Ita/151/2010 Of The Commissioner Of Income Tax,Cochin v. M/S Apollo Tyres Ltd,Kochi

# IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON & THE HONOURABLE MR.JUSTICE N.ANIL KUMAR MONDAY ,THE 25TH DAY OF FEBRUARY 2019 / 6TH PHALGUNA, 1940 ITA.No. 151 of 2010 AGAINST THE ORDER/JUDGMENT IN ITA 273/2005 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 09-09-2009 APPELLANT: THE COMMISSIONER OF INCOME TAX, COCHINCOCHIN. RESPONDENTS: BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.CHRISTOPHER ABRAHAM M/S APOLLO TYRES LTD,KOCHI, 6TH FLOOR, CHERUPUZHPAM BUILDINGS, SHANMUGHAM ROAD, KOCHI. BY ADVS. SRI. JOSEPH MARKOS (SR.), SRI.BINU MATHEWSRI.JOSEPH KODIANTHARA (SR.), SRI.B.J.JOHN PRAKASHSRI. MATHEWS K.UTHUPPACHAN, SRI.TERRY V.JAMESSRI.TOM THOMAS (KAKKUZHIYIL), SRI.V.ABRAHAM MARKOS THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 25.02.2019,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Ramachandra Menon, J. Annexure C order dated 09.09.2009 passed by the Income Tax Appellate Tribunal, Cochin Bench in the appeal preferred by the assessee, virtually unsettlingAnnexure A order passed by the Assessing Officer and Annexure B order passed by the Commissioner of IncomeTax [Appeals], both in favour of the Revenue, inrespect of the assessment year 1999-'00 is put tochallenge at the instance of the Revenue. 2. The assessee company engaged in the businessof manufacture and sale of automotive tyres,tubes..etc. filed its return on 30.12.1999. Theassessment was completed as per Annexure A order,which being detrimental to the rights and interest ofthe assessee, was challenged by filing an appealbefore the Commissioner of Income Tax. TheCommissioner passed Annexure B order dated 31.12.2004,whereby some relief was extended to the assessee, butdeclining it under some other heads. This made theassessee to file further appeal before the Tribunal.After considering the facts and figures, the relevantprovisions of law and the precedents cited, theversion of the assessee was accepted and relief wasgranted; which made the Revenue to feel aggrieved, whohas approached this Court by filing the present appeal. 3. When the matter came up for consideration on27.09.2010, notice was ordered on all questions of lawraised by the appellant. The questions suggested bythe Revenue, as involving 'substantial questions oflaw' are in the following terms : 1.Whether, on the facts and in the circumstances of the case - i) The Tribunal is right in law in deleting the disallowance ofRs.1,07,99,770/- made towards expenditure relating to prior yearsin respect of issue of non-convertibale debentures and redemptionpremium ? ii. is not the allowance at 1/8[th] of the expenses for the assessment year 1999-2000 in accord with the decision of the Supreme Courtand the Tribunal is justified in allowing the entire claim. 2. Whether, on the facts and in the circumstances of the case andalso considering the import of the word “due date” the Tribunal isright in law in deleting the dis allowance made under section 36 (1)(va) being delayed payment of employees and employer'scontribution to PF and ESIC ? 3. Whether the Tribunal is right in allowing 80IA deduction fromgross total income ? 4. With regard to the first question, the factualaspects, as discussed in paragraph 5 of 'Annexure A'order, is extracted below : ii. is not the allowance at 1/8[th] of the expenses for the assessment year 1999-2000 in accord with the decision of the Supreme Courtand the Tribunal is justified in allowing the entire claim. 2. Whether, on the facts and in the circumstances of the case andalso considering the import of the word “due date” the Tribunal isright in law in deleting the dis allowance made under section 36 (1)(va) being delayed payment of employees and employer'scontribution to PF and ESIC ? 3. Whether the Tribunal is right in allowing 80IA deduction fromgross total income ? 4. With regard to the first question, the factualaspects, as discussed in paragraph 5 of 'Annexure A'order, is extracted below : “5. The assessee had issued 27,87,040 - 17% Non convertibleDebenture of Rs. 100 each on 31.10.1991. The debentures areredeemable at a premium of Rs.5/- per debenture. Out of the facevalue of Rs. 27.87 crores Rs. 8.78 crores was redeemed in the F.Y1997-78 and Rs. 8.50 crores in the FY 1998- '99The aggregate amount of premium paid on the redemption in theseyears was Rs. 1,25,41 ,670/-. The gross amount of premium paid wasdebited to the share premium account, but the same was claimed intoto as a deduction in computing the total income for the year. Thepremium payable on redemption of the debenture is expenses for theborrowing and therefore, is allowable as deduction u/s 37 incomputing the income. But the benefit of the money borrowedthrough debentures was derived by the assessee over a period ofeight years in