I.t.a v. I.t.a

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY TUESDAY, THE 8TH DAY OF SEPTEMBER 2015/17TH BHADRA, 1937 ITA.No. 244 of 2014 () ----------------------- AGAINST THE ORDER IN ITA 8/2014 of I.T.A.TRIBUNAL, COCHIN BENCH DATED 09-05-2014 APPELLANT/APPELLANT/RESPONDENT/REVENUE: ----------------------------------------------------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADVS.SRI.P.K.R.MENON, SR.COUNSEL, GOI (TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: ---------------------------------------------------------------------------- M/S MERCHEM LIMITED, MALANKARA CENTRE, M.G.ROAD, KOCHI 682 035. BY ADVS. SRI.SAJI VARGHESE SMT.MARIAM MATHAI THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11-08-2015, THECOURT ON 08.09.2015 DELIVERED THE FOLLOWING: P.T.O. I.T.A.NO.244 OF 2014 APPENDIX APPELLANT'S ANNEXURES: ANNEXURE-ACOPY OF THE ASSESSMENT ORDER U/S.143(3) DATED 25.02.2013 PASSED BY THE ASSESSING OFFICER FOR AY 2010-11. ANNEXURE-BCOPY OF THE CIT(A)'S ORDER NO.ITA/49/R-I/E/CIT-II/2012-13 DATED23.10.2013. ANNEXURE-CCOPY OF THE ITAT'S ORDER ITA NO.8/COCH/2014 DATED 09.05.2014 FOR ASSESSMENT YEAR 2010-11. ANNEXURE-DTRUE COPY OF THE GUJARAT HIGH COURT JUDGMENT REPORTED IN (2014) 41 (TAXMAN)100. RESPONDENT'S ANNEXURES: NIL //TRUE COPY// P.S. TO JUDGE St/- ANTONY DOMINIC & SHAJI P. CHALY, JJ. -----------------------------------------------I.T.A. No.244 of 2014----------------------------------------------- Dated this the 8[th] day of September, 2015 C.R. JUDGMENT Shaji P. Chaly, J. This appeal is preferred by the Revenue against the orderof the Income Tax Appellate Tribunal, Cochin Bench in I.T.A.No.8/2014 dated 09.05.2014 for the assessment year 2010-11, by which the Tribunal has affirmed the order of the C.I.T(Appeals) and deleted an amount of Rs.34,41,659/- added bythe Assessing Officer under Sec.36(1)(va) r/w Sec.2(24)(x). 2.Brief facts necessary for the disposal of this appealare as follows: Respondent was engaged in the business of manufactureand sale of Rubber Chemicals. It had filed return of income forthe assessment year 2010-11, disclosing an income ofRs.9,92,16,240/-. The return was processed under Sec.143(1)of the Income Tax Act and scrutiny was conducted underSec.143(2) on 29.08.2011. It was found by the AssessingOfficer that remittance of employees' contribution to Provident I.T.A. No.244 of 2014 Fund and ESI has been delayed beyond the due date ofpayment prescribed under the respective Acts and thereforethe cumulative figure of all defaulted payments amounting toRs.34,41,659/- was proposed to be disallowed under Sec.36(1)(va) r/w Sec.2(24)(x) of the Income Tax Act, 1961 (for short,“the Act”). Thereupon, objections were invited and overrulingthe objections raised, Assessing Officer disallowed deduction ofthe aforesaid amounts under Sec.36(1)(va) r/w Sec.2(24)(x)of the Income Tax Act. 3.Aggrieved by the order of the Assessing Officer,Respondent took up the matter before the Appellate Authority,basically contending that the Assessing Officer was notjustified in disallowing the expenditure of employees'contribution invoking provisions of Sec.36(1)(va). It wasfurther contended that the ratio of the decision of the Hon'bleApex Court in the case of 'C.I.T. v. Alom Extrusions Ltd.'[(2009) 319 ITR 306 (SC)] was not followed by the AssessingOfficer. After evaluating the facts and circumstances,following the decision of the Hon'ble Apex Court in 'C.I.T. v.Vinay Cement Ltd.' [(2007) 213 CTR SC 268], the firstappellate authority held that contribution towards Provident I.T.A. No.244 of 2014 3.Aggrieved by the order of the Assessing Officer,Respondent took up the matter before the Appellate Authority,basically contending that the Assessing Officer was notjustified in disallowing the expenditure of employees'contribution invoking provisions of Sec.36(1)(va). It wasfurther contended that the ratio of the decision of the Hon'bleApex Court in the case of 'C.I.T. v. Alom Extrusions Ltd.'[(2009) 319 ITR 306 (SC)] was not followed by the AssessingOfficer. After evaluating the facts and circumstances,following the decision of the Hon'ble Apex Court in 'C.I.T. v.Vinay Cement Ltd.' [(2007) 213 CTR SC 268], the firstappellate authority held that contribution towards Provident I.T.A. No.244 of 2014 Fund and ESI were made before the due date of filing of returnand therefore the same are entitled for deduction underSec.43B of the Income Tax Act. Therefore the addition madeby the Assessing Officer in that regard was deleted. 4.Aggrieved by the order of the 1[st] AppellateAuthority, Revenue preferred appeal before the Tribunal.Tribunal affirmed the order of the 1[st] Appellate Authority andheld that the date of remittance of the contribution was withinthe due date for filing the return of income under Sec.139(1)of the Act for the assessment year under consideration. It wasfurther held that admittedly, the second proviso to Sec.43Bwas deleted and the entire sub-clauses under Sec.43B werebrought under Explanation (1) to Sec.43B and therefore allpayments including employee's and employer's contribution toProvident Fund and ESI paid on or before the due date forfiling the return of income under Sec.139(1) has to bededucted while computing the taxable income. It wasaggrieved by the order of the Tribunal, Revenue has preferredthis appeal. The following questions of law were raised forconsideration: “1. (a) Whether, on the facts and in thecircumstances of the case, the assessee whosecontribution towards PF/ESI is not in consonance withthe provisions of the Explanation to section 36(1)(va) isentitled to claim deduction of the same under Sec.43Bof the Income Tax Act? (b) If the answer to the above question is in thenegative cannot the Revenue treat the amount asincome under Section 2(24)(x) of the Income Tax Act? 2.Is not the order of the Tribunal on the issuewrong and lacks perspective for non consideration ofthe issue under Section 36(1)(va) read with Section 2(24)(x) of the Income tax Act?.” 5.Heard the learned Senior Counsel for Revenue andthe learned counsel for the assessee. 