Parixit Industries, Ahmedabad v. The ACIT.,(OSD) Range-5,, Ahmedabad

ITA 1308/AHD/2010 | 2006-2007
Pronouncement Date: 07-01-2011 | Result: Allowed

Appeal Details

RSA Number 130820514 RSA 2010
Assessee PAN AABCP8985D
Bench Ahmedabad
Appeal Number ITA 1308/AHD/2010
Duration Of Justice 8 month(s) 11 day(s)
Appellant Parixit Industries, Ahmedabad
Respondent The ACIT.,(OSD) Range-5,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 07-01-2011
Date Of Final Hearing 07-01-2011
Next Hearing Date 07-01-2011
Assessment Year 2006-2007
Appeal Filed On 26-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH B BB B BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T.K.SHARMA T.K.SHARMA T.K.SHARMA T.K.SHARMA JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER AND AND AND AND SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER DATE OF HEARING:7-1-2011 DRAFTED ON: 7-1 -11 ITA NO. 1308 /AHD/ 2010 ASSESSMENT YEAR : 2006-07 PARIXIT INDUSTRIES LTD. PLOT NO.4912 PHASE-IV GIDC VATVA AHMEDABAD. VS. ASSISTANT COMMISSIONER OF INCOME TAX(OSD) RANGE-5 C.U.SHAH BUILDING ASHRAM ROAD AHMEDABAD. PAN/GIR NO. : AABCP 8985 D (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SH RI M. G. PATEL. RESPONDENT BY: SHRI K. MADHUSUDAN SR. D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XI AHMEDABAD DATED 5-3-2010. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XI AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY CONFIRMING THE DISA LLOWANCE OF `.3 03 213/- IN RESPECT OF PROVIDENT FUND AND ESIC PAYMENTS AFTER I NVOKING THE PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT 1961 THOUGH PA YMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN. 3. THE BRIEF FACTS OF THE CASE ARE THAT ACCORDING T O THE LEARNED ASSESSING OFFICER THE ASSESSEE HAS NOT DEPOSITED TH E AMOUNT OF `.3 03 213/- WITHIN THE STIPULATED DATE TO THE ACCOUNTS OF PF AN D ESI. HE THEREFORE DISALLOWED DEDUCTION FOR `.3 03 213/-ON ACCOUNT OF PAYMENTS MADE TO PF AND ESI. 4. IN APPEAL THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) OBSERVED THAT THE IMPUGNED AMOUNT CONSISTS OF EMPLO YEES CONTRIBUTION TO - 2 - PF `.2 78 768/- AND ESIC `.24 445/-. THE SAID AMOUN TS WERE DEPOSITED AFTER THE STIPULATED DATES. SECTION 43B(B) SPEAKS ONLY O F EMPLOYERS CONTRIBUTION AND NOT OF EMPLOYEES CONTRIBUTION. THE LATER IS GO VERNED BY SECTION 36(1)(VA).THEREFORE DELETION OF PROVISO TO SECTIO N 43B AND THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE HAVE NO BEARING ON THE ISSUE UNDER CONSIDERATION AND DISMISS THE GROUND OF APPEAL OF T HE ASSESSEE. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. AL OM EXTRUSIONS LTD. 319 ITR-306. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED W ITH THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIV E OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE LEARNED ASSESSING OFFICER DISALLOWED DEDUCTION FOR EMPLOYEE S CONTRIBUTION TO PF `.2 78 768/- AND ESIC `.24 445/- ON THE GROUND THAT THE PAYMENTS WERE NOT ON THE STIPULATED DUE DATES PRESCRIBED UNDER THE RE SPECTIVE ACTS. IN APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CO NFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER. WE FIND THAT THE HON BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS (SUPRA) HELD AS UNDER:- WE FIND NO MERIT IN THESE CIVIL APPEALS FILED BY T HE DEPARTMENT FOR THE FOLLOWING REASONS : FIRSTLY AS STATED ABOVE SECTI ON 43B (MAIN SECTION) WHICH STOOD INSERTED BY THE FINANCE ACT 1983 WITH EFFECT FROM APRIL 1 1984 EXPRESSLY COMMENCES WITH A NON OBSTANTE CLAUS E THE UNDERLYING OBJECT BEING TO DISALLOW DEDUCTIONS CLAIMED MERELY BY MAKING A BOOK ENTRY BASED ON THE MERCANTILE SYSTEM OF ACCOUNTING. AT THE SAME TIME SECTION 43B (MAIN SECTION) MADE IT MANDATORY FOR TH E DEPARTMENT TO GRANT DEDUC-TION IN COMPUTING THE INCOME UNDER SECT ION 28 IN THE YEAR IN WHICH TAX DUTY CESS ETC. IS ACTUALLY PAID. HOWE VER PARLIAMENT TOOK COGNISANCE OF THE FACT THAT THE ACCOUNTING YEAR OF A COMPANY DID NOT ALWAYS TALLY WITH THE DUE DATES UNDER THE PROVIDENT FUND ACT MUNICIPAL CORPORATION ACT (OCTROI) AND OTHER TAX LAWS. THEREF ORE BY WAY OF THE FIRST PROVISO AN INCEN-TIVE/RELAXATION WAS SOUGHT TO BE GIVEN IN RESPECT OF TAX DUTY CESS OR FEE BY EXPLICITLY STATING THAT IF