this case. The main expenditure on barrowal is theinterest and the same is paid over a period and deduction claimed isalso over a period of eight years. Hence the premium payable onredemption which is also an expenditure in borrowal can be allowed asdeduction over a period of eight years. As such Rs. 17,41,900/-(2787040 X 5/8) alone is the expenditure for the year and the remaining sum of Rs. 1,07,99,770 is expenditure relating to prioryears. The facts of the case are identical with that of the caseconsidered by apex court (225 ITR 802 Madras industrial companyVs. CIT) wherein it was held that premium payable on redemption ofdebentures is an expenditure allowable as revenue but it has to bespread over the period of debentures for the purposes of allowing itas a deduction. Similar view was expressed by the Madras High courtin the case of Universal Cable Ltd Vs CIT (161 CTR 388). Thenarration given below the claim (item 15 of the total incomecomputation statement) in the return itself indicate that a part ofthe claim, is in fact, prior period expenses. A disallowance ofRs.107,99,770/- is made as expenses not related to the year underconsideration.” 5. The Assessing Officer placed reliance on theverdict passed by the Apex Court reported in MadrasIndustrial Investment Corporation Vs. Commissioner ofIncome Tax [(1997) 225 ITR 802] to the effect that thepremium payable on redemption of debentures, which isto be treated as revenue expenditure, had to be spreadover the period of debentures for claiming deduction.The said view was upheld by the Commissioner asdiscussed in paragraph 6 (iii) of Annexure B order,which reads as follows. 5. The Assessing Officer placed reliance on theverdict passed by the Apex Court reported in MadrasIndustrial Investment Corporation Vs. Commissioner ofIncome Tax [(1997) 225 ITR 802] to the effect that thepremium payable on redemption of debentures, which isto be treated as revenue expenditure, had to be spreadover the period of debentures for claiming deduction.The said view was upheld by the Commissioner asdiscussed in paragraph 6 (iii) of Annexure B order,which reads as follows. “ 6(iii) - I have considered the appellant’s objection. Theissue in dispute is covered by the decision of the Supreme Court inthe case of Madras Industrial Investment corporation In 225 ITR802. As per the ratio of the decision in that case, the appellant isentitled to the deduction of the premium equally over the period oftenure of the debentures. The appellant has claimed in the courseof the hearing that the decision of the Apex Court came muchlater than when the debentures were issued and and that theappellant had not made any claim during the tenure of thedebentures which was the law before the Apex Court ruling”. Thisclaim of the appellant is unsustainable because once the SupremeCourt has laid down the law it applies to all pending proceedingsbecause that law is considered to have always been the correct law.The fact that the appellant had not made any claim during therelevant assessment years as per the ratio of the above decisionrendered subsequently does not entitle the appellant to claim anydeviation from the correct position of law laid down by theSupreme Court. The appellant ought to have understood theprovisions of law correctly earlier and raised the claim in therelevant assessment years. Therefore, the disallowance of thepremium pertaining to the earlier years is upheld.” 6. Coming to the verdict passed by the Tribunal,the rival contentions have been taken note of and afinding has been rendered, as discussed in paragraphs9, 10 and 11 of 'Annexure C' order. Mr. Christopher Abraham, the learned standing counsel for theappellant submits that the law declared by the SupremeCourt has been wrongly applied and interpreted by theTribunal and that the finding is not supported by anyreasoning. There is no dispute to the fact that theamount claimed towards the premium has to be allowedas expenditure, but how that is to be counted is thedisputed question, submits the learned standingcounsel. In other words, such revenue expenditurehad to be spread over to the entire period covered bythe debentures, as held by the Apex Court in 225 ITR802 [cited supra], which aspect was not correctlydealt with by the Tribunal. Hence the challenge. counsel appearing for the assessee submits that thereis vital distinction between the position consideredby the Apex Court and the factual situation involvedin the present case. It is pointed out that the caseof the assessee, as dealt with by the Apex Court, wasin respect of discount on debentures and the resultant loss sustained by the assessee. The relevant portionof the said verdict, as sought to be relied on by theassessee, is extracted below : “Issuing debentures at a discount is another such instancewhere, although the assessee