6.The learned Senior Counsel for the Revenuecontended that the finding of the Tribunal that the Respondentwas entitled to claim deduction under Sec.43B of the IncomeTax Act was not correct in view of Sec.36(1)(va) andExplanation 1 thereto, r/w Sec.2(24)(x), since a specificprovision is made for treating the employees contributiontowards PF, ESI etc. etc. The learned Senior Counsel hasfurther contended that the Respondent had not credited thesum received towards the employees contribution to theemployees' account in the relevant fund on or before the due I.T.A. No.244 of 2014 date prescribed under Explanation to Sec.36(1)(va) andtherefore the Respondent shall not be entitled to deduction assuch, though they deposited the amount before the due dateprescribed under Sec.43B, i.e. before filing of return underSec.139(1). It was his further contention that the decision ofthe Hon'ble Apex Court in 'Vinay Cement Ltd.' case (supra)relied on by the Tribunal was not applicable to the facts of thiscase, since the Hon'ble Apex Court considered therein only thequestion of Sec.43B of the Act which deals with contributionpayable by the employer. The learned Senior Counsel, on theother hand, relied on the principles laid down by the GujaratHigh Court in 'Commissioner of Income-Tax v. GujaratState Road Transport Corporation' [(2014) 366 ITR 170(Guj)]. I.T.A. No.244 of 2014 date prescribed under Explanation to Sec.36(1)(va) andtherefore the Respondent shall not be entitled to deduction assuch, though they deposited the amount before the due dateprescribed under Sec.43B, i.e. before filing of return underSec.139(1). It was his further contention that the decision ofthe Hon'ble Apex Court in 'Vinay Cement Ltd.' case (supra)relied on by the Tribunal was not applicable to the facts of thiscase, since the Hon'ble Apex Court considered therein only thequestion of Sec.43B of the Act which deals with contributionpayable by the employer. The learned Senior Counsel, on theother hand, relied on the principles laid down by the GujaratHigh Court in 'Commissioner of Income-Tax v. GujaratState Road Transport Corporation' [(2014) 366 ITR 170(Guj)]. 7.Learned Senior Counsel for the Revenue has invitedour attention to paragraph 7 of the judgment in 'GujaratState Road Transport Corporation's case' (supra) andcontended that the issue involved therein was with respect tothe employees contribution to Provident Fund Account, ESI etc.etc. as provided under Sec.36(1)(va) and Explanation 1 of theAct. The learned Senior Counsel contended that the provisions I.T.A. No.244 of 2014 with respect to the employees contribution and the employer'scontribution to the PF, ESI etc. were governed by differentprovisions and need not be mixed up with the other.According to the learned counsel, with respect to theemployer's contribution, Sec.43B of the Act would beapplicable, however with respect to the employees'contribution, Sec.36(1)(va) and Explanation 1 r/w Sec.2(24)(x) of the Act would be applicable and further that aforesaidprovisions are different and distinct and were governingdifferent situations with respect to contributions referred supraon account of employer and employee respctively. Therefore,the learned Senior Counsel contended that Sec.43B cannot bemade applicable under any circumstances to a situation withrespect to Sec.36(1)(va) of the Income Tax Act and in thatview of the matter, findings of the Appellate Tribunal that theRespondent was entitled to get deduction for the employee'scontribution as provided under Sec.43B of the Act could not besustained. 8.It was also contended that in so far as the decisionof the Hon'ble Apex Court in 'C.I.T. v. Alom Extrusions Ltd.' [(2009) 319 ITR 306 (SC)] was concerned, the issues involved I.T.A. No.244 of 2014 therein were with respect to the employer's contribution to thePF Account under Sec.43B, and whether the amendmentbrought to Sec.43B as per the Finance Act, 2003 with effectfrom 01.04.2004 was curative or amendatory and whether itwas retrospective or prospective in operation. Therefore,learned Senior Counsel contended that the proposition of lawlaid down in the said judgment could not be taken to havearrived at a conclusion with regard to the payment ofemployee's contribution which was provided under Sec.36(1)(va) of the Act. It was also contended that the judgment ofthe Gujarat High Court cited supra has taken into account thejudgment of the Apex Court in 'Alom Extrusions case'(supra) and found that so far as the employee's contributionwas concerned, Sec.36(1)(va) r/w Explanation-1 alone wasapplicable and Sec.43B of the Act had no role to play at all. 9.The learned Senior Counsel for the Revenue hasspecifically invited our attention to paragraph 7.06 of thejudgment in 'Gujarat State Road Transport Corporation'scase' which read