M/S Central Office Mewar Palace Organization Pvt.ltd., City Palace, Udaipur v. The Joint Commissioner Of Income-Tax, Range-2

IN THE HIGH COURT OF JUDICATURE FORRAJASTHAN AT JODHPUR D.B.INCOME TAX APPEAL NO. 55 / 2009 M/S CENTRAL OFFICE MEWAR PALACE ORGANIZATION PVT.LTD., CITY PALACE, UDAIPUR. ----Appellant Versus THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-2 UDAIPUR ----Respondent Connected With D.B.INCOME TAX APPEAL No. 54 / 2009 M/S CENTRAL OFFICE MEWAR PALACE ORGANIZATION PVT. LTD., CITY PALACE, UDAIPUR ----Appellant Versus THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-II, UDAIPUR. ----Respondent __________________________________________ For Appellant :Mr.N.M.Ranka, Senior Advocate with Mr.N.K.Jain Mr.K.K.Bissa For Respondent : __________________________________________ HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE MR. JUSTICE DEEPAK MAHESHWARI Judgment Per Hon’ble Mr.Sangeet Lodha,J. Reportable Dated: 5[th] January, 2017. 1.These two appeals arising out of the order dated 19.12.07 [ITA-55/2009 & ONE CONNECTED MATTER] passed by the Income Tax Appellate Tribunal (‘ITAT’), JodhpurBench, Jodhpur in Income Tax Appeal No.131/JDPR/2005 and159/JDPR/2007 for the Assessment Year 2001-02 and 2002-03respectively, involving common question of facts and law, wereheard together and are being disposed of by this common order.2.The facts relevant are: The appellant assessee filed thereturn of income for the Assessment Year 2001-02 claimingdeduction of Rs.23,03,071/- on account of payment ofcontribution to Provident Fund (PF) and Rs.3,30,828/- onaccount of payment to Employees State Insurance (ESI) Fund.Admittedly, the employee’s contribution and employer’scontribution both were not deposited by the appellant assesseebefore the due date by which the assessee is required as anemployer to credit contribution to the employee’s account in therelevant fund under the relevant statute, however, the amountwas actually paid by the assessee before the due dateapplicable in its case for furnishing the return of income undersub-section (1) of Section 139 of the Income Tax Act, 1961( for short “the Act”) in respect of the previous year in whichthe liability to pay such sum was incurred and the evidence ofsuch payment was furnished alongwith the return. 3.The Assessing Officer vide assessment order dated23.3.04 disallowed the deduction claimed by the assessee (3 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] towards the deposit of employee’s contribution to the saidfunds, observing that as per provisions of Section 36 (1) (va)of the Act, if employee’s contribution to PF and ESI is notcredited to the employee’s account on or before the due date,the same being included in income under provisions of Section 2(24) (x) of the Act is liable to be taxed. However, onapplication being filed on behalf of the assessee under Section154 of Act, the total disallowance was reduced toRs.6,35,092/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before Commissioner of Income Tax(Appeals) [CIT(A)], Udaipur. The CIT(A) dismissed the appealvide order dated 4.1.05. 5.Aggrieved by the order passed by the CIT (A), the assessee preferred second appeal before the ITAT. After dueconsideration, the ITAT allowed the appeal vide order dated23.6.06, holding that the amendment in proviso to Section 43Bof the Act made vide Finance Act, 2003 is retrospective andtherefore, the payment having been made before the closure offinancial year, the deduction as claimed could not have beendisallowed. However, the Assistant Commissioner of Income TaxCircle-I, Udaipur preferred an application, relying upon a Benchdecision of this court in the case of Commissioner of IncomeTax vs. Udaipur Distillery Company Ltd., (2004) 187 CTR 369 (4 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] 5.Aggrieved by the order passed by the CIT (A), the assessee preferred second appeal before the ITAT. After dueconsideration, the ITAT allowed the appeal vide order dated23.6.06, holding that the amendment in proviso to Section 43Bof the Act made vide Finance Act, 2003 is retrospective andtherefore, the payment having been made before the closure offinancial year, the deduction as claimed could not have beendisallowed. However, the Assistant Commissioner of Income TaxCircle-I, Udaipur preferred an application, relying upon a Benchdecision of this court in the case of Commissioner of IncomeTax vs. Udaipur Distillery Company Ltd., (2004) 187 CTR 369 (4 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] and a decision of Madras High Court in the case of ‘AdditionalCommissioner of Income Tax Madras-II vs. Madras Radiatorsand Pressing Limited, (2003) 183 CTR 322. Relying upon thesaid decisions, the ITAT recalled the order dated 23.6.06 andrestored the appeal to its original number. 