has incurred the liability to pay thediscount in the year of issue of debentures, the payment is tosecure a benefit over a number of years. There is a continuingbenefit to the business of the company over the entire period. Theliability should, therefore, be spread over the period of thedebentures. loss sustained by the assessee. The relevant portionof the said verdict, as sought to be relied on by theassessee, is extracted below : “Issuing debentures at a discount is another such instancewhere, although the assessee has incurred the liability to pay thediscount in the year of issue of debentures, the payment is tosecure a benefit over a number of years. There is a continuingbenefit to the business of the company over the entire period. Theliability should, therefore, be spread over the period of thedebentures. The appellant, therefore, had, in its return, correctlyclaimed a deduction only in respect of the proportionate part ofdiscount of Rs. 12, 500 over the relevant accounting period inquestion. In this connection, we agree with the reasoning andconclusion of the Madhya Pradesh High Court in the case of M. P.Financial Corporation v. CIT [1987] 165 ITR 765 . The view that wehave taken is also in conformity with the accounting practice ofshowing the discount in the “discount on debentures account” whichis written off over the period of the debentures. The appellant is, therefore, entitled to deduct a sum ofRs.12,500 out of the discount of Rs. 3,00,000 in the relevantassessment year. The balance expenditure of Rs. 2, 87,500 cannotbe deducted in the assessment year in question. Question No. 2 (asreframed), therefore, which is the subject-matter of appeal before us, is answered in the negative in so far as it relates to thededuction of Rs. 2,87,500 in the assessment year in questionthough for reasons entirely different from those given by the HighCourt. The second part of the reframed question is answered inthe affirmative. But only a proportionate part of the discount canbe deducted in the assessment year in question as set out earlier.The appeal is disposed of accordingly and the judgment of the HighCourt is set aside. There will be no order as to costs in thecircumstances of the case.” 8. The learned senior counsel submits that, whendebentures are issued on discount in a given year, theloss has already sustained, to the extent the discountis offered. This is because of the fact that, overandabovetheinterestofferedtothebeneficiary/debenture holder, the amount covered bythe debentures will have to be offered on par, onmaturity and the liability is certain, theloss/expenditure having already been incurred/sufferedby the assessee. It is for this reason, that the ApexCourt held that the spreading of loss over the entireperiod covered by the debentures, as done by theassessee, was liable to be sustained. Unlike issuance of debentures on discount, in the instant case, thedebentures were issued by the assessee company 'onpremium', even though such debentures were issued inthe given year, and the maturity value was to be paidincluding the premium on conclusion of the periodcovered by the debentures. This being the position,the actual loss/expenditure suffered by the assesseewas only at the time of satisfying the amount coveredby the debentures. This occurred only in therelevant year, as claimed by the assessee and it wasfor this reason, that the said amount was claimed byway of deduction, which however came to be rejected bythe Assessing Officer and confirmed by theCommissioner of Income Tax [Appeals]. On pointing outthe facts and figures and the relevant provisions oflaw, besides applicability of the Apex Court judgmenton the point, the position was correctly analysed bythe Tribunal and hence deduction was allowed as perAnnexure C order, which is not assailable under anycircumstances, submits the learned senior counsel.Reliance is sought to be placed on the subsequent ruling rendered by the Bombay High Court as well,where the issuance of debentures 'on premium'[as inthe instant case] is involved and that the entireamount/expenditure met by the assessee for therelevant year was declared as eligible to be claimedas deduction in the particular year. The saidfinding has been rendered after placing reliance onthe verdict passed by the Apex Court in 225 ITR 802[cited supra]; submits the learned counsel. 