thus: “7.06. Considering the aforesaid provisions ofthe Act, as per section 2(24)(x), any sum received bythe assessee from his employees as contribution to any I.T.A. No.244 of 2014 9.The learned Senior Counsel for the Revenue hasspecifically invited our attention to paragraph 7.06 of thejudgment in 'Gujarat State Road Transport Corporation'scase' which read thus: “7.06. Considering the aforesaid provisions ofthe Act, as per section 2(24)(x), any sum received bythe assessee from his employees as contribution to any I.T.A. No.244 of 2014 provident fund or superannuation fund or any fund setup under the provisions of the ESI Act or any otherfund for the welfare of such employees shall be treatedas an “income”. Section 36 of the Act deals with thedeductions in computing the income referred to insection 28 and as per section 36(1)(va) such sumreceived by the assessee from any of his employees towhich the provisions of sub-clause (x) of clause (24) ofsection 2 apply, the assessee shall be entitled todeduction of such amount in computing the incomereferred to in section 28 if such sum is credited by theassessee to the employee's account in the relevantfund or funds on or before the “due date”, i.e. date bywhich the assessee is required as an employer to creditthe employee's contribution to the employee's accountin the relevant fund, in the present case, the providentfund and the ESI Fund under the Provident Funds Actand the ESI Act. Section 43B is with respect to certaindeductions only on actual payment. It provides thatnotwithstanding anything contained in any otherprovisions of the Act, a deduction otherwise liableunder the Act in respect of ...(B) any sum payable bythe assessee as an employer by way of contribution toany provident fund or superannuation fund or gratuityfund or any other fund for the welfare of the employeesin computing the income referred to in section 28 ofthat previous year in which such sum is actually paidby him. It appears that prior to the amendment ofsection 43B of the Act, vide the Finance Act, 2003, anassessee was entitled to deductions with respect to thesum paid by the assessee as an employer by way of I.T.A. No.244 of 2014 contribution to any provident fund or superannuationfund or gratuity fund or any other fund for the welfareof the employees (employer's contribution) providedsuch sum--employer's contribution is actually paid bythe assessee on or before the due date applicable in hiscase for furnishing return of income under sub-section(1) of section 139 in respect of the previous year inwhich the liability to pay such sum was incurred andthe evidence of such payment is furnished by theassessee along with such return. It also furtherprovided that no deduction shall, in respect of any sumreferred to in clause (B), i.e., with respect to theemployer's contribution, be allowed unless such sum isactually been paid in cash or by issue of cheque ordraft or by any other mode on or before the due dateas defined in the Explanation below clause (va) of sub-section (1) of section 36 and where such sum has beenmade otherwise that in cash, the sum has beenrealised within 15 days from the due date. By theFinance Act, 2003, the second proviso to section 43B ofthe Act has been deleted and th first proviso to section43B has also been amended which is reproduced hereinabove. Therefore, with respect to the employer'scontribution as mentioned in clause (b) of section 43B,if any sum towards the employer's contribution to anyprovident fund or superannuation fund or gratuity fundor any other fund for the welfare of the employees isactually paid by the assessee on or before the due dateapplicable in his case for furnishing the return of theincome under sub-section (1) of section 139, theassessee would be entitled to deduction under Sec.43B I.T.A. No.244 of 2014 I.T.A. No.244 of 2014 on actual payment and such deduction would beadmissible for the accounting year. However, it isrequired to be noted that as such there is nocorresponding amendment in section 36(1)(va).Deletion of the second proviso to section 43B, vide theFinance Act, 2003, would be with respect to section43B and with respect to any sum mentioned in section43B(a) to (f) and in the present case, the employer'scontribution as mentioned in section 43B(b).Therefore, the deletion of the second proviso to section43B and the amendment in the first proviso to section43B by the Finance Act, 2008 is required to be confinedto Section 43B alone and the deletion of the secondproviso to section 43B, vide the amendment pursuantto the Finance Act, 2003, cannot be made applicablewith respect to section 36(1)(va) of the Act.Therefore, any sum with respect to the employees'contribution as mentioned in section 36(1)(va), theassessee shall be entitled to the deduction of such sumtowards the employees' contribution if the same isdeposited in the accounts of the concerned employeesand in the concerned fund such as provident fund, ESIcontribution fund, etc., provided the said sum iscredited by the assessee to the employees' accounts inthe relevant fund or funds on or before the “due date”under the Provident Funds Act, ESI Act, rule, order ornotification issued thereunder or under any standingorder, award, contract or service or otherwise. It isrequired to be noted that as such there is noamendment in section 36(1)(va) and even theExplanation to section 36(1)(va) is not deleted and is I.T.A. No.244 of 2014 still on the