6.After re-hearing, vide order dated 19.12.07, the ITATsustained disallowance in respect of employee’s contribution butallowed the deduction towards employer’s contribution observing that assessee was entitled to claim benefit underSection 43B of the Act, keeping in view the fact that it has contributed to PF before filing of the return. 7.Similar is the view taken by the ITAT regarding thededuction claimed by the assessee for the Assessment Year2002-03. Hence, these appeals. 8.The appeals were admitted by a Bench of this court videorder dated 17.7.09 on following substantial question of lawarising out of the order impugned passed by the ITAT: “Whether the contribution of the employee as receivedby the employer in accordance with the provisions ofProvident Fund Act, or other allied laws, which iscovered by Section 2 (24) (x), can also be said to fallwithin the expression mentioned in Section 43B(b) as”“sum payable by the assessee as an employer. 9.Learned counsel Mr.N.M.Ranka, Senior Advocateappearing on behalf of the appellants contended that in view ofamendment made in Section 43B, vide Finance Act, 2003, by (5 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] which the second proviso to Section 43B stands deleted, thededuction has to be allowed even in respect of employee’scontribution, notwithstanding the provisions of Section 36(1)(va) and explanation attached thereto, if the contribution isactually paid by the assessee on or before the due dateapplicable in his case for furnishing the return of income undersub-section (1) of Section 139 in respect of the previous yearin which the liability to pay such sum was incurred. Learnedcounsel while relying upon a Bench decision of this court inState Bank of Bikaner & Jaipur’s case (supra), submitted thatthe question arising for consideration of this court in theseappeals out of the order impugned passed by the ITAT is nomore res integra. In support of the contention, learned counselalso relied upon the decisions of the Hon’ble Supreme Court inthe matter of “CIT vs. Alom Extrusions Ltd.” (2009) 319 ITR306 (SC) and “CIT vs. Vinay Cement Ltd., (2009) 313 ITR-St.1and the decisions of Karnataka High Court in “CIT vs. SabariEnterprises”, (2008) 298 ITR 141, Gauhati High Court in “CITvs. George Williamson (Assam) Ltd.”, (2006) 284 ITR 619 ,Uttrakhand High Court in “CIT vs. Desh Raksha AushdhalayaLtd.”, (2009) 313 ITR 140 & “CIT vs. Kiccha Sugar Co. Ltd.”,(2013) 356 ITR 351, Madras High Court in “CIT vs. NexusComputer P. Ltd.”, (2009) 321 ITR 144 and Delhi High Courtin “CIT vs. AIMIL Ltd.”, (2010) 321 ITR 508. Learned counsel (6 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] (6 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] submitted that the expression ‘contribution’ as used in provisoto Section 43B includes employer’s contribution and employee’scontribution both and therefore, the assessee having depositedthe employee’s contribution before the due date for filing thereturn under Section 139 of the Act, the deduction has wronglybeen disallowed by the ITAT. In support of the contention,learned counsel has relied upon a decision of the KarnatakaHigh Court in the matter of “Essae Teraoka P. Ltd. vs. D.C.I.T.”,(2014) 366 ITR 408. 10.On the other hand, the counsel appearing for the Revenuesubmitted that as per provisions of Section 2(24)(x) of the Act,any sum received by the assessee from his employees ascontribution to any provident fund or superannuation fund orfund set up under the provisions of Employees’ State InsuranceAct, 1948 (for short “the ESI Act”) or any other fund for welfareof such employee shall be treated as an income and therefore,by virtue of provisions of Section 36 of the Act while computingthe income referred to in Section 28, the deduction is allowableonly if such sum received by the assessee from any of hisemployee is credited to the employee’s account in the relevantfund or funds on or before the due date i.e. date by whichassessee is required as an employer to credit the employee’scontribution to the employee’s account in the relevant fundunder the relevant statute. Learned counsel submitted that (7 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] Section 36 (1) (va) and Section 43B (b) operate in differentfields and therefore, the contention sought to be raised that theexpression ‘contribution’ used in provisions of Section 43B (b)refers to employer’s contribution and employee’s contributionboth is absolutely fallacious. Learned counsel submitted thatthe provisions of Section 36(1) (va) deals with