SUC H TAX DUTY CESS OR FEE IS PAID BEFORE THE DATE OF FILING OF THE RETURN UNDER THE INCOME-TAX ACT (DUE - 3 - DATE) THE ASSESSEE(S) THEN WOULD BE ENTITLED TO DE DUCTION. HOWEVER THIS RELAXATION/INCENTIVE WAS RESTRICTED ONLY TO TAX DU TY CESS AND FEE. IT DID NOT APPLY TO CONTRIBUTIONS TO LABOUR WELFARE FUNDS. THE REASON APPEARS TO BE THAT THE EMPLOYER(S) SHOULD NOT SIT ON THE COLLE CTED CONTRIBUTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTFUL BENEFITS UNDER SOCIAL WELFARE LEGISLATIONS BY DELAYING PAYMENT OF CONTRIBUTIONS T O THE WELFARE FUNDS. HOWEVER AS STATED ABOVE THE SECOND PROVISO RESULT ED IN IMPLEMENTATION PROBLEMS WHICH HAVE BEEN MENTIONED HEREINABOVE AND WHICH RESULTED IN THE ENACTMENT OF THE FINANCE ACT 2003 DELETING THE SECOND PROVISO AND BRINGING ABOUT UNIFORMITY IN THE FIRST PROVISO BY EQUATING TAX DUTY CESS AND FEE WITH CONTRIBUTION S TO WELFARE FUNDS. ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PROVISO THEN IN OUR VIEW THE FINANCE ACT 2003 WHICH IS MADE APPLICAB LE BY PARLIAMENT ONLY WITH EFFECT FROM APRIL 1 2004 WOULD BECOME CURATI VE IN NATURE HENCE IT WOULD APPLY RETROSPECTIVELY WITH EFFECT FROM APRI L 1 1988. SECONDLY IT MAY BE NOTED THAT IN THE CASE OF ALLIED MOTORS P. LTD. V. CIT REPORTED IN [1997] 224 ITR 677 (SC) THE SCHEME OF SECTION 43B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE THE QUESTION WHICH AROSE FOR DETERMINATION WAS WHETHER SALES TAX COLLECTED BY THE ASSESSEE AN D PAID AFTER THE END OF THE RELEVANT PREVIOUS YEAR BUT WITHIN THE TIME A LLOWED UNDER THE RELEVANT SALES TAX LAW SHOULD BE DISALLOWED UNDER S ECTION 43B OF THE ACT WHILE COMPUTING THE BUSINESS INCOME OF THE PREVIOUS YEAR ? THAT WAS A CASE WHICH RELATED TO THE ASSESSMENT YEAR 1984-85. THE RELEVANT ACCOUNTING PERIOD ENDED ON JUNE 30 1983. THE INCOM E-TAX OFFICER DIS- ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE WHICH WAS ON ACCOUNT OF SALES TAX COLLECTED BY THE ASSESSEE FOR THE LAST QU ARTER OF THE RELEVANT ACCOUNTING YEAR. THE DEDUCTION WAS DISALLOWED UNDER SECTION 43B WHICH AS STATED ABOVE WAS INSERTED WITH EFFECT FROM APRI L 1 1984. IT IS ALSO RELEVANT TO NOTE THAT THE FIRST PROVISO WHICH CAME INTO FORCE WITH EFFECT FROM APRIL 1 1988 WAS NOT ON THE STATUTE BOOK WHE N THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIED MOTORS P. LTD. [199 7] 224 ITR 677. HOW- EVER THE ASSESSEE CONTENDED THAT EVEN THOUGH THE F IRST PROVISO CAME TO BE INSERTED WITH EFFECT FROM APRIL 1 1988 IT WAS ENTITLED TO THE BENEFIT OF THAT PROVISO BECAUSE IT OPERATED RETROSPECTIVELY FR OM APRIL 1 1984 WHEN SECTION 43B STOOD INSERTED. THIS IS HOW THE QUESTIO N OF RETROSPECTIVITY AROSE IN ALLIED MOTORS P. LTD. [1997] 224 ITR 677. THIS COURT IN ALLIED MOTORS P. LTD. [1997] 224 ITR 677 HELD THAT WHEN A PROVISO IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECT ION WORKABLE A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE S ECTION AND WHICH PROVISO IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION IT COULD BE READ AS RETR OSPECTIVE IN OPERATION PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHO LE. ACCORDINGLY THIS COURT IN ALLIED MOTORS P. LTD. [1997] 224 ITR 677 HELD THAT THE FIRST PROVISO WAS CURATIVE IN NATURE HENCE RETROSPECTIV E IN OPERATION WITH EFFECT FROM APRIL 1 1988. IT IS IMPORTANT TO NOTE ONCE AGAIN THAT BY THE FINANCE ACT 2003 NOT ONLY THE SECOND PROVISO IS D ELETED BUT EVEN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRINGING A BOUT UNIFORMITY IN TAX DUTY CESS AND FEE ON THE ONE HAND VIS-A-VIS CONTR IBUTIONS TO WELFARE FUNDS OF EMPLOYEE(S) ON THE OTHER. THIS IS ONE MORE REASON WHY WE HOLD THAT THE FINANCE ACT 2003 IS RETROSPECTIVE IN OPE RATION. MOREOVER THE JUDGMENT IN ALLIED MOTORS P. LTD. (SUPRA) IS DELIVE RED BY A BENCH OF THREE LEARNED JUDGES WHICH IS BINDING ON US. ACCORDINGLY WE HOLD THAT THE - 4 - FINANCE ACT 2003 WILL OPERATE RETROSPECTIVELY WIT H EFFECT FROM APRIL 1 1988 (WHEN THE FIRST PROVISO STOOD INSERTED). LASTL Y WE MAY POINT OUT THE HARDSHIP AND THE INVIDIOUS DISCRIMINATION WHICH WOU LD BE CAUSED TO THE ASSESSEE(S) IF THE CONTENTION OF THE DEPART-MENT IS TO BE ACCEPTED THAT THE FINANCE ACT 2003 TO THE ABOVE EXTENT OPERATE D PROSPECTIVELY. TAKE AN EXAMPLE-IN THE PRESENT CASE THE RESPONDENTS HAV E 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 IN COME-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 TIM ES. 