statute and is required to be complied with.Merely because with respect to the employer'scontribution the second proviso to section 43B whichprovided that even with respect to the employer'scontribution (section 43B(b)), the assessee wasrequired to credit the amount in the relevant fundunder the PF Act or any other fund for the welfare ofthe employees on or before the due date under therelevant Act, is deleted, it cannot be said that section36(1)(va) is also amended and/or the Explanation tosection 36(1)(va) has been deleted and/or amended. It is also required to be noted at this stage thatas per the definition of “income” as per section 2(24)(x), any sum received by the assessee from hisemployees as contribution to any provident fund orsuperannuation fund or any fund set up under theprovisions of the ESI Act or any other fund for thewelfare of the such employees is to be treated asincome and on fulfilling the condition as mentionedunder section 36(1)(va), the assessee shall be entitledto deduction with respect to such employees'contribution. Section 2(24)(x) refers to any sumreceived by the assessee from his employees ascontribution and does not refer to the employer'scontribution. Under the circumstances and so long asand with respect to any sum received by the assesseefrom any of his employees to which the provisions ofsub-clause (x) of clause (24) of section 2 applies, theassessee shall not be entitled to deduction of such sumin computing the income referred to in section 28unless and until such sum is credited by the assessee to the employees' account in the relevant fund orfunds on or before the due date as mentioned in theExplanation to section 36(1)(va). Therefore, withrespect to the employees contribution received by theassessee if the assessee has not credited the said sumto the employees' account in the relevant fund or fundson or before the due date mentioned in the Explanationto section 36(1)(va), the assessee shall not be entitledto deductions of such amount in computing the incomereferred to in section 28 of the Act.” to the employees' account in the relevant fund orfunds on or before the due date as mentioned in theExplanation to section 36(1)(va). Therefore, withrespect to the employees contribution received by theassessee if the assessee has not credited the said sumto the employees' account in the relevant fund or fundson or before the due date mentioned in the Explanationto section 36(1)(va), the assessee shall not be entitledto deductions of such amount in computing the incomereferred to in section 28 of the Act.” 10.It was further contended that, on a reading of theabove extracted portion of the judgment of the Gujarat HighCourt, it was clear that so far as the amount recovered byassessee towards contribution of the employees to theProvident Fund and ESI are concerned, Sec.36(1)(va) wasapplicable and if the contributions are not paid within theperiod specified under the relevant statute as provided underExplanation-1 thereto, the assessee would not be entitled todeduction. It was also contended that there was noamendment made to Sec.36(1)(va) and the Explanation toSec.36(1)(va) was not deleted and was still on the statutebook and therefore the same was required to be compliedwith, and further that merely the second proviso to Sec.43Bwhich provided that the assessee was entitled to credit the I.T.A. No.244 of 2014 employer's contribution under Sec.43B(b) in the relevant fundfor the welfare of the employees on or before the due dateunder the relevant Act, was deleted, it cannot be said thatSec.36(1)(va) was also amended and/Explanation to Sec.36(1)(va) has been deleted/or amended. 11.Learned Senior Counsel for the Revenue has alsoinvited our attention to the decisions reported in'Commissioner of Income-Tax v. South IndiaCorporation Ltd. [(2000) 242 ITR 114], 'Commissioner ofIncome-Tax v. G.T.N. Textiles Ltd.' [(2004) 269 ITR 282],'Commissioner of Income-Tax v. Jairam and Sons'[(2004) 269 ITR 285] and contended that the said questionwas considered by this Court and held that so far as thecontribution received from the employees were concerned,Sec.36(1)(va) and the Explanation thereto was the applicableprovision and the amounts received towards employeescontribution shall be credited to the relevant account of theemployee within the due date prescribed under the PF and ESIActs. 12.Even though the assessment years considered inthose judgments were before the Finance Act, 2003 was I.T.A. No.244 of 2014 introduced, these judgments have clearly drawn a distinctionbetween Sec.36(1)(va) and Sec.43B of the Act. In 'SouthIndia Corporation Ltd. case' (supra), at page 118 held asfollows: 12.Even though the assessment years considered inthose judgments were before the Finance Act, 2003 was I.T.A. No.244 of 2014 introduced, these judgments have clearly drawn a distinctionbetween Sec.36(1)(va) and Sec.43B of the Act. In 'SouthIndia Corporation Ltd. case' (supra), at page 118 held asfollows: “Learned counsel for the assessee submitted thatif payment is permissible to be made with damagesafter a prescribed period, the same is not unauthorisedpayment and in view of the broad language employedin clause (va) of sub-section (1) of section 36, it shallbe deemed as if the payment was made within the duedate. The expression “due date” means the timestipulated for payment. As per the Explanation toclause (va) for the purpose of the clause, “due date”means the date