9. Even though the above submission made onbehalf of the assessee appears to be of some force, ona deeper scrutiny, we find it difficult to persuadeourselves to accept the said proposition. Thediscussion made by the Apex Court with regard to theissuance of debentures and the liability incurred bythe assessee with reference to the loss stands on adifferent pedestal. In the case of debentures issuedon discount in a particular year, it is sure andcertain that there is liability, in so far as theamount covered by the debentures has to be satisfied on completion of the period of debentures. Thedebenture is issued so as to procure funds for thebusiness of the company/assessee and this business isspread over the period of years covered by thedebenture. This being the position, the loss incurredby issuance of such debentures issued 'at a discount'also requires to be segregated for the period coveredby debentures and it was accordingly held that thededuction claimed by the assessee spreading over theloss for the entire tenure/period covered by thedebentures was to be sustained. The law was declaredaccordingly. Applying the same logic and reasoningin the case of issuance of debentures 'on premium',the liability has already been undertaken and loss hassuffered by the assessee, in so far as the payment ofthe value covered by the debentures at premium has tobe effected, on maturity. This loss, payment thougheffected only on maturity of debentures, has to betaken care of and necessary quantum of funds, inrespect of the different years covered by thedebentures has to be identified. This being the position, this loss also ought to have been spread outfor the entire period covered by the debentures, fromthe year in which debentures were issued. The lawdeclared by the Supreme Court came to be wronglyunderstood and applied by the Tribunal while passingAnnexure C order. 10. Coming to the verdict passed by the DivisionBench of the Bombay High Court, it was, of course, acase where debentures were issued 'on premium'.'Question (E)' raised by the Bench alone is relevant,so as far as the present case is involved and the sameis extracted below : “(E) Whether on the facts and in the circumstances of thecase and in the circumstances of the case and in law, theITAT is right in allowing the actual premium paid onredemption of debentures as revenue expenditure;” 11. The discussion in relation to the saidquestion has been made in 'paragraph 6', wherein thefactual points have been narrated. The stand takenby the Assessing Officer was that, the premium which was paid, related to capital payment and hence couldnot be allowed as revenue expenditure. TheCommissioner of Income Tax [Appeals] held it in favourof the assessee, placing reliance on his own order forthe previous assessment year, which by itself wasbased on the verdict passed by the Culcutta High Court inCommissioner of Income Tax Vs. TungabhadraIndustries Ltd. [(1994) 207 ITR 553]. TheCommissioner directed the Assessing Officer to allowthe deduction for premium actually paid during theprevious year, provided that no part of the same wasallowed as a deduction on pro-rata basis in theearlier years. The scope and applicability of theverdict passed by the Apex Court in 225 ITR 802 [citedsupra], as discussed in paragraphs 6 and 7 isextracted below: was paid, related to capital payment and hence couldnot be allowed as revenue expenditure. TheCommissioner of Income Tax [Appeals] held it in favourof the assessee, placing reliance on his own order forthe previous assessment year, which by itself wasbased on the verdict passed by the Culcutta High Court inCommissioner of Income Tax Vs. TungabhadraIndustries Ltd. [(1994) 207 ITR 553]. TheCommissioner directed the Assessing Officer to allowthe deduction for premium actually paid during theprevious year, provided that no part of the same wasallowed as a deduction on pro-rata basis in theearlier years. The scope and applicability of theverdict passed by the Apex Court in 225 ITR 802 [citedsupra], as discussed in paragraphs 6 and 7 isextracted below: “6. Question E is now taken up for consideration. Theassessee had issued Non Convertible Debentures during the yearending on 31 March 1985. In the previous year relevant toAssessment Year 1992-93 the assessee repaid an amount ofRs.450 lakhs, at a premium of Rs.15 lakhs on account of the Non Convertible Debentures. The Assessing Officer took the view thatthe premium which was paid related to Capital Repayment andcould not be allowed as revenue expenditure. The CIT (A) held infavour of the assessee relying upon his order for AY 1991 -92 which in turn was based on the judgment of the Calcutta HighCourt in Commissioner of Income Tax Vs. Thngbhadra IndustriesLtd. [1994] 207 ITR 553. The CIT(A) directed the AssessingOfficer to allow the deduction for premium actually paid duringthe previous year provided that no part of the said premium hasbeen allowed as a deduction on a pro rata basis in the earlier years.In appeal, the Tribunal noted that the Non Convertible Debentureswhich were issued in the. amount of Rs.300 lakhs during the yearending 31 March 1985 were to be repaid after seven years ofallotment on 9 February 1992 at a premium of 5 per cent. Theassessee paid the entire amount due on the redemption of theDebentures along with the premium in the previous year relevantto AY 1992-93 and claimed a deduction for the payment made ofRs.15 lakhs. The Tribunal followed the decision of the CalcuttaHigh Court in 'Thungabhadra Industries' and accepted theclaim of the assessee. 