. 2355110 as against returned income of Rs. 8,01,500 and accordingly denies its liability to pay tax, cess and interest demand and wants to claim refund thereon.

Income u/s 2(24)(x)- PF, ESIC etc Contribution

The definition of Income u/s 2(24)(x) of the Income Tax Act,  includes 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, or any other fund for the welfare of such employees.

Deduction from Income of contribution to PF, ESCI etc u/s 36(1)(va) and 43B:

Deduction from the amount of income received from employees as contributions to any provident fund or superannuation fund etc. is provided u/s 36(1)(va) of the Income Tax Act. According to this section any sum received by the assessee from any of his employees to which the provisions of section 2(24)(x) will be allowed as deduction, 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. “Due date” here 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 there under or under any standing order, award, contract of service or otherwise.

Moreover, section 43B of the Income Tax Act,1961 states that being late deposit of employees contribution towards ESIC/EPF which has been duly deposited on or before the due date of filing of return of income as per the provisions under section 139(1) of The Income Tax Act 1961, employee contribution towards ESI and PF paid after due date of respective statue but before the filling of Income Tax return due date as per section 139(1) are allowable expenses and hence, cannot be disallowed under section 36(1)(va).

Assessment with blind eyes

The Ld. Assessing Officer indulged in speculation, surmises, conjectures and without appreciating legal position and facts of the case made the abovementioned addition and raised the demand cancelling the Income Tax Refund of the assessee company.

Chart showing details of deposits of Employee’s share of contribution in Provident Fund and ESI

Name of Fund Sum received from Employees Due date of Payment Actual Amount paid Actual date of payment to concerned Authorities  

Deposited before due date of filing of ITR

Provident Fund               1,18,552 15-05-2017                 1,18,552 22-05-2017 Yes
Provident Fund               1,02,985 15-06-2017                 1,12,961 25-06-2017 Yes
Provident Fund               1,09,835 15-07-2017                 1,09,835 18-07-2017 Yes
Provident Fund               1,08,589 15-08-2017                 1,08,589 25-08-2017 Yes
Provident Fund               1,12,185 15-09-2017                 1,12,185 28-09-2017 Yes
Provident Fund               1,11,165 15-10-2017                 1,11,165 25-10-2017 Yes
Provident Fund               1,16,973 15-11-2017                 1,16,973 30-11-2017 Yes
Provident Fund               1,16,532 15-12-2017                 1,16,532 22-12-2017 Yes
Provident Fund               1,19,126 15-01-2018                 1,19,126 19-01-2018 Yes
Provident Fund               1,16,374 15-02-2018                 1,16,374 17-02-2018 Yes
Provident Fund               1,14,922 15-03-2018                 1,14,922 18-03-2018 Yes
Provident Fund               1,13,569 15-04-2018                 1,13,569 02-05-2018 Yes
 

Employee State Insurance

                 17,099 21-05-2017                     17,099 30-05-2017 Yes
Employee State Insurance                  14,517 21-06-2017                     14,517 24-06-2017 Yes
 

Employee State Insurance

                 15,505 15-07-2017                     15,505 18-07-2017 Yes
 

Employee State Insurance

                 15,331 15-08-2017                     15,331 26-08-2017 Yes
 

Employee State Insurance

                 15,880 15-09-2017                     15,880 23-09-2017 Yes
 

Employee State Insurance

                 15,730 15-10-2017                     15,730 29-10-2017 Yes
 

Employee State Insurance

                 16,575 15-11-2017                     16,575 30-11-2017 Yes
 

Employee State Insurance

                 16,501 15-12-2017                     16,501 22-12-2017 Yes
 

Employee State Insurance

                 16,869 15-01-2018                     16,869 25-01-2018 Yes
 

Employee State Insurance

                 16,484 15-02-2018                     16,484 22-02-2018 Yes
 

Employee State Insurance

                 16,243 15-03-2018                     16,243 27-03-2018 Yes
 

Employee State Insurance

                 16,073 15-04-2018                     16,073 02-05-2018 Yes
Total            15,53,614                 15,63,590    

Assessee Company incurs interest or penalty liability under respective welfare act for late deposit

Assessee Company incurs interest or penalty liability under respective welfare act for late deposit of contributions to the welfare fund. It means that respective welfare act allows the assessee to deposit the contribution with some delays subject to some interest and penalty. In that case, how can be assessee can get unjustly enriched by the amount.