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 D EDUCTION UNDER SECTION 43B OF THE ACT FOR ALL TIMES. THEY WOULD LO SE THE BENEFIT OF DEDUCTION EVEN IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE CON- TRIBUTIONS TO THE WELFARE FUNDS WHEREAS A DEFAULTE R WHO FAILS TO PAY THE CONTRIBUTION TO THE WELFARE FUND RIGHT UP TO APRIL 1 2004 AND WHO PAYS THE AFTER APRIL 1 2004 WOULD GET THE BENEFIT OF D EDUCTION UNDER SECTION 43B OF THE ACT. IN OUR VIEW THEREFORE THE FINANCE ACT 2003 TO THE EXTENT INDICATED ABOVE SHOULD BE READ AS RETROSPEC TIVE. IT WOULD THEREFORE OPERATE FROM APRIL 1 1988 WHEN THE FIR ST PROVISO WAS INTRODUCED. IT IS TRUE THAT PARLIAMENT HAS EXPLICIT LY STATED THAT THE FINANCE ACT 2003 WILL OPERATE WITH EFFECT FROM A PRIL 1 2004. HOWEVER THE MATTER BEFORE US INVOLVES THE PRINCIPLE OF CON STRUCTION TO BE PLACED ON THE PROVISIONS OF THE FINANCE ACT 2003. BEFOR E CONCLUDING WE EXTRACT HEREINBELOW THE RELEVANT OBSERVATIONS OF T HIS COURT IN THE CASE OF CIT V. J. H. GOTLA REPORTED IN [1985] 156 ITR 323 WHICH READS AS UNDER (PAGE 339) : ' . . . WE SHOULD FIND OUT THE INTENTION FROM THE LANGUAGE USED BY THE LEGISLATURE AND IF STRICT LITERAL CONSTRUCTION LEAD S TO AN ABSURD RESULT I.E. A RESULT NOT INTENDED TO BE SUBSERVED BY THE OBJECT OF THE LEGISLATION FOUND IN THE MANNER INDICATED BEFORE THEN IF ANOTH ER CONSTRUCTION IS POSSIBLE APART FROM STRICT LITERAL CONSTRUCTION TH EN THAT CONSTRUCTION SHOULD BE PREFERRED TO THE STRICT LITERAL CONSTRUCT ION. THOUGH EQUITY AND TAXATION ARE OFTEN STRANGERS ATTEMPTS SHOULD BE M ADE THAT THESE DO NOT REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE THEN SUCH CONSTRUCTION SHOULD BE PREFER RED TO THE LITERAL CONSTRUCTION.' FOR THE AFORESTATED REASONS WE HO LD THAT THE FINANCE ACT 2003 TO THE EXTENT INDICATED ABOVE IS CURAT IVE IN NATURE HENCE IT IS RETROSPECTIVE AND IT WOULD OPERATE WITH EFFECT FROM APRIL 1 1988 (WHEN THE FIRST PROVISO CAME TO BE INSERTED). FOR THE ABOVE REASONS WE FIND NO MERIT IN THIS BATCH OF CIVIL APPEALS FILED BY THE DEPARTMENT WHICH ARE HEREBY DISMISSED WITH NO ORDER AS TO COSTS. 8. THE HONBLE DELHI HIGH COURT IN THE CASE OF COMM ISSIONER OF INCOME-TAX V. AIMIL LTD. 321 ITR 306 (DEL.) HAS HELD AS UNDER: - THE CASE RELATES TO THE ASSESSMENT YEAR 2002-03. THE RESPONDENT- ASSESSEE HAD FILED ITS RETURN ON OCTOBER 30 2002 DECLARING INCOME AT RS.7 95 430. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HAD DEPOSITED THE EMPL OYERS' CONTRIBUTION AS WELL AS THE EMPLOYEES' CONTRIBUTION TOWARDS PROV IDENT FUND AND ESI - 5 - AFTER THE DUE DATE AS PRESCRIBED UNDER THE RELEVAN T ACTS/RULES. ACCORDINGLY HE MADE ADDITION OF RS. 42 58 574 BEIN G THE EMPLOYEES' CONTRIBUTION UNDER SECTION 36(1)(VA) OF THE ACT AND RS. 30 68 583 BEING THE EMPLOYERS' CONTRIBUTION UNDER SECTION 43B OF TH E ACT. FELT AGGRIEVED BY THIS ASSESSMENT ORDER THE ASSESSEE PREFERRED AP PEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) WHO DECIDED TH E SAME VIDE ORDERS DATED JULY 15 2005. THOUGH THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE T HAT IF THE PAYMENT IS MADE BEFORE THE DUE DATE OF FILING OF RETURN NO DI SALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B AS A MENDED VIDE FINANCE ACT 2003 HE STILL CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT NO DOCUMENTARY PROOF WAS GIVEN T O SUPPORT THAT PAYMENT WAS IN FACT MADE BY THE ASSESSEE. THE ASSES SEE FILED AN APPLICATION UNDER SECTION 154 OF THE ACT BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) FOR RECTIFICATION OF THE MISTA KE. AFTER HAVING SATISFIED THAT PAYMENT HAD IN FACT BEEN MADE THE COMMISSIONER OF INCOME-TAX (APPEALS) RECTIFIED THE MISTAKE AND DELE TED THE ADDITION BY HOLDING THAT THE ASSESSEE HAD MADE THE PAYMENT BEFO RE THE DUE DATE OF FILING OF THE RETURN WHICH WAS A FACT APPARENT FRO M THE RECORD. IT WAS NOW THE TURN OF THE REVENUE TO FEEL AGITATED BY THESE ORDERS AND THEREFORE THE REVENUE APPROACHED THE INCOME-TAX AP PELLATE TRIBUNAL (ITAT) CHALLENGING THE ORDERS OF THE COMMISSIONER O F INCOME-TAX (APPEALS). THE DEPARTMENT HAS HOWEVER REMAINED UN SUCCESSFUL AS THE APPEAL PREFERRED BY THE