7. In the decision of the Supreme Court in MadrasIndustrial Investment Corporation Ltd. Vs. Commission of IncomeTax [1997] 225 ITR 802 the assessee had made a public issue ofdebentures. The debentures were issued at a discount of 2 percent and were redeemable after twelve years. The total discounton the issue of Rs.15 crores amounted to Rs. 3 lakhs. For Assessment Year 1968-69 the assessee wrote off Rs.12500 out ofa total discount of Rs. 3 lakhs, being the proportionate amount ofthe discount. The Assessing Officer disallowed the claim of theappellant on the ground that the discount on the debentures wasnot allowable as expenditure. The AAC however, upheld the claimfor deduction of Rs. 12,500/-. The Tribunal held that theexpenditure of Rs.3 lakhs was incurred during the relevantprevious year although it was proportionately written off over aperiod of twelve years. The Tribunal allowed the entire deductionin the amount of Rs.2,87,500/-. Among the questions which werereferred to the High Court for decision, was whether the Tribunalwas justified in holding that the assessee had incurred anexpenditure of Rs. 3 lakhs, by way of discount paid to the personswho had subscribed to the debentures, during the relevantprevious year and whether the same was allowable as revenueexpenditure. The High Court held that the discount of Rs.3 lakhsdid not represent any payment made to anyone so as to constituteexpenditure. The High Court held that of the total discount ofRs.3 lakhs, a discount of Rs.12,500/ had been allowed by theTribunal which the Department had not challenged. The High Courtheld that the balance of Rs.2,87,500/could not be considered asexpenditure.” 12. Applying the ratio of the said decision tothe given case, the Bombay Bench held that non-convertible debentures were issued for the financial year ending on 31.03.1985, which were liable to beredeemed in the financial year 1991 - '92 at a premiumof Rs. 15 lakhs. The Bench also observed that theamount which was spent by the assessee towards thesaid premium of Rs. 15 lakhs was a liability, whichwas incurred by the assessee for its own business, inorder to obtain the use of funds for the periodcovered by the issue of non-convertible debentures.The relation and co-relation between the loss incurredin the case of 'discount on loss' and in the case of'issuance on premium' is mentioned in the followinglines: “8.................................The Supreme Court held that whenthe assessee had issued debentures at a discount, it had incurreda liability to pay a large amount than what it had borrowed, at afuture date. The Court held that the liability to pay thediscounted amount over and above the amount received for thedebentures is a liability which has been incurred by the companyfor the purpose of its business in order to generate funds for itsbusiness activities. The amounts so obtained by issue ofdebentures were used by the assessee for the purpose of itsbusiness and was, therefore, held to constitute expenditure.” From the above, it is clear that the issue projected,argued, considered and decided by the Bombay Bench waswith regard to the correctness of the stand taken bythe Revenue in declining to treat the amount as'revenue expenditure', but for holding it as a'capital expenditure'. The verdict passed by theApex Court in 225 ITR 802 [cited supra] was reliedonly to resolve the said issue and the questionwhether the amount had to be spread over the entireperiod covered by the debenture was never an issueprojected or decided by the Bombay Bench. 13. The Tribunal, while granting benefit to theassessee, also placed reliance on the course pursuedby the Revenue in respect of the subsequent year wherethe entire amount spent by the assessee stated as lossin respect of issuance of debentures at premium [asclaimed by the assessee] was allowed, without raisingany objection as to the necessity to have it spreadout during the entire period. It may be true thatthe Revenue had not filed any appeal in respect of the said assessment year, but the question is whether non-filing of appeal can be taken as the 'law'; the answerof which is only in the 'negative'. There is noestoppel to law and the law is the one as declared bythe Apex Court in 225 ITR 802 [cited supra]. As such,the said reasoning does not support the findingrendered by the Tribunal. 