Assessee referring to the judgment of the Apex Court in CIT v. Larsen & Toubro Ltd. [2009] 313 ITR 1, the Delhi High Court held as follows:

“We may only add that if the employees’ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. In so far as the Income-tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement [2009] 313 ITR (St.) 1.”

Further in the case of Commissioner of Income-tax, Shimla Versus NipsoPolyfabriks Ltd., it was held by high court of Himachal Pradesh as under:

We are dealing with cases where though the amount was not deposited by the due date under the Welfare Acts, it was definitely deposited before furnishing the returns. We see no reason to make any distinction between the employees’ contribution or the employers’ contribution. Once the contribution is there, whether by the employee or by the employer, it is a contribution to a welfare fund held in trust by the employer, who is bound to deposit the same. When the employer does not deposit the same within the time prescribed under the Welfare Acts, such as the Provident Fund Act, ESI Act etc., he may face criminal prosecution under the said Act. He may also become liable to pay interest or penalty. However, that is no reason to deny him the benefit of Section 43B, which starts with a non obstante clause and which clearly lays down that the assessee can take benefit of deduction of such contributions, if the same are paid before furnishing of the return.

Employees’ contributions are also allowable as deduction if paid on or before the due date of filing ROl:

Assessee Company relied on the judgement of Hon’ble Supreme Court of India in the case of CIT, Gauhati vs. Vinay Cement Limited, 2007, In view of this ruling, the employees’ contributions are also allowable as deduction if paid on or before the due date of filing ROl, although such payments are paid after the statutory due date.The scheme of the ITL, insofar as the employees’ contributions are concerned, is that the recovery from the employees is treated as income and the deposit is allowed as deduction, subject to actual payment.

The Vinay Cements ruling is discussed and followed by the two Delhi HC rulings in the case of CIT v Dharmendra Sharma [297 ITR 320] and CIT Vs P.M. Electronics Ltd. [ITA No. 475/2007 dated 3 November 2008]. In view thereof, the amendment by Finance Act 2003 permitting deduction for sums paid beyond the statutory due date but before the due date of filing Return of Income needs to be construed as having retrospective effect.

If the employees’ contributions are not deposited by the statutory due date, the employer is required to pay interest and penalty under the relevant statutes. Therefore, it can be inferred that the statutes governing the relevant act permit the employer to make the deposit with some delays. For tax purposes, the taxpayer can get the benefit if the actual payment is made before Return of Income is filed in terms of the Vinay Cements ruling.

Judgments regarding allowability of deduction of contribution towards PF, ESI when paid after due date under respective act but before due date of ROI u/s 139(1):

The assessee relies on the following judgments of the Hon’ble High Court and Hon’ble ITATs regarding allowability of deduction of contribution towards PF, ESI when paid after due date under respective act but before due date of ROI u/s 139(1):

1. Value Momentum Software Service vs. Dy. Commissioner Of Income Tax , on 19 May, 2021 (ITAT HYDERABAD)

It was held that late deposit of Employees Provident Fund prior to 01.04.2021 will not attract any disallowance as the explanation inserted by Finance Act, 2021 in section 43B and Section 36(1)(va) has prospective effect and the same will be applicable only from 01.04.2021 as written in the memorandum to the Finance Act 2021 and has further stated that the legislature itself has condoned the defaults done prior to 01.04.2021.

Relevant Extract: Next comes the latter issue of Section 43B disallowance of Rs.8,11,648/- pertaining to employee’s provident fund. It is not in dispute that learned lower authorities held that the same had to be deposited before the due date prescribed in the corresponding statute than the due date for filing Section 139(1) return. The Revenue’s case in tune thereof relies on Section 36(1)(va) read with explanation thereto that it is not Section 43B but the former provision which is applicable in such an instance. We find no merit in the Revenue’s foregoing stand. We take note of the explanatory memorandum to the Finance Act, 2021 proposing amendment in both Section 36(1)(va) as well as Section 43B by inserting corresponding Explanations that although the impugned employees provident fund comes under the former provision only, the same is applicable from 01-04-2021 onwards. Meaning thereby that the legislature itself has condoned the impugned default before 01-04-2021. We thus delete the impugned employees provident fund disallowance of Rs.8,11,648/- for this precise reason alone. Necessary computation to follow as per law.

