Ita/26/2011 Of Dy Commissioner Income Tax v. M/S Kumaon Mandal Vikas Nigam Limited

IN THE HIGH COURT OF UTTARAKHAND AT NAINITALIncome Tax Appeal No. 26 of 2011 Dy. Commissioner, Income Tax, Nainital ….…… Appellant. Versus M/s Kumaon Mandal Vikas Nigam Ltd., Nainital ………. Respondent. Mr. Arvind Vashistha, Advocate for the appellant. Mr. Shobhit Saharia, Advocate for the respondent. Date of Judgment: 23.09.2011 JUDGMENT Coram: Hon’ble Barin Ghosh, C.J.Hon’ble U.C. Dhyani, J. BARIN GHOSH, C.J. (ORAL) Assessee claimed deduction for making contributions to Provident Fund and Employees’ Provident Fund for the financial year 2001-02. In the assessment order, it has been recorded by the Assessing Officer that in respect of such payments, as requested by him, a table showing payments was furnished. From that, it appeared that payments were made, but the employer’s share of contribution and the employees’ share of contribution were not made within the stipulated time. On the premise that contribution to the said funds, both employer’s share and employees’ share, were not made within the time stipulated for making such payments, Assessing Officer held that the assessee was not entitled to deduction in respect of those contributions. On appeal, CIT (Appeal) held that since the amounts of contributions were paid, though not before the due dates, in view of deletion of proviso to Section 36(1)(va), which was held by the Hon’ble Supreme Court in CIT Vs. Alom Extrusions Ltd., reported in 2009, 319 ITR, 306 SC, as an action of curative nature, whereby the legislation was cured, the assessee was entitled to deduction for such contributions. The said finding has been affirmed by the Tribunal, when the Tribunal, in addition to the said decision, referred to the judgment of the Hon’ble Delhi High Court in the case of CIT Vs. P.M. Electronics Ltd., reported in 2009 (313) ITR, 0161, DEL, which was rendered on the basis of the judgment of the Hon’ble Supreme Court, rendered in the case of Commissioner of Income Tax Vs. Vinay Cement Ltd., reported in 2007 (213) CTR (0268) SC. 2. Aggrieved thereby, the present appeal has been filed, where the principal question is also whether non-payment of such contributions within due date, as specified by the Provident Fund and Employees’ Provident Fund authorities, would render deductions allowed unsustainable. The said question is covered by the judgments referred to above. 3. In addition to that, learned counsel, appearing in support of the appeal, contended that the amount of employees’ contributions to the said funds deducted by the employer were not deposited within due date and, accordingly, in terms of Section 43B, which deals with only the contribution of the employer, assessee was not entitled to the deduction in relation to employees’ contributions. If the employees’ contributions are not covered by Section 43B, then the same may, at the best, be treated as an other income, though, according to us, the same would tantamount to entrustment of such funds with the employer in trust. The fact remains, as found by the Assessing Officer, the same did not remain in the hands of the assessee during the relevant assessment year, for the same had been, in fact, deposited with the authority managing the funds. There was, therefore, no other income in the hands of the assessee. 4. In those circumstances, question of adding the employees’ contributions as income of the assessee did never arise. We, accordingly, dismiss the appeal. Amit (U.C. Dhyani, J.) 23.09.2011 (Barin Ghosh, C.J.) 23.09.2011