DEPARTMENT IS DISMISSED BY THE INCOME-TAX APPELLATE TRIBUNAL VIDE ITS IMPUGNED DECISION DATED DECEMBER 31 2007 WHICH IS THE SUBJECT-MATTER OF APPEAL BEFORE US. PERUSAL OF THE ORDER OF THE TRIBUNAL WOULD SHOW THA T IT HAS RELIED UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CI T V. VINAY CEMENT LTD. [2009] 313 ITR (ST.) 1 (SC) ; 213 CTR 268 TO SUPPORT ITS DECISION TO THE EFFECT THAT IF THE EMPLOYERS' AS WELL AS EMPLOY EES' CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI IS PAID BEFORE THE D UE DATE OF FILING OF RETURN NO DISALLOWANCE CAN BE MADE BY THE ASSESSIN G OFFICER. IN SOME OTHER APPEALS PREFERRED BY THE ASSESSEES T HE INCOME-TAX APPEL- LATE TRIBUNAL HAS TAKEN A CONTRARY VIEW AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICERS. UNDER THESE CIRCUMSTANCES ALL THESE APPEALS WERE ADMITTED AND HEARD ON THE FOLLOWING QUESTION O F LAW : 'WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS CORR ECT IN LAW IN DELETING THE ADDITION RELATING TO THE EMPLOYEES' CO NTRIBUTION TOWARDS PROVIDENT FUND AND ESI MADE BY THE ASSESSING OFFICE R UNDER SECTION 36(1)(VA) OF THE INCOME-TAX ACT 1961 ?' SECTION 36 OF THE ACT DEALS WITH CERTAIN DEDUCTIONS WHICH SHALL BE ALLOWED IN RESPECT OF MATTERS DEALT WITH THEREIN I N COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THE ACT. DIFFERENT TYP ES OF DEDUCTIONS ARE PRO- VIDED THEREIN IN VARIOUS CLAUSES OF SECTION 36. CLA USE (IV) OF SUB-SECTION (1) DEALS WITH DEDUCTIONS ON ACCOUNT OF CONTRIBUTIO N TOWARDS A RECOGNIZED PROVIDENT FUND OR AN APPROVED SUPERANNUA TION FUND MADE BY THE ASSESSEE AS AN EMPLOYER SUBJECT TO CERTAIN LIM ITS AND ALSO SUBJECT TO - 6 - CERTAIN CONDITIONS AS THE CENTRAL BOARD OF DIRECT T AXES MAY THINK FIT TO SPECIFY. CLAUSE (V) OF SUB-SECTION (1) OF SECTION 3 6 ENABLES THE ASSESSEE TO SEEK DEDUCTION IN RESPECT OF SUM PAID BY IT AS A N EMPLOYER BY WAY OF CONTRIBUTION TOWARDS AN APPROVED GRATUITY FUND CREA TED BY HIM FOR THE EXCLUSIVE BENEFIT OF HIS EMPLOYEES UNDER AN IRREVOC ABLE TRUST. THEN COMES CLAUSE (VA) WHICH DEALS ABOUT EMPLOYEES' CONT RIBUTION IN THE PROVIDENT FUND AND ESI AND READS AS UNDER : '(VA) ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (2 4) OF SECTION 2 APPLY IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYE E'S ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. EXPLANATION.-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 I N THE RELEVANT FUND UNDER ANY ACT RULE ORDER OR NOTIFICATION ISSUED T HEREUNDER OR UNDER ANY STANDING ORDER AWARD CONTRACT OR SERVICE OR OTHER WISE ;' IT WOULD ALSO BE APPROPRIATE TO TAKE NOTE OF SECTIO N 43B OF THE ACT PRI- MARILY FOR THE REASON THAT IN VINAY CEMENT LTD. [20 09] 313 ITR (ST.) 1 (SC) IT WAS THIS PROVISION WHICH CAME UP FOR DISCUS SION BEFORE THE SUPREME COURT AND ALSO KEEPING IN VIEW THE CONTENTI ON OF LEARNED COUNSEL FOR THE REVENUE THAT THIS JUDGMENT WOULD BE OF NO AVAIL TO THE ASSESSEE WHILE DIS-CUSSING THE MATTER UNDER SECTION 36(1)(VA) OF THE ACT. SECTION 43B STIPU-LATES THAT CERTAIN DEDUCTIONS ARE TO BE GIVEN ONLY ON ACTUAL PAYMENT. CLAUSE (B) THEREOF TALKS ABOUT CONT RIBUTION BY THE ASSESSEE AS EMPLOYER TO ANY PROVIDENT FUND OR SUPER ANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES. SINCE WE ARE CONCERNED ONLY WITH CLAUSE (B) WE REPRODUCE THE SAME FOR CLEARER UNDERSTANDING : '43B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTH ER PROVISION OF THIS ACT A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF- . . . (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES OR . . . SHALL BE ALLOWED IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM ONLY IN COMPUT ING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM : PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON O R BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIO US YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WIT H SUCH RETURN.' - 7 - DURING THE PERIOD IN QUESTION WITH WHICH WE ARE CON CERNED SECTION 43B CONTAINED A SECOND PROVISO ALSO WHICH STANDS OMITT ED BY THE FINANCE ACT 2003 WITH EFFECT FROM APRIL 1 2004. SINCE T HIS PROVISION EXISTED AT THE RELEVANT TIME IT ALSO NEEDS TO BE REPRODUCED : 'PROVIDED FURTHER THAT NO DEDUCTION SHALL IN RESPE CT OF ANY SUM REFERRED TO IN CLAUSE (B) BE ALLOWED