by which the assessee is required asan employer to credit an employee's contribution to theemployee's account in the relevant fund. The amountis deductible only if the assessee credits the amount tothe employee's account in the relevant fund on orbefore the date by which he is legally or contractuallyrequired to do so. The right to deduction would be losteven if the sum is credited after the due date. Itcannot be an indefinite date left to the choice of theassessee. It is to be noted that under the mainprovision of section 43B of the Act, the payments madeduring the currency of the financial year relevant to theassessment year qualify for deduction in certain cases.But in the case of payments relating to provident fund,etc. stress has been made on payment within the “duedate”. Therefore, it cannot be said that payment made beyond the due date also qualifies for deduction, inview of the prescription in the main provision itself.Had that been the legislative intent, there was nonecessity to enact the proviso. The Legislature in itswisdom has incorporated the proviso and it cannot besaid to be without a purpose. There is nothingrepugnant between the main provision and the proviso.They operate in different situations. The view of theTribunal that payment having been made before theclose of the financial year, qualifies for deduction isindefensible.” 13.On the contrary learned counsel for the Respondentcontended that the Respondent was paying the salary andwages during the second week of every month and in the caseof contribution towards PF and ESI, the amount would become due for payment within 15 days plus 5 days towards graceperiod from the end of the month in which wages or salarywere paid. Thus, for the Respondent, due dates for thepayment of such contribution arose in the month subsequentto the month in which wages/salary actually disbursed andtherefore the liability to deduct employees' contribution arisesonly on paying salary to employees and not as and whenwages and salaries are earned by the employees. It wasfurther contended by the learned counsel that the Respondent I.T.A. No.244 of 2014 can claim deduction under the head subject to the conditionthat the outstanding statutory payments as shown in thebalance as at the end of the relevant previous year were madewithin the time permitted under Sec.139(1) as prescribedunder Sec.43B of the Income Tax Act. 14.Learned counsel for the Respondent, furthercontended that since Sec.43B takes in both employee's as wellas employer's contribution, even if statutory deductions aremade by the Respondent during the relevant deduction period,the Respondent was entitled to get deduction, if the same wastendered to the statutory authority before filing of the returnunder Sec.139(1) of the Act. I.T.A. No.244 of 2014 can claim deduction under the head subject to the conditionthat the outstanding statutory payments as shown in thebalance as at the end of the relevant previous year were madewithin the time permitted under Sec.139(1) as prescribedunder Sec.43B of the Income Tax Act. 14.Learned counsel for the Respondent, furthercontended that since Sec.43B takes in both employee's as wellas employer's contribution, even if statutory deductions aremade by the Respondent during the relevant deduction period,the Respondent was entitled to get deduction, if the same wastendered to the statutory authority before filing of the returnunder Sec.139(1) of the Act. 15.Learned counsel for the Respondent has alsocontended that if the shortfall on the Provident Fund or ESIFund was deposited or made good before the filing of thereturn, the assessee shall be entitled to deduction underSec.36(1)(va) in the same year. It was further contended bythe learned counsel for the assessee that consequent to thedeletion of the second proviso to Sec.43B of the Act with effectfrom 01.04.2004 by the Finance Act, 2003, which stipulatedthat contributions to the Provident Fund and ESI should be made within the time mentioned under Sec.36(1)(va), wasretrospective from 01.04.1989 as held in 'Alom Extrusions'(supra) and that the PF and ESI contribution received from theemployees were remitted before the due date for filing ofreturn under Sec.139 of the Income Tax Act, there shall not beany dis-allowance of the contribution so made. Learnedcounsel also contended that, the payments due under theaforesaid Acts were made by the assessee on or before the duedate for the filing of the return and therefore they shall beentitled to deduction in the same year as rightly held by theAppellate Tribunal. In that context, learned counsel hasinvited our attention to the decision of the Hon'ble Apex Courtin 'Alom Extrusions Ltd.' (supra) and contended that sincethe Apex Court held that the Finance Act, 2003 will operateretrospectively with effect from 01.04.1988 when the firstproviso stood inserted, the Respondent was entitled to getdeduction for the contributions of the employees received sincethe same were paid before the filing of the return underSec.139(1) of the Act. Learned counsel has invited ourattention to paragraph 10 of the judgment and contended thateven though in the decision cited supra, the Hon'ble Apex I.T.A. No.244 of 2014 Court was considering the question of retrospective operationof the amendment so made to Sec.43B as per the Finance Act,2003, the Court considered the said question after appreciatingthe entire scheme of the Act, as it existed prior to 01.04.1984and therefore the application of Sec.43B read with Sec.36(1)(va) was considered by the Apex Court and in suchcircumstances the findings rendered thereunder is a bindingprecedent so far as the question considered in this case wasconcerned. 