2. Mahadev Cold Storage Vs Jurisdictional Assessing Officer (ITAT Agra)

No disallowance on late deposit of ESI and PF in section 143(1)(a) if deposited before due date of return u/s 139(1). Decision of Jurisdictional Honorable Allahabad High Court in the case of Sagun Foundry (P) Ltd. Vs CIT (97CCH 0160 and 145 DTR 0265) followed held to be binding on NFAC AND INCOME TAX.

3. CIT Vs Aimil Ltd (Delhi High Court)

Relevant Extract: 17. We may only add that if the employees‟ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement (supra).

We, thus, answer the question in favour of the assessee and against the Revenue. As a consequence, the appeals filed by the assessees stand allowed and those filed by the Revenue are dismissed.

Scope of addition under section 143(1)(a)

Of late the CPC is making additions to the returned income of assessee u/s 143(1)(a)(iv) on account of late deposit of employee contribution to PF and ESI while processing the return of income. Section 143(1)(a)(iv) provides that where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142 then such return shall be processed and the total income or loss shall be computed after making the adjustments for disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return.

This shows that the auditor is required to report only the facts of the due date of the payment and the actual date of the payment. Nowhere the auditor is required to indicate the amount of disallowance of expenditure on the above counts. Therefore, when the CPC makes the adjustment by disallowing the late payment then it can be said that the revenue is wrong in invoking the provision of section 143(1)(a)(iv) of the Income Tax Act on the fallacy of presumption that the auditor has disallowed the employee contribution to EPF /ESI.

Regarding amendment made by the Finance Act, 2021

It was held by Hon’ble Delhi ITAT in the case of “Addl. CIT Vs. Insta Exhibitions Pvt. Ltd.”  ITA No. 6941/Del/2017,

Further with respect to the argument of the learned departmental representative that amendment made with finance act 2021 wherein explanation 1 is added u/s 36(1)(va) of the act with effect from 1 April 2021, is applicable to the present case, we referred to the “Notes on clauses” at the time of introduction of the finance bill 2021 which says as Under:- 

“Clause 8 of the Bill seeks to amend section 36 of the Income-tax Act, relating toother deductions. Sub-section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the said sub-section provides for allowance of deduction for 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 to the said clause provides that 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. It is proposed to insert Explanation 2 to clause (va) of sub-section (1) of the said section so as to clarify that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the “due date” under the said clause. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.”

Therefore, it is apparent that the above amendments do not apply to the assessment year 2014 – 15 in this appeal.

In view of this we allow the solitary ground of appeal raised by the assessee holding that the addition/disallowance made by the learned assessing officer of late deposit of employee’s contribution to the provident fund and ESI, as it is deposited before the due date of the filing of the return of an income but beyond the due date prescribed Under the respective provident fund and ESI laws is not sustainable in law.

Prayer to the Hon’ble CIT (A), Faceless for production of all the documents

The Hon’ble CIT (Appeals), Faceless is prayed to give a chance to produce all the evidences before him which could not be produced earlier at the time of rectification so that assessee company gets full justice.

The appellant also prays to produce additional evidence under Rule 46A of the Income Tax Rules, 1962 at the time of hearing or before it.

Some court judgments relied upon by the assessee:

Sr. No. Judgments relied upon by the assessee Relevant Extract
1 KARNATAKA HIGH COURT: February 4, 2014 [2014] 366 ITR 408 (Kar) M/S ESSAE TERAOKA PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME-TAX 15. From bare perusal of this provision, it is clear that under the provision, for IT Act, an extension is given to the employer to make payment of contribution to provident fund or any other fund till the “due date” applicable for furnishing the return of income under sub- section(1) of section 139 of the IT Act 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. In short, this provision states, notwithstanding anything contained in any other provision contained in this Act, a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution to any fund such as provident fund shall be allowed if it is paid on or before the due date as contemplated under Section 139(1) of the IT Act. This provision has nothing to do with the consequences, provided for under the PF Act/PF Scheme/ESI Act, for not depositing the “contribution” on or before the due dates therein.

16. In the present case, admittedly, though the employer did not deposit the contribution, within the stipulated time, as contemplated by paragraph-30 of the PF Scheme or before the due date under the provisions of the PF scheme/Act, he deposited the contribution to the PF/ESI fund before the due date contemplated under Section 139(1) of the Act.

18. Paragraph-30 of the PF Scheme provides for payment of contributions. Sub-para(1) of paragraph-30 states that the employer shall, in the first instance, pay both the contribution payable by himself (in this Scheme referred to as the employer’s contribution) and also, on behalf of the member employed by him directly or by or through a contractor, the contribution payable by such member (in this Scheme referred to as the member’s contribution).