employee’scontribution, whereas Section 43B(b) deals with employer’scontribution and therefore, the view taken by the ITAT cannotbe faulted with. Learned counsel submitted that in decisions ofvarious High Courts relied upon by the learned counsel for theappellant, the question with regard to the scope of provisions ofSection 36 (1) (va) and Section 43B did not come up forconsideration. Relying upon the decision of Kerala High Court inthe matter of “Commissioner of Income Tax, Cochin vs.Merchem Ltd.”, (2015) 378 ITR 443, learned counsel submittedthat if the contention raised on behalf of the assessee isaccepted it will render the explanation attached to Section 36(1) (va) redundant. Learned counsel submitted that both theprovisions operating in different fields have to be given effect toand therefore, the assessee having failed to deposit theemployee’s contribution towards PF and ESI before the duedate i.e. the date by which the assessee was required to as anemployer to credit an employee’s contribution to the employee’saccount in the relevant fund under the relevant statute is not (8 of 20 ) entitled to deduction while computing its income under Section28 of the Act. (8 of 20 ) entitled to deduction while computing its income under Section28 of the Act. 11.Replying the contentions raised on behalf of the Revenue,learned counsel for the appellant submitted that the questionwith regard to applicability of the provisions of Section 43B (b)as it stands after deletion of second proviso has beenspecifically dealt with by the various High Courts and therefore,the contention of the Revenue that the question arising in thepresent appeals is not dealt with by various High Courtsspecifically is absolutely devoid of any merit. Learned counselreiterated that a bare perusal of the decision of this court inState Bank of Bikaner & Jaipur’s case (supra) reveals that thequestion of law arising in the instant appeals already standdecided after due consideration. Learned counsel submittedthat the decision of the Gauhati High Court dealing with anidentical issue having been upheld by the Hon’ble SupremeCourt while rejecting the Special Leave Petition by a speakingorder, the said decision is a binding precedent which has to befollowed by this court. 12.We have considered the rival submissions and perused thematerial on record. 13.Indisputably, any sum received by the assessee from itsemployees as contribution to any provident fund orsuperannuation fund or any fund set up under the provisions of (9 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] ESI Act or any other fund for welfare of such employee shallstand included within the income of the assessee by virtue ofprovisions of Section 2(24)(x) of the Act. However, whilecomputing income chargeable to income tax under the head“Profit and Gains of Business and Profession” in terms ofSection 28 of the Act, any sum received by the assessee asaforesaid which is treated to be his income under Section 2(24)(x) of the Act shall be liable to be deducted under Section36 (1)(va) of the Act, if such sum received is credited by theassessee to the employee’s account in the relevant fund orfunds on or before the due date i.e. the date by which assesseeis required as an employer to credit an employee’s contributionto the employee’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. To putin other words, the assessee shall not be entitled for deductionunder Section 36(1) (va) of the Act in computing the incomereferred to under Section 28 of the Act, in respect of the sumreceived as employee’s contribution if he has not credited thesaid sum to the employee’s account in the relevant fund orfunds on or before the due date mentioned in explanation toSection 36 (1) (va) of the Act. 14.But then, the question which arises for consideration inthese appeals is whether the provisions of Section 43B as it [ITA-55/2009 & ONE CONNECTED MATTER] stands after deletion second proviso thereto by Finance Act,2003, permitting certain deductions on actual payment, can beapplied for allowing the deductions in respect of the employee’scontribution towards the relevant fund or funds received by theassessee not credited to the employee’s account on or beforethe due date as contemplated under explanation attached toSection 36 (1) (va) of the Act but is actually paid by theassessee on or before the due date applicable in his case forfurnishing the return of income under sub-section (1) of Section139 in respect of the previous year in which the liability to paysuch sum was incurred and the evidence of such payment isfurnished by the assessee alongwith such return. [ITA-55/2009 & ONE CONNECTED MATTER] stands after deletion second proviso thereto by Finance Act,2003, permitting certain deductions on actual payment, can beapplied for allowing the deductions in respect of the employee’scontribution towards the relevant fund or funds received by theassessee not credited to the employee’s account on or beforethe due date as contemplated under explanation attached toSection 36 (1) (va) of the Act but is actually paid by theassessee on or before the due date applicable in his case forfurnishing the return of income under sub-section (1) of Section139 in respect of the previous year in which the liability to paysuch sum was incurred and the evidence of such payment isfurnished by the assessee alongwith such return. 