16. Learned counsel has also invited our attention to 'Commissioner of Income Tax v. AIMIL Ltd. & Ors.'[(2010) 321 ITR 508 (Del.)], 'Commissioner of Income-Taxv. State Bank of Bikaner & Jaipur' [(2014) 363 ITR 70(Rajasthan)],Essae Teraoka (P) Ltd. v. DeputyCommissioner of Income Tax' [(2014) 366 ITR 408 (Karn.),'Commissioner of Income-Tax v. South IndiaCorporation Ltd.'[(2000) 242 ITR 114 (Ker.],'Commissioner of Income Tax v. Ghatge Patil TransportsLtd.' [(2014) 368 ITR 749 (Bom)] and 'Commissioner ofIncome Tax v. Spectrum Consultants India P. Ltd.'[(2014) 2 ITR-OL 622 (Karn)] and canvassed the proposition I.T.A. No.244 of 2014 that if the employees contribution received by the assesseewas paid actually before the filing of the return under Sec.139(1), the same could not be disallowed under Sec.43B or Sec.36(1)(va). 'Commissioner of Income Tax v. AIMIL Ltd. & Ors.'[(2010) 321 ITR 508 (Del.)], 'Commissioner of Income-Taxv. State Bank of Bikaner & Jaipur' [(2014) 363 ITR 70(Rajasthan)],Essae Teraoka (P) Ltd. v. DeputyCommissioner of Income Tax' [(2014) 366 ITR 408 (Karn.),'Commissioner of Income-Tax v. South IndiaCorporation Ltd.'[(2000) 242 ITR 114 (Ker.],'Commissioner of Income Tax v. Ghatge Patil TransportsLtd.' [(2014) 368 ITR 749 (Bom)] and 'Commissioner ofIncome Tax v. Spectrum Consultants India P. Ltd.'[(2014) 2 ITR-OL 622 (Karn)] and canvassed the proposition I.T.A. No.244 of 2014 that if the employees contribution received by the assesseewas paid actually before the filing of the return under Sec.139(1), the same could not be disallowed under Sec.43B or Sec.36(1)(va). 17.In order to answer the questions of law raised inthis appeal, we think it appropriate that Sec.36(1)(va)Explanation 1 and Sec.43B and sub-section (b) are extracted. “36. Other deductions.--(1) The deductions providedfor in the following clauses shall be allowed in respect of thematters dealt with therein, in computing the income referredto in section 28-- (va) any sum received by the assessee from any ofhis employees to which the provisions of sub-clause (x) ofclause (24) of section 2 apply, if such sum is credited by theassessee to the employee's account in the relevant fund orfunds on or before the due date: Explanation.-- For the purposes of this clause, “duedate” means the date by which the assessee is required asan employer to credit an employee's contribution to theemployee's account in the relevant fund under any Act, rule,order or notification issued thereunder or under anystanding order, award, contract of service or otherwise;”. “43B. Certain deductions to be only on actualpayment.-- Notwithstanding anything contained in any otherprovision of this Act, a deduction otherwise allowable underthis Act in respect of-- x x xxxx I.T.A. No.244 of 2014 (b) any sum payable by the assessee as an employerby way of contribution to any provident fund orsuperannuation fund or gratuity fund or any other fund forthe welfare of the employees, or shall be allowed (irrespective of the previous year inwhich the liability to pay such sum was incurred by theassessee according to the method of accounting regularlyemployed by him) only in computing the income referred toin section 28 of that previous year in which such sum isactually paid by him: Provided that nothing contained in this section shallapply in relation to any sum which is actually paid by theassessee on or before the due date applicable in his case forfurnishing the return of income under sub-section (1) ofsection 139 in respect of the previous year in which theliability to pay such sum was incurred as aforesaid and theevidence of such payment is furnished by the assesseealong with such return.” 18.On a reading of Sec.36(1)(va), what we find is thatany sum received by the assessee from his employees to whichthe provisions of sub-clause (x) of clause (24) of Sec.2 applywas credited by the assessee to the employees' Account in therelevant Fund or Funds on or before the due date prescribedunder Explanation 1 to Sec.36(1)(va), is entitled to deduction.According to us, it thus means that Sec.36(1)(va) takes care ofcontribution received on account of the employees and I.T.A. No.244 of 2014 credited by the assessee to the employees' account in therelevant Fund or Funds on or before the due date as providedunder the relevant statute alone will be entitled to getdeduction. In this context, the definition of income containedunder Sec.2(24) (x) is relevant, which read thus: “any sum received by the assessee from hisemployees as contributions to any provident fund orsuperannuation fund or any fund set up under theprovisions of the Employees' State Insurance Act, 1948(34 of 1948), or any other fund for the welfare of suchemployees.” I.T.A. No.244 of 2014 credited by the assessee to the employees' account in therelevant Fund or Funds on or before the due date as providedunder the relevant statute alone will be entitled to getdeduction. In this context, the definition of income containedunder Sec.2(24) (x) is relevant, which read thus: “any sum received by the assessee from hisemployees as contributions to any provident fund orsuperannuation fund or any fund set up under theprovisions of the Employees' State Insurance Act, 1948(34 of 1948), or any other fund for the welfare of suchemployees.” 