UNLESS SUCH SUM HAS AC TUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CL AUSE (VA) OF SUB- SECTION (1) OF SECTION 36 AND WHERE SUCH PAYMENT H AS BEEN MADE OTHERWISE THAN IN CASH THE SUM HAS BEEN REALIZED W ITHIN FIFTEEN DAYS FROM THE DUE DATE.' AS PER THE FIRST PROVISO IF THE PAYMENT IS ACTUALL Y MADE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FILING THE RETU RN IT WOULD BE ADMISSIBLE AS DEDUCTION. THUS THE 'DUE DATE' IS TH E DATE ON WHICH RETURN IS TO BE FILED. THE CASE OF THE REVENUE IS THAT FOR EMPLOYEES' CONTRIBUTION THE SECOND PROVISO WAS SPECIFICALLY I NCORPORATED AND IN THE PRESENT CASE AS WE ARE CONCERNED WITH NON-DEPOSIT OF THE EMPLOYEES' CONTRIBUTION TOWARDS PROVIDENT FUND AS WELL AS ESI CONTRIBUTION BY THE EMPLOYER ONLY THE SECOND PROVISO BE LOOKED INTO. WHAT IS SOUGHT TO BE ARGUED IS THAT DISTINCTION IS TO BE MADE WHILE TREAT- ING THE CASE RELATED TO THE EMPLOYERS' CONTRIBUTION ON THE ONE HAND AND THE EMPLOYEES' CONTRIBUTION ON THE OTHER HAND. IT W AS SUBMITTED THAT WHEN THE EMPLOYEES' CONTRIBUTION IS RECOVERED FROM THEIR SALARIES/WAGES THAT IS TRUST MONEY IN THE HANDS OF THE ASSESSEE. F OR THIS REASON RIGOURS OF LAW ARE PROVIDED BY TREATING IT AS INCOME WHEN T HE ASSESSEE RECEIVES THE EMPLOYEES' CONTRIBUTION AND ENABLING THE ASSESS EE TO CLAIM DEDUCTION ONLY ON ACTUAL PAYMENT BY DUE DATE SPECIF IED UNDER THE PROVISIONS. MS. PREM LATA BANSAL LEARNED COUNSEL FOR THE REVEN UE THUS ARGUED THAT THE SECOND PROVISO TO SECTION 43B AS IT STOOD AT THE RELEVANT TIME CLEARLY MENTIONED THAT DEDUCTION IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B) SHALL NOT BE ALLOWED UNLESS SUCH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUANCE OF CHEQUE OR DRAFT OR BY ANY OT HER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW C LAUSE (VA) OF SUB- SECTION (1) OF SECTION 36. THUS THE ASSESSEE WOULD EARN THE ENTITLEMENT ONLY IF THE ACTUAL PAYMENT IS MADE BEFORE THE DUE D ATE SPECIFIED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 OF THE ACT. AS PER THE SAID EXPLANATION 'DUE DATE' MEANS THE D ATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT THE EMPLOYEES' CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVA NT FUND UNDER ANY ACT RULES ORDER OR NOTIFICATION ISSUED THERE-UNDE R OR UNDER ANY STANDING ORDER AWARD CONTRACT OF SERVICE OR OTHERWISE. BEFORE WE DELVE INTO THIS DISCUSSION WE MAY TAKE N OTE OF SOME MORE PROVISIONS OF THE ACT. SECTION 2(24) OF THE ACT ENU MERATES DIFFERENT COM- PONENTS OF INCOME. IT INTER ALIA STIPULATES THAT INCOME INCLUDES ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONT RIBUTIONS TO ANY PRO- VIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE PROVI- - 8 - SIONS OF THE EMPLOYEES' STATE INSURANCE ACT 1948 ( 34 OF 1948) OR ANY OTHER FUND FOR THE WELFARE OF SUCH EMPLOYEES. IT IS CLEAR FROM THE ABOVE THAT AS SOON AS THE EMPLOYEES' CONTRIBUTION TOWARDS PROVIDENT FUND OR ESI IS RECEIVED BY THE ASSESSEE BY WAY OF DEDUCTION OR OTHERWISE FROM THE SALARY/WAGES OF THE EMPLOYEES IT WILL BE TREAT ED AS 'INCOME' AT THE HANDS OF THE ASSESSEE. IT CLEARLY FOLLOWS THEREFROM THAT IF THE ASSESSEE DOES NOT DEPOSIT THIS CONTRIBUTION WITH PROVIDENT F UND/ESI AUTHORITIES IT WILL BE TAXED AS INCOME AT THE HANDS OF THE ASSESSE E. HOWEVER ON MAKING DEPOSIT WITH THE CONCERNED AUTHORITIES THE ASSESSEE BECOMES ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF SECTI ON 36(1)(VA) OF THE ACT. SECTION 43B(B) HOWEVER STIPULATES THAT SUCH DEDUC TION WOULD BE PERMISSIBLE ONLY ON ACTUAL PAY-MENT. THIS IS THE SC HEME OF THE ACT FOR MAKING AN ASSESSEE ENTITLED TO GET DEDUCTION FROM I NCOME IN SO FAR AS THE EMPLOYEES' CONTRIBUTION IS CON-CERNED. IT IS IN THIS BACKDROP WE HAVE TO DETERMINE AS TO AT WHAT POINT OF TIME THIS PAYME NT IS TO BE ACTUALLY MADE. SINCE THE INCOME-TAX APPELLATE TRIBUNAL WHILE HOLDI NG THAT THE AMOUNT WOULD QUALIFY FOR DEDUCTION EVEN IF PAID AFTER THE DUE DATES PRESCRIBED UNDER THE PROVIDENT FUND/ESI ACT BUT BEFORE THE FIL ING OF THE INCOME-TAX RETURNS BY PLACING RELIANCE UPON THE SUPREME COURT JUDGMENT IN VINAY CEMENT [2009] 313 ITR (ST.) 1 AT THIS JUNCTURE WE TAKE NOTE OF THE DIS- CUSSION OF THE INCOME-TAX APPELLATE TRIBUNAL ON THI S ASPECT : '11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IN