15.It is to be noticed that Section 43B, a non obstanteclause, shall be operative irrespective of other provisions of theAct in respect of the deductions specified, which are otherwiseallowable under the Act. As per clause (b) of Section 43B readwith proviso to Section 43B, any sum payable by the assesseeas an employer by way of contribution to any provident fund orsuperannuation fund or gratuity fund or any other fund for thewelfare of the employees shall be an allowable deduction if suchsum is actually paid by the assessee on or before the due dateapplicable in his case for furnishing the return of the incomeunder sub-section (1) of Section 139 in respect of previous yearin which liability to pay such sum was incurred as aforesaid and (11 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] the evidence of such payment is furnished by the assesseealongwith such return. 16.In the instant cases, it is not disputed that the assesseehas deposited the employee’s contribution and employer’scontribution both in respect of the liability incurred in theprevious year but the contention of the Revenue is that theemployee’s contribution to the relevant funds is not covered byclause (b) of Section 43B and therefore, the ITAT has erred inallowing the deduction in respect thereof invoking theprovisions of Section 43B. 17.It is pertinent to note that as per para 30 of theEmployees’ Provident Fund Scheme, 1952 as framed by theCentral Government, in exercise of the powers conferred bySection 5 of the Employees’ Provident Fund Act, 1952 (for short“PF Act”), it is the employer’s liability in the first instance, topay both the contribution payable by himself referred to asemployer’s contribution in the Scheme and also the contributionpayable on behalf of the member employed by him directly orthrough a contractor. Of course, the contribution payable by theemployee paid by the employer or a contractor is recoverableby means of deductions from the wages of the employee andnot otherwise. But in any case, the payment of employee’scontribution by the employer on or before the due date asspecified under the relevant statute is not dependent upon the (12 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] actual deduction from the employee’s wages, by the employeror the contractor who in its turn is required to pay the amountdeducted to the principal employer. Similarly, as per provisionsof Section 39 of the ESI Act, the contribution payable under thesaid Act in respect of an employee shall comprise contributionpayable by the employer and contribution payable by theemployee, a member of ESI Scheme. Further, Section 40 of ESIAct mandates that the principal employer shall pay thecontribution in respect of every employee whether directlyemployed by him or by or through an immediate employer, both (12 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] actual deduction from the employee’s wages, by the employeror the contractor who in its turn is required to pay the amountdeducted to the principal employer. Similarly, as per provisionsof Section 39 of the ESI Act, the contribution payable under thesaid Act in respect of an employee shall comprise contributionpayable by the employer and contribution payable by theemployee, a member of ESI Scheme. Further, Section 40 of ESIAct mandates that the principal employer shall pay thecontribution in respect of every employee whether directlyemployed by him or by or through an immediate employer, both the employer’s contribution and employee’s contribution. Theprincipal employer is entitled to recover from employee theemployee’s contribution by deduction from his wages and incase of an employee employed through an immediate employer,as per provisions of Section 41 of the ESI Act, the principalemployer is entitled to recover the amount of employer’scontribution as well as employee’s contribution from theimmediate employer either, by deduction from any amountpayable or as debt payable by the immediate employer. But inany case, both under PF fund and ESI Scheme as created underthe relevant statutes, it is the duty of the principal employer tomake payment of the contributions comprising of theemployer’s contribution and employee’s contribution and thepayment of employee’s contribution by the principal employer is [ITA-55/2009 & ONE CONNECTED MATTER] not dependent on such sum being actually received from theemployees. 