19.Therefore, income of the assessee includes any sumreceived by the assessee from his employee as contribution toany Provident Fund or superannuation fund or funds set upunder the provisions of the Employees' State Insurance Act,1948 (34 of 1948) or any other fund for the welfare of suchemployees. According to us, on a reading of Sec.36(1)(va)along with Sec.2(24)(x), it is categoric and clear that thecontribution received by the assessee from the employee alonewas treated as income for the purpose of Sec.36(1)(va) of theAct and therefore we are of the considered opinion that theassessee was entitled to get deduction for the sum received bythe assessee from his employees towards contribution to the I.T.A. No.244 of 2014 fund or funds so mentioned only if, the said amount wascredited by the assessee on or before the due date to theemployees account in the relevant fund as provided underExplanation 1 to Sec.36(1)(va) of the Act. According to us, sofar as Sec.43B (b) is concerned, it takes care of only thecontribution payable by the employer/assessee to therespective fund. Therefore, in that circumstances, Sec.36(1)(va) and Sec.43B(b) operate in different fields i.e. the formertakes care of employee's contribution and the latter employer'scontribution. The assessee was entitled to get the benefit ofdeduction under Sec.43B(b) as provided under the provisothereto only with regard to the portion of the amount paid bythe employer to the contributory fund. Such an understandingof Sec.43B is further exemplified by the phraseology used inthe proviso, which reads thus: “Provided that nothing contained in this section shallapply in relation to any sumwhich is actually paid by theassessee on or before the due date applicablein his casefor furnishing the return of income under sub-section (1) ofsection 139 in respect of the previous year in which theliability to pay such sum was incurred as aforesaid and theevidence of such payment is furnished by the assesseealong with such return.” I.T.A. No.244 of 2014 Further, in Explanation 1 to Sec.43B also, the phraseologyused persuade us to think that Sec.43B can be applied to thecontribution payable by the assessee as an employer, whichreads thus: “xxxxxxx For the removal of doubts, it is hereby declaredthat where a deduction in respect of any sum referredto in clause (a) or clause (b) of this section is allowedin computing the income referred to in section 28 ofthe previous year (being a previous year relevant tothe assessment year commencing on the 1[st] day ofApril, 1983 or any earlier assessment year) in whichthe liability to pay such sum was incurred by theassessee, the assessee shall not be entitled to anydeduction under this section in respect ofsuch sumincomputing the income of the previous year in whichthe sum is actually paid by him.” Therefore, according to us, since the Respondent hasadmittedly not paid the deduction so made within the due dateas provided under Sec.36(1)(va), the Respondent was notentitled to get deduction of the amounts deducted thereunderfor and on behalf of the employees. 20.In view of the reliance placed by various HighCourts in 'Alom Extrusions' (supra), to arrive at a conclusionthat the assessees therein were liable to pay both the I.T.A. No.244 of 2014 Therefore, according to us, since the Respondent hasadmittedly not paid the deduction so made within the due dateas provided under Sec.36(1)(va), the Respondent was notentitled to get deduction of the amounts deducted thereunderfor and on behalf of the employees. 20.In view of the reliance placed by various HighCourts in 'Alom Extrusions' (supra), to arrive at a conclusionthat the assessees therein were liable to pay both the I.T.A. No.244 of 2014 employees as well as employer's contribution on or beforefiling of return under Sec.139(1) only, we thought that if'Alom Extrusions' (supra) is discussed in detail, the questionraised in this case can be made clear. In paragraph 3 of thesaid judgment, the question considered was formulated asfollows:: “3. A short question which arises fordetermination in this batch of civil appeals is whetheromission (deletion) of the second proviso to section43B of the Income-tax Act, 1961, by the Finance Act,2003, operated with effect from 1[st] April, 2004, orwhether it operated retrospectively with effect from 1[st]April, 1988?”. 21.Therefore, the question that was considered in Alom Extrusions' case' was whether omission of secondproviso to Sec.43B of the Income Tax Act by the Finance Act,2003, operated with effect from 1[st]April, 2004 orretrospectively with effect from 1[st] April, 1988. Therefore, thequestion raised in this appeal has nothing to do with thequestion considered in the said decision. It is true that Sec.2(24)(x) as well as Sec.36(1)(va) were discussed in paragraphs10 and 11 of the said judgment. But it was for the solepurpose of understanding the scheme of the Income Tax Act, I.T.A. No.244 of 2014 1961 as it existed prior to 1[st] April, 1984 and as it stood after1[st] April, 1984. After discussing the aforesaid provisions andSec.43B, the Apex Court held in paragraph 14 of thejudgment as follows: “14. On reading the above provisions, itbecomes clear that the assessee(s)-employer(s) wouldbe entitled to deduction only if the contribution standscredited on or before the due date given in theProvident Fund Act. However, the