THE ASSESSMENT ORDER THE LEARNED ASSESSING OFFICER HAS CATEGORICALLY STATED THAT WHAT THE AMOU NT DUE WAS FOR WHICH MONTH IN RESPECT OF EPF FAMILY PENSION PF INSPECT ION CHARGES AND ESI DEPOSITS AND WHAT WERE THE DUE DATES FOR THESE DEPO SITS AND ON WHICH DATE THESE DEPOSITS WERE MADE. THE DATES OF DEPOSIT S ARE MENTIONED BETWEEN MAY 23 2001 TO 23RD APRIL 2002. THE LATEST PAYMENT IS MADE ON APRIL 23 2002 AND THE ASSESSEE BEING A LIMITED COMPANY HAD FILED ITS RETURN ON OCTOBER 20 2002 WHICH IS A DATE NOT BEYO ND THE DUE DATE OF FILING OF THE RETURN. THUS IT IS CLEAR BEYOND DOUB T THAT ALL THE PAYMENTS WHICH HAVE BEEN DISALLOWED WERE MADE MUCH EARLIER T O THE DUE DATE OF FILING OF THE RETURN. THE DISALLOWANCE IS NOT MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THERE IS NO PROOF OF MAKING SUCH PAYMENT BUT DISALLOWANCE IS MADE ONLY ON THE GROUND THAT THESE PAYMENTS HAVE BEEN MADE BEYOND THE DUE DATES OF MAKING THESE PAYMENTS UNDER THE RESPECTIVE STATUTE. THUS IT WAS NOT AN ISSUE THAT THE PAYMENTS WERE NOT MADE BY THE ASSESSEE ON THE DATES WHICH HAVE BEEN S TATED TO BE THE DATES OF DEPOSITS IN THE ASSESSMENT ORDER. IF SUCH IS A FACTUAL ASPECT THEN ACCORDING TO THE LATEST POSITION OF LAW CLARIFIED B Y THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. [2009 ] 313 ITR (ST.) 1 THAT NO DISALLOWANCE COULD BE MADE IF THE PAYMENTS ARE M ADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. THIS ISSUE CAM E BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LT D. [2009] 313 ITR (ST.) 1 WHICH WAS A SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT AGAINST THE HIGH COURT ORDER OF JUNE 26 2006 IN I. T. A. N O. 2 OF 2005 AND I. T. A. NO. 56 OF 2003 AND I. T. A. NO. 80 OF 2003 OF THE H IGH COURT OF GUWAHATI ASSAM AND IT IS ORDER DATED MARCH 7 2007. A COPY O F THE SAID ORDER IS - 9 - PLACED ON RECORD. THE OBSERVATIONS OF THEIR LORDSHI PS ON THE ISSUE ARE AS UNDER : IN THE PRESENT CASE WE ARE CONCERNED WITH THE LAW A S IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B. IN THE CIRCUMSTANCES THE ASSESSEE WAS ENTITLED TO CLAIM THE BENEFIT IN SECTION 43B FOR TH AT PERIOD PARTICULARLY IN VIEW OF THE FACT THAT HE HAS CONTRIBUTED TO PROVIDE NT FUND BEFORE FILING OF THE RETURN. THE SPECIAL LEAVE PETITION IS DISMISSED'.' IT IS CLEAR FROM THE ABOVE THAT IN VINAY CEMENT LTD . [2009] 313 ITR (ST.) 1 (SC) THE SPECIAL LEAVE PETITION PREFERRED BY THE REVENUE AGAINST THE JUDGMENT OF THE GUWAHATI HIGH COURT WAS DISMISSED M AKING THE AFOREQUOTED OBSERVATIONS. THE REASONS ARE GIVEN AND THUS IT AMOUNTS TO AFFIRMATION OF THE VIEW TAKEN BY THE HIGH COURT OF GUWAHATI. WHEN WE KEEP THAT PROPOSITION IN MIND AND ALSO TAKE INTO CONSIDERATION VARIOUS JUDGMENTS WHERE VINAY CEMENT LTD. [2009] 31 3 ITR (ST.) 1 (SC) IS APPLIED AND FOLLOWED IT WILL NOT BE POSSIBLE TO AC CEPT THE CONTENTION OF THE REVENUE. IN CIT V. DHARMENDRA SHARMA [2008] 297 ITR 320 (DEL HI) THIS COURT SPECIFICALLY DEALT WITH THIS ISSUE AND RELYING UPON THE AFORESAID JUDGMENT OF THE GUWAHATI HIGH COURT AS AFFIRMED BY THE SUPR EME COURT IN VINAY CEMENT LTD. [2009] 313 ITR (ST.) 1 THE APPEAL OF T HE REVENUE WAS DISMISSED. MORE DETAILED DISCUSSION IS CONTAINED IN ANOTHER JUDGMENT OF THIS COURT IN CIT V. P. M. ELECTRONICS LTD. [2009] 313 ITR 161 (DELHI) (I.T.A. NO. 475 OF 2007 DECIDED ON NOVEMBER 3 2008). SPECI FIC QUESTIONS OF LAW WHICH WERE PROPOSED BY THE REVENUE IN THAT CASE WER E AS UNDER (PAGE 164) : '(A) WHETHER AMOUNTS PAID ON ACCOUNT OF PF/ESI AFTE R DUE DATE ARE ALLOWABLE IN VIEW OF SECTION 43B READ WITH SECTION 36(1)(VA) OF THE ACT ? (B) WHETHER THE DELETION OF THE SECOND PROVISO TO S ECTION 43B BY WAY OF AMENDMENT BY THE FINANCE ACT 2003 IS RETROSPECTIVE IN NATURE ?' THESE QUESTIONS WERE ANSWERED BY THE DIVISION BENCH IN THE FOLLOWING MANNER (PAGE 164) : '7. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENU E AS WELL AS THE ASSESSEE WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVES TO BE SUSTAINED AS IT IS NO LONGER RES INT EGRA IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 WHICH H AS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V . DHARMENDRA SHARMA [2008] 297 ITR 320. 