In the result, the appeal is allowed and the substantial question of law framed by us is answered in favour of the appellant-assessee and against the respondent-revenue. There shall be no order as to costs.

2 KARNATAKA HIGH COURT: [2008] 298 ITR 141 (Karn): July 3, 2007:COMMISSIONER OF INCOME-TAX VERSUS SABARI ENTERPRISES 36(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.

ExplanationFor 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.

This clause is inserted by Finance Act with effect from 1-4-1988. Explanation to this clause is read very carefully. “Due date” has been explained stating that “means the date by which the assessee is required as an employer to credit contribution to the employee’s account in the relevant fund under any Act, rule or order or notification issued thereunder or under any standing order, award, contract of service or otherwise”. Prior to the above clause was inserted to Section 36 giving statutory deductions of payment of tax under the provisions of the Act, Section 43B(b) was inserted by Finance Act, 1983 which came into force with effect from 1-4-1984. Therefore, again the provision of Section 43B(b) clearly provides that notwithstanding anything contained in other provisions of the Act including Section 36(1), Clause (va) of the Act, even prior to the insertion of that clause the assessee is entitled to get statutory benefit of deduction of payment of tax from the revenue. If that provision is read along with the first proviso of the said Section which was inserted by Finance Act, 1987 which came into effect from 1-4-1988, the letters numbered as Clause (a) or (c) or (d) or (e) or (f) are omitted from the above proviso and, therefore, deduction towards the employer’s contribution paid can be claimed by the assessee. The Explanation Clause (va) of Section 36 of the Income Tax Act further makes it very clear that the amount actually paid by the assessee on or before the due date applicable in this case at the time of submitting returns of income under Section 139 of the Act to the revenue in respect of the previous year can be claimed by the assessees for deduction out of their gross income. The abovesaid statutory provisions of the Income Tax Act abundantly make it clear that, the contention urged on behalf of the revenue that deduction from out of gross income for payment of tax at the time of submission of returns under Section 139 is permissible only if statutory liability of payment of PF or other contribution funds referred to in Clause (b) are paid within the due date under the respective statutory enactments by the assessees as contended by the learned Counsel for the revenue is not tenable in law and, therefore, the same cannot be accepted by us.

3 CALCUTTA HIGH COURT: August 8, 2018 PEERLESS GENERAL FINANCE AND INVESTMENT CO. VERSUS COMMISSIONER OF INCOME TAX, KOLKATA – 1 By using the expression liability incurred the legislature permitted the assessee to deposit the money with the return for the year in which the liability was incurred irrespective of the fact whether payment was made or not in that previous year.

In Commissioner of Income-Tax, Circle –I, Kolkata Vs. Vijay Shree Ltd. CALCUTTA HIGH COURT has allowed the deduction on provident fund contribution made beyond the due date for its deposit but made before the due date for filing the assessee’s return for the previous year when the liability was incurred.