second proviso onceagain created further difficulties. In many of thecompanies, financial year ended on 31[st] March, whichdid not coincide with the accounting period of R.P.F.C.For example, in many case, the time to makecontribution to R.P.F.C. ended after due date for filingof returns. Therefore, the industry once again maderepresentation to the Ministry of Finance and, takingcognizance of this difficulty, the Parliament insertedone more amendment vide Finance Act, 2003, which,as stated above, came into force w.e.f. 1[st] April, 2004.In other words, after 1[st] April, 2004, two changes weremade, namely, deletion of the second proviso andfurther amendment in the first proviso, quoted above.By the Finance Act, 2003, the amendment made in thefirst proviso equated in terms of the benefit ofdeduction of tax, duty, cess and fee on the one handwith contributions to employees; provident fund,superannuation fund and other welfare funds on theother. However, the Finance Act, 2003, bringing aboutthis uniformity came into force w.e.f. 1[st] April, 2004. 26 22.Therefore, on a reading of the afore-extractedportion of the judgment, it is clear that the Apex Court hadconsidered only the question relating to the effect of theamendment so made and found that amendment was curativein nature and therefore that it operated retrospectively from 1[st]April, 1988. 26 22.Therefore, on a reading of the afore-extractedportion of the judgment, it is clear that the Apex Court hadconsidered only the question relating to the effect of theamendment so made and found that amendment was curativein nature and therefore that it operated retrospectively from 1[st]April, 1988. 23.Thereafter, in paragraph 15 of the judgment, it washeld that the amendments were brought about under theFinance Act, 1983 for the purpose of ensuring that therelaxation/incentive was restricted only to tax, duty, cess andfee under Sec.43B in order to ensure that it did not apply tocontributions to labour welfare funds. Further, it was held thatthe reason appears to be that the employers should not sit onthe collected contributions and deprive the workmen of therightful benefits under social welfare legislations by delayingpayment of contributions to the welfare funds. It was alsoheld that consequent to the implementation problems of thesecond proviso to Sec.43B resulted in enactment of FinanceAct, 2003, deleting the second proviso and bringing about I.T.A. No.244 of 2014 uniformity in the first proviso by equating tax, duty, cess andfee with contributions to welfare funds and therefore theFinance Act, 2003 which was made applicable by theParliament only with effect from 1[st] April, 2004 would becomecurative in nature and hence it would apply retrospectivelyfrom April, 1988. 24.So also, the learned counsel for the assesseecontented that since Sec.43B commences with a non-obstanteclause, Explanation 1 to Sec.36(1)(va) was excluded. But inAlom Extrusions' case' (supra), the Apex Court had heldthat the underlying object of the non-obstante clause was todisallow deductions claimed merely by making the book entryunder mercantile system of accounting. Therefore, thecontention of the learned counsel for the assessee that sinceSec.43B commences with a non-obstante clause, Sec.36(1)(va) stood excluded, cannot be sustained. According to us, thefindings of the Apex Court towards the latter part of paragraph15 makes the intention and purpose behind the amendmentbrought about to Sec.43B clear and it reads thus: So also, the learned counsel for the assessee I.T.A. No.244 of 2014 operate retrospectively w.e.f. 1[st] April, 1988 (when thefirst proviso stood inserted). Lastly, we may point outthe hardship and the invidious discrimination whichwould be caused to the assessee(s) if the contention ofthe Department is to be accepted that Finance Act,2003, to the above extent, operated prospectively.Take an example--in the present case, the respondentshave deposited the contributions with the R.P.F.C. after31[st] March (end of accounting year) but before filing ofthe Returns under the IT Act and the date of paymentfalls after the due date under the Employees' ProvidentFund Act, they will be denied deduction for all times.In view of the second proviso, which stood on thestatute book at the relevant time, each of suchassessee(s) would not be entitled to deduction underSec.43B of the Act for all times. They would lose thebenefit of deduction even in the year of account inwhich they pay the contributions to the welfare funds,whereas a defaulter, who fails to pay the contributionto the welfare fund right up to 1[st] April, 2004, and whopays the contribution after 1[st] April, 2004, would getthe benefit of deduction under Sec.43B of the Act.” According to us, it is thus clear that the decision rendered bythe Apex Court in 'Alom Extrusions' (supra) did not considerthe question involved in this case. 25.So also, in paragraph 16 of the judgment supra, theApex Court had quoted with approval the judgment in'Commissioner of Income Tax v. J.H. Gotla' [(1985) 156 ITR 323 (SC)], which read thus: According to us, it is thus clear that the decision rendered bythe Apex Court in 'Alom Extrusions' (supra) did not considerthe question involved in this case. 25.So also, in paragraph 16 of the judgment supra, theApex Court had quoted with approval the judgment in'Commissioner of Income Tax v. J.H. Gotla' [(1985) 156 ITR 323 (SC)], which read thus: “We should find out