8. DESPITE THE AFORESAID JUDGMENTS THE LEARNED COU NSEL FOR THE REVENUE HAS CONTENDED THAT IN VIEW OF THE JUDGMENT OF THE D IVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. SYNERGY FIN AN-CIAL EXCHANGE LTD. - 10 - [2007] 288 ITR 366 AND THAT OF THE DIVISION BENCH O F THE BOMBAY HIGH COURT IN THE CASE OF CIT V. PAMWI TISSUES LTD. [200 9] 313 ITR 137 THE ISSUE REQUIRES CONSIDERATION. ACCORDING TO US IN V IEW OF THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF VINAY CEM ENT LTD. [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 BY THE SUPREME CO URT BY A SPEAKING ORDER THE SUBMISSION OF LEARNED COUNSEL FOR THE RE VENUE HAS TO BE REJECTED AT THE VERY THRESHOLD. THE REASON FOR THE SAME IS AS FOLLOWS : 9. THE GAUHATI HIGH COURT IN THE CASE OF CIT V. GEO RGE WILLIAMSON (ASSAM) LTD. [2006] 284 ITR 619 DEALT WITH THE VERY SAME ISSUE. IN THE SAID JUDGMENT THE DIVISION BENCH OF THE GAUHATI HI GH COURT NOTED A CONTRARY VIEW TAKEN BY THE KERALA HIGH COURT IN THE CASE OF CIT V. SOUTH INDIA CORPORATION LTD. [2000] 242 ITR 114. AFTER NO TING THE SAID JUDGMENT THE FACT THAT THE AMENDMENTS HAD BEEN MADE TO THE P ROVISIONS OF SECTION 43B OF THE ACT BY VIRTUE OF THE FINANCE ACT 2003 WITH EFFECT FROM APRIL 1 2004 IT AGREED WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT BY VIRTUE OF THE OMISSION OF THE SECO ND PROVISO AND THE OMISSION OF CLAUSES (A) (C) (D) (E) AND (F) WITH OUT ANY SAVING CLAUSE WOULD MEAN THAT THE PROVISIONS WERE NEVER IN EXISTE NCE. FOR THIS PURPOSE IN THE SAID CASE THE ASSESSEE HAD PLACED RELIANCE ON THE JUDGMENT OF A CONSTITUTION BENCH OF THE SUPREME COU RT IN THE CASE OF KOLHAPUR CANESUGAR WORKS LTD. V. UNION OF INDIA [20 00] 2 SCC 536 AND RAYALA CORPORATION P. LTD. V. DIRECTOR OF ENFORCEME NT [1969] 2 SCC 412 AND GENERAL FINANCE CO. V. ASST. CIT [2002] 257 ITR 338 (SC). THE SAID SUBMISSIONS FOUND FAVOUR WITH THE DIVISION BENCH OF THE GAUHATI HIGH COURT AND RELYING ON EARLIER DECISIONS OF ITS OWN C OURT IN CIT V. ASSAM TRIBUNE [2002] 253 ITR 93 AND CIT V. BHARAT BAMBOO AND TIMBER SUPPLIERS [1996] 219 ITR 212 (GAUHATI) THE DIVISION BENCH DISMISSED THE APPEAL OF THE REVENUE. IT TRANSPIRES THAT THE AFORE SAID MATTER WAS TAKEN UP IN APPEAL ALONG WITH OTHER MATTERS INCLUDING VIN AY CEMENT LTD.'S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1. THE OR DER IN VINAY CEMENT LTD.'S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST .) 1 WAS PASSED BY THE SUPREME COURT ON MARCH 7 2007 WHEREIN IT OBSE RVED AS FOLLOWS : DELAY CONDONED. IN THE PRESENT CASE WE ARE CONCERNED WITH THE LAW AS IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B. IN THE CIRCUMSTANCES THE ASSESSEE WAS ENTITLED TO CLAIM THE BENEFIT IN SECTION 43B FOR TH AT PERIOD PARTICULARLY IN VIEW OF THE FACT THAT HE HAS CONTRIBUTED TO PROVIDE NT FUND BEFORE FILING OF THE RETURN. SPECIAL LEAVE PETITION IS DISMISSED.' 10. IN VIEW OF THE ABOVE IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AND WHIL E DOING SO THE SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFORE IT PERTAINS TO A PERIOD PRIOR TO THE AMENDMENT BROUGHT ABOUT IN SECTION 43B OF THE ACT. THE AFORESAID POSITION AS REGARDS T HE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO SECTION 43B HAS BEEN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA [ 2008] 297 ITR 320 (DELHI). APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 A DIVISION - 11 - BENCH OF THIS COURT DISMISSED THE APPEALS OF THE RE VENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. NEXUS C OMPUTER P. LTD. BY A JUDGMENT DATED AUGUST 18 2008 PASSED IN TAX CASE (A) NO. 1192 OF 2008 [2009] 313 ITR 144 (MAD) DISCUSSED THE IMPACT OF BOTH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. [2006] 284 ITR 619 (GAUHATI) AND VINAY CEMENT LTD.'S CASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 AS WEL L AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINA NCIAL EXCHANGE [2007] 288 ITR 366 (MAD). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF THE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON THE JUDG-MENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED V. STATE OF KERALA [2000] 2 45 ITR 360 (SC) ; 119 STC 505 AT PAGE 526 IN PARA-GRAPH 40 AND NOTED THE FOLLOWING OBSERVATIONS (PAGE 382) : IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKING ORDER I.E. GIVES REASONS FOR REFUSING THE GRANT OF LEAVE THEN THE O RDER HAS TWO IMPLI- CATIONS. FIRSTLY THE STATEMENT OF LAW CONTAINED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ARTICLE 141 OF THE CONSTITUTION. SECONDLY OTHER THAN THE D ECLARATION OF LAW WHATEVER IS STATED IN THE ORDER ARE THE FINDINGS RE CORDED BY THE SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS SUBSEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY. BUT THIS DOES NOT AMOUNT TO SAYING THAT THE ORDER OF TH E COURT TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF TH E SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR THAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUB-SEQUE NT PROCEEDINGS BETWEEN THE PARTIES.' 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COU RT IN KUNHAYAMMED [2000] 245 ITR 360 THE DIVISION BENCH O F THE MADRAS HIGH COURT IN THE CASE OF NEXUS COMPUTER (P.) LTD. T. C. A. NO. 1192 OF 2008 ([2009] 313 ITR 144 (MAD)) CAME TO THE CONCLUS ION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT LTD.'S C ASE [2007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 WOULD BIND THE HIGH CO URT AS IT WAS THE LAW DECLARED BY THE SUPREME COURT UNDER ARTICLE 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONI NG OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P.) LTD. T. C. A. NO. 1192 OF 2008 ([2009] 313 ITR 144 (MAD)). THE JUDICIAL DISCIPLINE REQUIRE S US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE [2 007] 213 CTR 268 ; [2009] 313 ITR (ST.) 1 AS ALSO THE VIEW OF THE BENCH OF THIS COURT IN DHARMENDRA SHARMA'S CASE [20 08] 297 ITR 320 (DELHI). 13. IN THESE CIRCUMSTANCES WE RESPECTFULLY DISAGRE E WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COUR T IN CIT V. PAMWI TISSUES LTD. [2008] 215 CTR 150 ; [2009] 313 ITR 13 7. - 12 - 14. IN THESE CIRCUMSTANCES INDICATED ABOVE WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSI DERATION IN THE PRESENT APPEAL. THE APPEAL IS THUS DISMISSED.' IT ALSO BECOMES CLEAR THAT DELETION OF THE SECOND P ROVISO IS TREATED AS RETROSPECTIVE IN NATURE AND WOULD NOT APPLY AT ALL. THE CASE IS TO BE GOVERNED WITH THE APPLICATION OF THE FIRST PROVISO. 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 PAYM ENT BUT CAN INCUR PENALTIES ALSO FOR WHICH SPECIFIC PROVISIONS ARE M ADE 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 TH E AFORESAID CONSEQUENCES. IN SO FAR AS THE INCOME-TAX ACT IS CO NCERNED THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE B EFORE THE RETURN IS FILED AS PER THE PRINCIPLE LAID DOWN BY THE SUPREM E COURT IN VINAY CEMENT [2009] 313 ITR (ST.) 1. WE THUS ANSWER THE QUESTION IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE. AS A CONSEQUENCE THE APPEALS FILED BY THE ASSESSEES STAND ALLOWED AND THOSE FILED BY THE REVENUE ARE DISMISSE D. NO COSTS. 9. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF HO NBLE SUPREME COURT AND HONBLE DELHI HIGH COURT WE SET ASIDE THE ORDERS O F THE LOWER AUTHORITIES AND REMAND THE MATER BACK TO THE FILE OF THE LEARNED AS SESSING OFFICER TO VERIFY IF PAYMENT OF EMPLOYEES CONTRIBUTION TO PF `.2 78 768 /- AND TO ESIC `.24 445/-IS MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INC OME UNDER SECTION139(1) OF THE ACT AND IF IT IS FOUND THAT THE PAYMENT HAS BEE N MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME BY THE ASSESSEE THEN TO ALLOW DEDUCTION FOR THE SAID AMOUNTS TO THE ASSESSEE. THUS THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF HEARI NG IN THE PRESENCE OF THE PARTIES ON 7 TH DAY OF JANUARY 2011. SD/- SD/- ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATED: AHMEDABAD 7 TH DAY OF JANUARY 2011. COMPILED AND COMPARED BY : PATKI - 13 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XI AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 07-01-2011 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 07-01-2011- ---- --------------- 3. DRAFT PROPOSED & PLACED 07-01-2011 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 07-01-2011 --------- ---------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 07-01-2011 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 07-01-2011 -------- ------------ 7. FILE SENT TO THE BENCH CLERK 12-01-2011 ----- --------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------