4 RAJASTHAN HIGH COURT: [2014] 363 ITR 307: January 6, 2014 COMMISSIONER OF INCOME TAX, JAIPUR-II VERSUS JAIPUR VIDYUT VITRAN NIGAM LTD AND RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD 6. We have considered the arguments advanced by the learned counsel for the revenue and have also gone through the impugned orders. In our view no substantial question of law arise out of the orders of the ITAT as it is an admitted fact that the entire amount was deposited by the respondent-assessee at least on or before the due date of filing of the returns under Section 139 of the I.T. Act and being a concurrent finding of fact by the respective authorities and in the light of the judgments rendered by this Court in the case of Commissioner of Income Tax vs. M/s State Bank of Bikaner & Jaipur (D.B. Income Tax Appeal No.177/2011) so also Commissioner of Income Tax vs. Jaipur Vidyut Viaran Nigam Ltd. (D.B. Income Tax Appeal No.189/2011), of even date wherein it has been held that if the amount has been deposited on or before the due date of filing the return under Section 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under Section 43B of the I.T. Act or under Section 36(1)(va) of the Act. In fact in the above matters one of the party is same as in the present appeals, therefore, the issue is no more res-integra in the light of judgments of this Court referred to supra and, in our view, no substantial question of law arises out of the impugned orders of the ITAT, which may require attention of this Court.
5 RAJASTHAN HIGH COURT: [2014] 366 ITR 163: May 13, 2013 COMMISSIONER OF INCOME TAX, UDAIPUR VERSUS M/S. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LIMITED, UDAIPUR Payment made to PF in ESI fund – amount to be added u/s 36(1)(va) read with section 2(24)(x) or not – Held that:- The CIT(A) as well as Tribunal was rightly of the view that where the payments on account of contribution to the provident fund, employees’ State insurance, etc., are made within the due date of filing the return, such deductions are allowable – the provident fund contribution and the employees’ State insurance was deposited before the due date of filing the return – Following the decision in CIT v. AIMIL Ltd. [DELHI HIGH COURT] – if the employees’ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Funds Act as well as the Employees’ State Insurance Act.
6 RAJASTHAN HIGH COURT [2014] 363 ITR 70: January 6, 2014 COMMISSIONER OF INCOME TAX VERSUS M/S. STATE BANK OF BIKANER & JAIPUR AND JAIPUR VIDYUT VITARAN NIGAM LTD. Relying upon Allied Motors (P) Ltd. vs. CIT [Supreme Court] – the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues – The amount actually paid by the assessee on or before the due date u/s 139(1) can be claimed by the assessee for deduction out of their gross total income – Sec.43B starts with a notwithstanding clause& would thus override Sec.36(1)(va). Thus, where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before the date u/s 139(1) cannot be disallowed u/s 43B or u/s 36(1)(va) of the IT Act
7 RAJASTHAN HIGH COURT: August 4, 2016 COMMISSIONER OF INCOME TAX, JAIPUR-2 VERSUS M/S. RAJASTHAN STATE BEVERAGES CORPN. LTD. Deduction of claim on account of Provident Fund (PF) and ESI. The court allowed the claim of the assessee, in so far as payment of PF & ESI etc. is concerned, on the finding of fact that the amounts in question were deposited on or before the due date of furnishing of the return of income and taking in consideration judgment of this Court in Commissioner of Income Tax Vs. State Bank of Bikaner & Jaipur and Commissioner of Income Tax Vs. Jaipur Vidyut Vitaran Nigam Ltd. (RAJASTHAN HIGH COURT).
8 BOMBAY HIGH COURT: [2014] 368 ITR 749 (Bom): October 14, 2014 THE COMMISSIONER OF INCOME TAX VERSUS GHATGE PATIL TRANSPORTS LTD. The employer assessee would be entitled to deduction only if the contribution to the employee’s welfare fund stood credited on or before the due date and not otherwise – following the decision in Commissioner of Income Tax V/s. Alom Extrusions Ltd. [SUPREME COURT] – both employees’ and employer’s contributions are covered under the amendment to Section 43B of I.T. Act – the Tribunal was right in holding that payments are subject to benefits of Section 43B.
9 DELHI HIGH COURT: [2010] 321 ITR 508 (Delhi): December 23, 2009 COMMISSIONER OF INCOME TAX VERSUS AIMIL LIMITED, NIRMALA SWAMI, SPEARHEAD DIGITAL STUDIO, M/S. NET 4 INDIA LTD., MODIPON LTD., & M/S. EKTA AGRO INDUSTRIES LTD., If the employees’ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement.
10 SUPREME COURT: [2009] 319 ITR 306 (SC): November 25, 2009 COMMISSIONER OF INCOME TAX VERSUS M/S. ALOM EXTRUSIONS LIMITED Amendment to section 43B – omission [deletion] of the second proviso to Section 43-B – whether retrospective in nature – regarding restriction of deduction in respect of any sum payable by an employer by way ofcontributiontoprovident fund/superannuation fund or any other fund for the welfare of employees, unless it stood paid within the specified due date – held that – the second proviso resulted in implementation problems, which have been mentioned hereinabove, and which resulted in the enactment of Finance Act, 2003, deleting the second proviso and bringing about uniformity in the first proviso by equating tax, duty, cess and fee with contributions to welfare funds. Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only with effect from 1st April, 2004, would become curative in nature, hence, it would apply retrospectively with effect from 1st April, 1988 – Decision in Allied Motors (P) Limited vs. Commissioner of Income Tax, SUPREME Court], followed.
11 SUPREME COURT  [1997] 224 ITR 677 (SC) .- March 10, 1997 ALLIED MOTORS PRIVATE LIMITED VERSUS COMMISSIONER OF INCOME-TAX Assessee’s claim that the first proviso to section 43B by the Finance Act, 1987 was applicable retrospectively, is accepted – sales-tax collected by the assessee and paid after the end of the relevant previous, but within the time allowed, is to be allowed u/s 43B:
12 SC ORDER: [2009] 313 ITR (St.) 1 : March 7, 2007 CIT VERSUS VINAY CEMENT LTD. Claim u/s 43B – Contribution to provident fund – Held that:- assessee was entitled to claim the benefit in Sec.43-B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return.
13 SC ORDER: July 4, 2017 PRINCIPAL COMMISSIONER OF INCOME-TAX, JAIPUR VERSUS M/S RAJASTHAN STATE BEVERAGES CORPN. LTD Deduction of claim on account of Provident Fund (PF) and ESI. The court allowed the claim of the assessee, in so far as payment of PF & ESI etc. is concerned, on the finding of fact that the amounts in question were deposited on or before the due date of furnishing of the return of income and taking in consideration judgment of this Court in Commissioner of Income Tax Vs. State Bank of Bikaner & Jaipur and Commissioner of Income Tax Vs. Jaipur Vidyut Vitaran Nigam Ltd. (RAJASTHAN HIGH COURT).
14 GAUHATI HIGH COURT: [2006] 284 ITR 619: June 26, 2006 COMMISSIONER OF INCOME-TAX VERSUS GEORGE WILLIAMSON (ASSAM) LIMITED. Deposit of contributions made towards provident fund, etc., after the close of the accounting period but before the due date for filling of the return of income, the assessees are entitled to relief under section 43B(b) –