18.In the backdrop of the provisions of the PF Act and ESIAct discussed hereinabove, adverting to the provisions ofSection 43B of the Act, it is pertinent to note that the clause (b)thereof refers to ‘sum payable by the assessee as an employerby way of contribution’to any provident fund, superannuationfund or gratuity fund or any other fund for the welfare of theemployees. As discussed hereinabove, under the relevantstatutes, both the employer’s contribution and employee’scontribution is required to be paid by the employer before thedue date and therefore, the expression ‘sum payable by theassessee as an employer by way of contribution’ as used inSection 43B (b) cannot be given restricted meaning assuggested by the Revenue so as to include within its ambit,only the employer’s contribution and not the both theemployer’s contribution and the employee’s contribution. Thus,we are of the considered opinion that the provisions asincorporated in Section 43B (b) allowing deduction in respect ofany sum payable by the assessee as an employer by way ofcontribution to provident fund etc. include both the employer’scontribution and the employee’s contribution, if the same isactually paid by the assessee on or before the due dateapplicable in his case for furnishing the return of the income (14 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] under sub-section (1) of Section 139 in respect of the previousyear in which the liability to pay such sum was incurred asaforesaid and the evidence of such payment is furnished by theassessee alongwith such return. 19.Having gone through the decisions cited at the bar, we areof the opinion that the contention sought to be raised by theRevenue that the question with regard to entitlement of theassessee for deduction in respect of the employee’s contributionunder Section 43B has not been dealt with in the decisionsrendered by the various High Courts is not correct. In some ofthe decisions, the question with regard to applicability of theprovisions of Section 43B vis-a-vis the provisions of Section 36(1) (va) of the Act dealing with employee’s contribution hasbeen specifically dealt with. under sub-section (1) of Section 139 in respect of the previousyear in which the liability to pay such sum was incurred asaforesaid and the evidence of such payment is furnished by theassessee alongwith such return. 19.Having gone through the decisions cited at the bar, we areof the opinion that the contention sought to be raised by theRevenue that the question with regard to entitlement of theassessee for deduction in respect of the employee’s contributionunder Section 43B has not been dealt with in the decisionsrendered by the various High Courts is not correct. In some ofthe decisions, the question with regard to applicability of theprovisions of Section 43B vis-a-vis the provisions of Section 36(1) (va) of the Act dealing with employee’s contribution hasbeen specifically dealt with. 20.In State Bank of Bikaner & Jaipur’s case (supra), whilespecifically dealing with the question with regard to theentitlement of the assessee for deduction in respect of theemployee’s contribution to PF fund paid beyond the due date asmentioned in explanation to Section 36(1)(va) of the Act, aBench of this court relying upon the decisions of Supreme Courtin Alom Extrusions Ltd.’s case (supra) and Vinay Cement’s case(supra), categorically held that contributions to provident fund,contributory provident fund and general provident fund etc. ifpaid after the due date under the respective Acts but before [ITA-55/2009 & ONE CONNECTED MATTER] filing of the return of income under Section 139(1) could not bedisallowed under Section 43B or under Section 36(1)(va) of theAct. 21.In Sabari Enterprises case (supra), the Karnataka HighCourt while dealing with the question whether the contributionsmade by the assessee to PF and ESI are allowable deductioneven though it is made beyond the stipulated period ascontemplated under mandatory provisions of Section 36 (1)(va)read with Section 2(24) (x) and Section 43B of the Act, heldthat the provisions of Section 43B (b) clearly provides thatnotwithstanding anything contained in the other provisions ofthe Act including Section 36(1) clause (va) of the Act, evenprior to insertion of that clause the assessee is entitled to getstatutory benefit of deduction. The court observed that theexplanation to clause (va) of Section 36(1) of the Act furthermakes it very clear that the amount actually paid by theassessee on or before the due date applicable i.e. at the time ofsubmitting returns of income under Section 139 of the Act tothe Revenue in respect of the previous year can be claimed bythe assessees for deduction out of their gross income. 