14. The law declared by the Apex Court that theliability already incurred in the case of debenturesissued at a discount for making necessary fundsavailable for utilization during the entire periodcovered by the debentures has been highlighted in theabove verdict as well, to give exactly similarapplication for the issuance of debentures as well.It is not a judgment to support the case projected bythe assessee and to sustain the relief granted by theTribunal. Applying the dictum in 225 ITR 802 [citedsupra], the liability incurred by the assessee todischarge the liability covered by the debentures atpremium is in the year of issuance and this, 14. The law declared by the Apex Court that theliability already incurred in the case of debenturesissued at a discount for making necessary fundsavailable for utilization during the entire periodcovered by the debentures has been highlighted in theabove verdict as well, to give exactly similarapplication for the issuance of debentures as well.It is not a judgment to support the case projected bythe assessee and to sustain the relief granted by theTribunal. Applying the dictum in 225 ITR 802 [citedsupra], the liability incurred by the assessee todischarge the liability covered by the debentures atpremium is in the year of issuance and this, naturally, has to be spread over the period covered bydebentures. The assessee is not correct in sayingthat it is a liability which would happen only onmaturity of debentures. The liability is certain andis already undertaken; quantum of which is alsocertain and known. By virtue of this, the extent ofloss suffered has to be applied in respect of eachyear covered by the debentures, to an appropriateextent. In the said circumstances, we are of the viewthat the Tribunal went wrong in passing Annexure Corder, upsetting Annexures A and B orders passed bythe Assessing Officer and the Commissioner of IncomeTax [Appeals]. The first question raised by theRevenue involves a substantial question of law and itstands answered in favour of the Revenue. 15. Coming to the second question, the discussionmade by the Assessing Officer to decline the relief tothe assessee, as discernible from paragraph 11 ofAnnexure A order, is with reference to the variousstatutory payments like Provident Fund, ESI etc. There was a short delay in effecting the payment,considering the due date and the date of payment.The deduction sought for by the assessee in thisregard was totally disallowed by the AssessingOfficer, as the payment effected was not on or beforethe due date, but belated. The Tribunal consideredthe case projected by the assessee and held that thededuction claimed as such was allowable and grantedrelief accordingly, in the following terms: 13. Ground No. 10 is regarding disallowance of PF/ESI payment after the prescribed statutory period but within theperiod specified under section 43B, Rs. 19,47,571/--. This groundrelates to disallowance of the amount of Rs. 1,94,757/- beingdelayed payment of employees and employers contribution to PFand ESI for the months of June 1998, November 1998 and March1999 under section 36(1)(va) of the Income Tax Act. The Id.Counsel for the assessee submitted that since the said paymentswere made by the assessee company prior to the date of filing ofits return of income for the year under assessment the same isan allowable expenditure. For this proposition, the Id. Counsel forthe assessee relied on the decision of the Hon'ble Karnataka HighCourt in the case of CIT Vs. Sabari Enterprises and others, 298ITR 463. 13 (a) After considering the rival submissions, we find that thedecision of Honourable Supreme Court in the case of CIT Vs.Vinay Cemets Ltd., 213 CTR 268 (SC) is applicable in the casewherein it was held that these payments are businessexpenditure. Respectfully, following the decision of the Hon'bleSupreme Court, cited supra, we allow the claim of the assessee onthis issue. 16. It is brought to the notice of this Courtthat the relevant provisions in the Statute wereamended by the Government, based on the grievanceraised from different corners. The amended Section43B, stipulates that the payment effected by theassessee before filing the return could be claimed asvalid deduction. The learned senior counselappearing for the assessee submits that nointerference is called for with regard to Annexure Corder passed by the Tribunal, in so far as the same isin conformity with the law declared by the Apex Court 16. It is brought to the notice of this Courtthat the relevant provisions in the Statute wereamended by the Government, based on the grievanceraised from different corners. The amended Section43B, stipulates that the payment effected by theassessee before filing the return could be claimed asvalid deduction. The learned senior counselappearing for the assessee submits that nointerference is called for with regard to Annexure Corder passed by the Tribunal, in so far as the same isin conformity with the law declared by the Apex Court in Commissioner of Income Tax Vs. Alom Extrusions Ltd. [(2009) 319 ITR 306] holding that the deduction ofcontribution made to the Provident Fund is a businessexpenditure. 