Ashok Kumar v. The Income Tax Officer

ITA No. 362 of 2007 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Ashok Kumar Versus The Income Tax Officer ITA No. 362 of 2007 Date of Decision: 8.12.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Sandeep Goyal, Advocate for the appellant. Ms. Urvashi Dhugga, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.The appeal was admitted by this Court on December 3,2007 for determination of the following substantial questions of law:- “(i)Whether the omission of second proviso toSection 43B of the Income Tax Act, 1961 by FinanceAct, 2003 is declaratory and clarificatory and,therefore, retrospective in operation from the date itwas substituted by the Finance Act, 1989? (ii)Whether on the facts and circumstances of thecase, the learned ITAT is justified to set aside theorder of CIT(A), deleting the entire addition made bythe A.O.?” 2.The facts necessary for adjudication as pleaded in thepresent appeal are that the assessee is a labour contractor and isengaged in the profession of supply of labour to various companies. Hefiled his return for the assessment year 2003-04 declaring an income ofRs.3,38,550/-. He had debited in his Profit and Loss Account anamount of Rs.11,66,287/- on account of Provident Fund andRs.4,63,635/- on account of ESI paid. The Assessing Officer vide orderdated 30.1.2006 disallowed the claim of Rs.2,67,217/- andRs.3,85,694/- on the ground that these payments were not deductible inview of the provisions of Section 36(1)(va) and second proviso toSection 43B of the Income Tax Act, 1961. On appeal by the assesseebefore the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”], the CIT (A) vide order dated 30.3.2006 deleted the disallowancesrelying upon the amendment to Section 43B by the Finance Act, 2003,under which the second proviso was omitted. Against the order of theCIT(A), the department went in appeal before the Income Tax AppellateTribunal, Delhi Bench “B”, New Delhi, who vide order dated 23.3.2007set aside the order of the CIT(A) and restored that of the AssessingOfficer. Hence, the present appeal by the assessee. 3.We have heard learned counsel for the parties. 4.Learned counsel for the parties are ad-idem that in view ofthe pronouncement of the Hon'ble Supreme Court in Commissioner ofIncome Tax v. M/s Alom Extrusions Limited, 319 ITR 306 (SC) andof this Court in Income Tax Appeal No. 663 of 2005 (TheCommissioner of Income Tax, Patiala v. M/s Rai Agro Industries Ltd. Sangrur), decided on 30.11.2010,the substantial questions of law ITA No. 362 of 2007 -3- are to be answered in favour of the assessee and against the revenue. Ordered accordingly. 5.The appeal stands allowed. (AJAY KUMAR MITTAL) JUDGE December 8, 2010gbs (ADARSH KUMAR GOEL)JUDGE