22.In Alom Extrusions Ltd.’s case (supra), the Hon’bleSupreme Court held that the Finance Act 2003 deleting thesecond proviso to Section 43B of the Act is curative in natureand would operate retrospectively i.e. with effect from 1.4.88. (16 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] 23.In Desh Rakshak Aushdhalaya Ltd’s case (supra), theUttrakhand High Court while dealing with the questionregarding the entitlement of the assessee for deduction of theamount deposited in relation to employee’s contributiontowards provident fund with delay, upheld the order of the ITATdeleting the addition made in this regard by the AO, relyingupon the decision of the Hon’ble Supreme Court in the matterof “Allied Motors Private Limited vs. CIT” (1997) 224 ITR 677(SC), holding that the deletion of second proviso to Section 43Bof the Act simply removes ambiguity and being curative in nature, impliedly has retrospective effect. (16 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] 23.In Desh Rakshak Aushdhalaya Ltd’s case (supra), theUttrakhand High Court while dealing with the questionregarding the entitlement of the assessee for deduction of theamount deposited in relation to employee’s contributiontowards provident fund with delay, upheld the order of the ITATdeleting the addition made in this regard by the AO, relyingupon the decision of the Hon’ble Supreme Court in the matterof “Allied Motors Private Limited vs. CIT” (1997) 224 ITR 677(SC), holding that the deletion of second proviso to Section 43Bof the Act simply removes ambiguity and being curative in nature, impliedly has retrospective effect. 24.In Kichha Sugar Co. Ltd’s case (supra), the UttrakhandHigh Court while dealing with the question of delay indepositing employee’s contribution towards provident fund heldthat the due date referred to in Section 36(1) (va) of the Act,must be read in conjunction with Section 43B (b) of the Act andreading of the same makes it amply clear that the due date asmentioned in Section 36(1)(va), is the due date as mentionedin Section 43B(b) i.e. payment of contributions made to theprovident fund authority any time before filing of the return forthe year in which the liability to pay accrued alongwith evidenceto establish payment thereof. 25.In Nexus Computers Pvt. Ltd.’s case (supra), the MadrasHigh Court while relying upon the decision of Hon’ble Supreme (17 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] Court in rejecting SLP by a speaking order against thejudgment of Gauhati High Court in Vinay Cement Ltd.’s case(supra), observed that law declared by the Apex Court isbinding under Article 141 of the Constitution. 26.In AIMIL Ltd.’s case (supra), the Delhi High Court whilediscussing the decisions of various High Courts and theSupreme Court, observed that if the employee’s contribution isnot deposited by the due date prescribed under the relevantActs and is deposited late, the employer not only pays intereston delayed payment but can incur penalties also for which specific provisions are made under the Provident Fund Act aswell as ESI Act. The court held that in so far as Income Tax Act,1961 is concerned, the assessee can get benefit of deduction ifthe actual payment is made before filing the return as per theprinciple laid down by the Supreme Court in Vinay Cement’scase (supra). 27.In Essae Teraoka Pvt. Ltd.’s case (supra), the KarnatakaHigh Court held that ‘contribution’ used in clause (b) of Section43B of the Act means the contribution of the employer and theemployee and thus, if the contribution is made on or beforethe due date or furnishing the return of income under sub-section (1) of Section 139 of the Act, the employer is entitledfor deduction. 28.In Merchem Ltd.’s case (supra), heavily relied upon by the [ITA-55/2009 & ONE CONNECTED MATTER] Revenue, the Kerala High Court while disagreeing with the viewtaken by the various High Courts and explaining the decision ofthe Hon’ble Supreme Court in Alom Extrusion’s case (supra),held: 27.In Essae Teraoka Pvt. Ltd.’s case (supra), the KarnatakaHigh Court held that ‘contribution’ used in clause (b) of Section43B of the Act means the contribution of the employer and theemployee and thus, if the contribution is made on or beforethe due date or furnishing the return of income under sub-section (1) of Section 139 of the Act, the employer is entitledfor deduction. 