17. The learned standing counsel for the Revenuesubmits that the above verdict does not come to therescue of the appellant and that the scope of the saidjudgment has been considered in detail by a DivisionBench of this Court in the decision rendered inCommissioner of Income Tax Vs. Merchem Ltd. [(2015)378 ITR 443]. Reference to the observations made inparagraphs 26 and 29 of the said decision will beapposite in this context and hence they are extractedbelow : “26. Therefore, in our view, when section 43B, as it stood prior to the amendment, and section 36(1)(va) Explanationthereto read with section 2(24)(x) are considered together, it asclear that they operate in different fields. So far as theemployees‘ contribution received is concerned, it should have beenpaid on or before the due date prescribed under the relevantstatutes. Then again the learned counsel contended that on areading of section 43B(b), any sum "payable by the assessee as anemployer" by way of contribution to any provident fund meantpayment of both the employees contribution and the employer‘scontribution, by the employer and, therefore, the assessee wasentitled to pay both contributions together on or before thefiling of the return under section 139 (1) of the Act. We are unable to accept the said contention advanced by the learnedcounsel. If such a contention is accepted, that would makesection 36(1)(va) and the Explanation thereto otiose. According tous, there was no indication in section 43B, as it stood prior to theamendment and thereafter also to deface section 36(1)(va) andthe Explanation thereto from the Income-tax Act. Thus, it meansthat both provisions are operative and the contributions have tobe paid in accordance with the mandate contained under section36(1)(va) and the Explanation thereto and under section 43Brespectively. 29. In that view of the matter, we are of the consideredOpinion that the view taken by the Tribunal which affirmed thedecision of the first appellate authority that the respondent wasentitled to get deduction of the contributions received from theemployees if paid on or before the filing of the return undersection 139(1) was not correct. We are inclined to agree with thejudgment of the Gujarat High Court in Gujarat State RoadTransport Corporation's case (supra). We are also of the opinionthat the judgments of the other High Courts referred to by thelearned counsel for the respondent do not lay down the lawcorrectly.” 18. The gist of the finding and declaration ofthe law is to the effect that the law laid down by theSupreme Court [granting the benefit of reduction] could be claimed only in respect of Employer'scontribution and not applicable in the case of'Employees contribution. This vital distinction hasbeen carved out by the Division Bench of this Court in(2015) 378 ITR 443 [cited supra]. We are in fullagreement with the view expressed by the DivisionBench and we answer the substantial question of law tothe said extent in favour of the Revenue and againstthe Assessee, holding that the Employees' Contributionamounting to Rs.51668/- requires to be disallowed. 18. The gist of the finding and declaration ofthe law is to the effect that the law laid down by theSupreme Court [granting the benefit of reduction] could be claimed only in respect of Employer'scontribution and not applicable in the case of'Employees contribution. This vital distinction hasbeen carved out by the Division Bench of this Court in(2015) 378 ITR 443 [cited supra]. We are in fullagreement with the view expressed by the DivisionBench and we answer the substantial question of law tothe said extent in favour of the Revenue and againstthe Assessee, holding that the Employees' Contributionamounting to Rs.51668/- requires to be disallowed. 18. In relation to the 3[rd] question projected inthe appeal, the Tribunal, as per Annexure C order,caused the matter to be reconsidered by the AssessingOfficer, by ordering remand. It is pointed out that,after the remand, the Assessing Officer virtually re-iterated the stand taken earlier and it was answeredagainst the assessee. There is no case for theassessee that the matter has been taken up any furtherand hence it has attained finality. As it stands so,there is no substantial question of law in relation to kmd the said issue. 19. In the above circumstances, we answer thequestions as aforesaid and hold that the Revenue isjustified in approaching this Court seekinginterference under Section 260A of the I.T. Act. Theappeal stands allowed to the extent mentioned above.No cost. It is for the Assessing Officer to takefurther steps to take the proceedings to a logicalconclusion in view of the declaration of law. Sd/- P.R.RAMACHANDRA MENON JUDGE Sd/- N.ANIL KUMARJUDGE