The contributions towards provident fund, etc., paid before the filing of the return by the assessees are entitled for the deduction

15 PATNA HIGH COURT: [2017] 393 ITR 386 March 16, 2016 M/S BIHAR STATE WAREHOUSING CORPORATION LTD. VERSUS COMMISSIONER OF INCOME TAX-1, DY. COMMISSIONER OF INCOME TAX In view of the proposition laid down by the Supreme Court in the case of CIT Vs. Vinay Cements Limited the admitted position being that the aforesaid amounts were credited after the due dates of payment under the relevant Acts but much before the date of filing of the return under the Income Tax Act, the assessee would clearly be entitled to the deletion of the addition.
16 PATNA HIGH COURT: March 31, 2015 COMMISSIONER OF INCOME TAX-1, PATNA, ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-II, PATNA VERSUS ALKEN LABORATORIES LTD, EXHIBITION ROAD, PATNA Delayed payment of employer’s contribution under Section 43B the tribunal has relied upon a decision of the Supreme Court in the case of CIT Vs. Vinay Cements Limited which decision has been reiterated in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd.: (SUPREME COURT). –

 

17 PUNJAB AND HARYANA HIGH COURT September 21, 2015 COMMISSIONER OF INCOME TAX, FARIDABAD VERSUS M/S LAKHANI RUBBER UDYOG P. LIMITED Addition made on account of late deposit of employees’ contribution to PF – ITAT deleted the addition – Held that:- Issue covered against the revenue by judgment of the Apex Court in Commissioner of Income Tax vs. Alom Extrusions Limited, (SUPREME COURT)
18 Commissioner of Income-tax, Shimla Vs NipsoPolyfabriks Ltd[2013] 350 ITR 327 “The deletion of the second proviso to section 43B which specifically made a reference to section 36(l)(va) was curative in nature and, hence, would apply with retrospective effect from April 1, 1988. The second proviso to section 43B(b) specifically referred to the due date under section 36(l)(va) of the Act and as such, it cannot be urged that the provisions of section 43B and section 36(1)(va) should not be read together. The law was enacted to ensure that the payment of the contributions towards the provident funds, the ESI funds or other such welfare schemes must be made before furnishing the return of income under sub-section (1) of section 139. On a conjoint reading of section 36(1)(va) and section 43B it is obvious that earlier section 43B made reference to the due date as prescribed under section 36(1)(va). There was a conflict between the first and the second provisos and the second proviso was deleted. The benefit of this amendment must be extended to the employees’ contribution also.”

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Qualification: LL.B / Advocate
Company: S.K. Jain and Co.
Location: Faridabad, Haryana, India
Member Since: 16 May 2019 | Total Posts: 102
I am S.K.Jain , Tax Consultant cum Advocate practising in Income Tax , GST , Company Matters . The name of the concern is S.K. Jain and Co. and I am prop. of this concern . I am in practice for the last 30 years . Professionals and non professional can feel free to contact me on mail . My mail ID is View Full Profile

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