28.In Merchem Ltd.’s case (supra), heavily relied upon by the [ITA-55/2009 & ONE CONNECTED MATTER] Revenue, the Kerala High Court while disagreeing with the viewtaken by the various High Courts and explaining the decision ofthe Hon’ble Supreme Court in Alom Extrusion’s case (supra),held: “26. Therefore, in our view, when Sec.43B as it stoodprior to the amendment and Sec.36(1)(va) Explanation 1thereto r/w Sec.2(24)(x) are considered together, it isclear that they operate in different fields. So far as theemployee’s contribution received is concerned, it shouldhave been paid on or before the due date prescribedunder the relevant statutes. Then again the learnedcounsel contended that on a reading of Sec.43B(b), anysum “payable by the assessee as an employer” by way ofcontribution to any provident fund meant payment ofboth employees contribution and employer’s contribution,by the employer and therefore the assessee was entitledto pay both contributions together on or before the filingof the return under Sec.139(1) of the Act. We are unableto accept the said contention advanced by the learnedcounsel. If such a contention is accepted, that wouldmake Sec.36 (1)(va) and the Explanation thereto otiose.According to us, there was no indication in Sec.43B as itstood prior to the amendment and thereafter also todeface Sec.36(1)(va) and the Explanation thereto fromthe Income Tax Act. Thus, it means that both provisionsare operative and the contributions have to be paid inaccordance with the mandate contained under Sec.36(1)(va) and Explanation thereto and under Sec.43B,respectively.” 29.In George Williamson (Assam) Ltd.’s case (supra), while considering the question of law raised regarding interpretationof clause (b) of Section 43B of the Act, read with secondproviso to said section and clause (va) of sub-section (1) ofSection 36 of the Act, the Gauhati High Court while relyingupon its earlier decisions in the matter of “CIT vs. BharatBamboo and Timber Suppliers” (1996) 219 ITR 212 and“CIT [ITA-55/2009 & ONE CONNECTED MATTER] vs. Assam Tribune”, (2002) 253 ITR 93, held that contributionstowards provident fund etc. paid before the filing of the returnby the assessee are entitled for deduction. 30.The Hon’ble Supreme Court in Vinay Cement’s case(supra), while rejecting the Special Leave Petition preferredagainst the judgment of Gauhati High Court in GeorgeWilliamson (Assam) Ltd. and other connected appeals,observed: “In the present case we are concerned with the law as itstood prior to the amendment of Section 43B. In thesecircumstances the assessee was entitled to claim benefit inSection 43B for that period particularly in view of the factthat he has contributed to the provident fund before filingthe return.” 31.The decision of the Hon’ble Supreme Court in VinayCement’s case (supra), upholding the decision of Gauhati HighCourt in George Williamson (Assam) Ltd.’s case (supra), asconcluded by the Madras High Court in Nexus Computer PrivateLimited’s case (supra) and the Delhi High Court in AIMIL Ltd.’scase (supra) and “The commissioner of Income Tax-V vs. P.M.Electronics Ltd.”, (ITA No.475/07, decided on 3.11.08), isbinding precedent under Article 141 of the Constitution of India,which is required to be followed by this court. 32.In view of the discussion above, the substantial questionof law framed as aforesaid is answered in favour of theassessee and against the Revenue. Powered by TCPDF (www.tcpdf.org) Aditya/ [ITA-55/2009 & ONE CONNECTED MATTER] 31.The decision of the Hon’ble Supreme Court in VinayCement’s case (supra), upholding the decision of Gauhati HighCourt in George Williamson (Assam) Ltd.’s case (supra), asconcluded by the Madras High Court in Nexus Computer PrivateLimited’s case (supra) and the Delhi High Court in AIMIL Ltd.’scase (supra) and “The commissioner of Income Tax-V vs. P.M.Electronics Ltd.”, (ITA No.475/07, decided on 3.11.08), isbinding precedent under Article 141 of the Constitution of India,which is required to be followed by this court. 32.In view of the discussion above, the substantial questionof law framed as aforesaid is answered in favour of theassessee and against the Revenue. Powered by TCPDF (www.tcpdf.org) Aditya/ [ITA-55/2009 & ONE CONNECTED MATTER] 33.In the result, the appeals are allowed. The impugnedorder dated 19.12.07 passed by the Income Tax AppellateTribunal, Jodhpur Bench, Jodhpur in Income Tax AppealNo.131/JDPR/2005 and 159/JDPR/2007 for the AssessmentYear 2001-02 and 2002-03 respectively are set aside. No order as to costs.(DEEPAK MAHESHWARI)J. (SANGEET LODHA)J.