Income-Tax v. The Spectrum Consultants India Put

IN THB HIGH COURT OF KARNATAKA AT BENGALURU DATEBD THIS THE [th]DAY OF JANUARY 2015) PRESENT THER HON’BLE MR. JUSTICE N.KUMARAN 1 THER HON’BLE MR. JUSTICE B.VBEBRAPP I.T.A. NO.257/2009 BETWEEN : 1.|The Commissioner of Income-tax,C.R. Building, Queens Road,C.R. Building, Queens Road, Bangalore. 2.|The Income-Tax Officer, Wared-12(1), C.R.Building,Wared-12(1), C.R.Building, Queens Road, Bangalore. ...APPELLANTS (By Sri.K.V.Aravind, Adv.) AND :. M/s. Magus CustomersDialog Pvt. Ltd.,No.41, Christu Complex,Next Mandovi Motors,Lavelle Road,Bangalore — 560 OO1. ...RESPONDENT| (By Dr.R.B.Krishna, Adv.) . . . . -9O-. This I.T.A. is filed under Section ZJO0OA of thIncome Tax Act, 1961, arising out of order dated30.12.2008 passed in ITA No.11359/Bang/2008 prayingTO :. 3#4formulate the substantial questions of lawstated therein,stated therein, 3##4Allow the appeal and set-aside the orderpassed by the Income Tax Appellate Tribunal,Bangalore in I.T.A. No.1139/Bang/2008 dated30.12.2008 confirming the order of theAppellate Commissioner and confirm theorder passed by the Income Tax Officer, Ward-12(1), Bangalore, in the interest of justice andequity.passed by the Income Tax Appellate Tribunal,Bangalore in I.T.A. No.1139/Bang/2008 dated30.12.2008 confirming the order of theAppellate Commissioner and confirm theorder passed by the Income Tax Officer, Ward-12(1), Bangalore, in the interest of justice andequity. This I.T.A. coming on foradmission,this day,N.Kumar J., delivered the following: JUDGMENT The Revenue have preferred this appeal againstthe order passed by the Tribunal holding that even theemployees contribution made by the assessee on orbefore the due date for filing the return under Section 139(1) of the Income-tax Act would be eligible for thebenefit conferred under Section 43B(b) of the Act. | -3-. 2. The substantial questions of law that is raised in this appeal are as under: (1)Whether the Appellate Authorities were correctin holding that in view of the provisions ofSection 43B of the Act deduction in respect of)employees contributions made to PF and ESIbelatedly was an allowable deduction?in holding that in view of the provisions ofSection 43B of the Act deduction in respect of)employees contributions made to PF and ESIbelatedly was an allowable deduction? (2)Whether the Appellate Authorities were correctin applying Section 43B of the Act which was)applicable to employers contribution and failing|to apply Section 36(1)(va) and Section 2(24)(x)of|theActunderwhichtheemployeescontribution would become the income of theassessee at the end of the year if the same is)not deposited within the stipulated timerin applying Section 43B of the Act which was)applicable to employers contribution and failing|to apply Section 36(1)(va) and Section 2(24)(x)of|theActunderwhichtheemployeescontribution would become the income of theassessee at the end of the year if the same is)not deposited within the stipulated timer 3. This Court had an occasion to consider the said question of law in the case ofThe Commissioner of Income-tax Vs. The Spectrum Consultants India Put. Ltd.,decidedOT]=[th]December,920131n W.A.No.4077/2013where, aiter referring to Sections 29, 30and 31 of the Provident fund Act has held as under: 3. This Court had an occasion to consider the said question of law in the case ofThe Commissioner of Income-tax Vs. The Spectrum Consultants India Put. Ltd.,decidedOT]=[th]December,920131n W.A.No.4077/2013where, aiter referring to Sections 29, 30and 31 of the Provident fund Act has held as under: A reading of the aforesaid provisions makes itclear that the contributions payable by the|employer under the scheme shall be at the|rate of 10% of the basic wages, Dearness|Allowance. The contribution payable by theemployee shall be equal to the contribution|payable by the employer in respect of suchemployee. However, the employer shall, in|the first instance, pay both the contribution|payablebyhimselfLe.theemployer'scontribution as well as the employee’s|contribution and thereafter he is entitled to|recover by means of deduction from the|employee the contribution which he has paid|as employee’s contribution. Therefore, in law,the payment of contribution by the employer|to the fund under the scheme means both|employer'scontributionandemployee'scontribution.Whetherhedeductsthe|employee’s contribution from the salary or|not, in law, he is liable to pay the said|amount. Therefore, Section 2(24)(x) of the Act|makes|It|clearthatthe|employee’scontribution which the employer deducts from|his salary before it is paid into the fund, ts| treated as the income of the employer, and|the employer by contributing can get the|deduction. That payment must be made|within the due date te. the Que date!prescribed under Section 1359(1) of the Act.Because it was causing lot of problem as.discussed in the judgment of the Apex Court,on a representation made by the industry,|subsequent amendment was carried out to.mitigatethedifficultiescausedtotheemployer under Section 43B of the Act.Though such contributions are not paid within|the time prescribed under the relevant act, tfthose contributions are paid before the due|date prescribed under Section 139(1) of the|Act, the employer shall be entitled to thedeductions as provided under Section 36(1) ofthe Act. While extending such benefit, the|Parliament has not made any distinctionbetween the employee’s contribution and the|employer's contribution. It is for the simple|reason, under the provident fund scheme, an|employer has to pay both the contribution and|then recover from the salary of the employee. |Therefore, in view of the aforesaid judgment,| -6-. we do not find any substance in this appeal. |Therefore, the appeal is dismissed. 4. In that view of the matter, the substantial questions of law are answered in favour of the assessee and against the Revenue. There is no merit in thisappeal. Appeal standsdismissed Sd/-.JUDGE| Sd/-.JUDGE| SPS