Income Tax Appellate Tribunal - Chandigarh
M/S Smilax Healthcare Pvt. Ltd., Solan vs Dcit, Parwanoo on 4 July, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE MS. DIVA SINGH, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.324/Chd/2017
(Assessment Year : 2012-13)
M/s Biogenetic Drugs Pvt. Ltd., Vs. The D.C.I.T.,
Villalge Jharmajri, Tehsill Baddi, Circle Parwanoo,
Distt. Solan (HP). (HP).
PAN: AACCB3897K
And
ITA No.325/Chd/2017
(Assessment Year : 2012-13)
M/s Smilax Healthcare Pvt. Ltd., Vs. The D.C.I.T.,
54, EPIP Area, Vill.Jharmajri, Circle Parwanoo,
Tehsill Baddi, Distt. Solan (HP). (HP).
PAN: AAJCS5602G
(Appellant) (Respondent)
Appellant by : Shri Jaspal Sharma
Respondent by : Shri S.K. Mittal, DR
Date of hearing : 08.06.2017
Date of Pronouncement : 04.07.2017
O R D E R
PER BENCH :
Both the a b ove appeals h av e been filed by d i f f e r e n t as s e s s ee s a g a i n s t s e p a ra t e o r d e r s o f CI T( A p p e a l s ), F a r i d a b a d d a t ed 1 8 . 1 1 . 20 1 6 re l a t i n g t o a s s es sm e n t y e ar 2012-13.
2. S i n c e i t w a s c om m o n g r o u n d be t w e e n b o t h t h e parties th a t t he issue i nv o l v ed in both th e appeals is identical, the sa m e were h e a rd together and are being d i s p o s e d o ff b y t h i s c o n s o l i d a t ed a n d c o m m o n o r d e r . F or t h e s a k e o f c o n ve n i e n c e , w e sh a l l b e d e a l i n g w i t h the facts i n I TA N o . 3 2 4 / Ch d / 2 0 1 7 .
2I T A N o . 3 24 / C h d/ 2 0 1 7 ( M/s Biogenetic Drugs Pvt. Ltd.):
3. Th e a s s e s s e e h a s r a i s e d t h e f o l l o w i n g g r o u n d s of appeal:
"1. The impugned order is both against facts and erroneous in law.
2. On the facts and circumstances of the case the Ld.CIT(Appeals) has erred in having confirmed the disallowance/addition amounting to Rs.3,59,648/- made by the Ld.AO on account of late deposit of employee's contribution to PF and ESI dues.
3. On the facts and circumstances of the case the Ld.CIT(Appeals) has erred in having confirmed the action of the AO in having reduced the deduction u/s 80IC to the extent of disallowance/addition of Rs.3,59,648/-."
4. Th e o n l y i s s u e i n t h e p r e s e n t ap p e a l p e r t a i n s to d i s a l l o w an c e m ad e o n a c c o u n t of l a t e d e p o si t o f e m p l o y e es c o n t r i b u ti o n t o P F a n d E SI a mo u n t i n g to R s . 3, 5 9 , 6 4 8 / -.
During a s s es s me n t p r o c e e di n g s, the A s s e s s i ng Officer noticed that th e a s s e ss e e ha d d e p o si t e d employees c o n t r i b u ti o n to PF amounting to R s . 3 , 15 , 9 5 7 / - a nd e m p l o y e e s co n t ri b u t i o n t o E SI a m o u n t i n g to Rs . 4 3 , 6 9 1 /- , a f t e r t h e d u e d at e a s p r e s c r i be d u n d e r t h e r e s p ec t i v e A c t s .
Th e A s s e s s i n g Of f i c e r , t he r e f o re , d i s a l l o w ed t h e s a m e u / s 2 ( 2 4 ) ( x ) r . w .s . 36 ( 1 ( v a ) o f t he I n c o m e Ta x A c t, 1 9 6 1 ( i n s h o r t ' t he A c t ') .
5. Th e matter wa s c a r r i ed in a pp e a l b ef o r e the L d . CI T( A p p e a l s ) w h o u p h e l d t he a d d i t i o n m ad e r el y i n g u p on t h e d e c i s i o n o f t h e I TA T C h a n d i g a r h B e n c h i n th e c a s e o f M / s H y c r o n E l ec t r o n i c s V s . D CI T i n a p p e a l N o . I T. 3 1 0 / 1 4 -
1 5 / S m l d a t e d 9. 2 . 2 0 1 6 w h e r e i n i d e n t i c a l a d d i t i o n m a de h a d b e e n u p h e l d f o l l o w i n g t h e d ec i s i o n o f t h e H on ' b l e H i g h 3 C o u r t o f G u j a r at i n t h e c as e o f C I T V s . Gu j a r a t S t a t e R o ad Tr a n s p o r t C o r por a t i o n r e p o r te d a t 4 1 Ta x m a nn . c o m 10 0 ( G u j ) . Th e f i n d i n g s o f t h e L d . CI T( A p p e a l s ) a t p a ra 5 . 2 o f h is o r d e r a r e r e p r odu c e d h e r eu n d e r :
5.1 I have carefully considered the submission of AR of the appellant and pursued the order passed by the AO. I find that the issue is squarely covered by the Hon'ble Chandigarh Bench of ITAT in the case of Appeal No.lT/310/14-15/Sml dated 09/02/2016 in the case of M/s Hycron Electronics vs DCIT Circle, Parwanoo and the relevant part of the same is as below:
"The facts of the case and the contention of the appellant has been considered. The delay in depositing an amount of Rs. 6500S/- on account of PF and ESIC as detailed supra pertains to the employee contribution. This is a very vital and pertinent fact. The judgment relied on by the appellant has been perused alongwith the judgment of the Punjab and Haryana High Court in the case of CIT Vs. Nuchem Ltd. in ITA No. 323 of 2009. The said judgments are not applicable to the case under consideration as the said judgments pertained to the delay in payment of employers contribution before the due date. In the case under consideration, the issue involved is the delay in remitting the employees contribution before the due date. The said issue has been considered by the High Court of Gujarat in the case CIT Vs. Gujarat State Road Transport Corporation reported at 41 Taxmann.com WO(Gujarat). The relevant extract of the judgment is reproduced as under:
"7. Heard the learned advocates appearing on behalf of the respective parties at length.
7.1 Short question which is posed for consideration of this Court is with respect to the disallowance of the amount being employees' contribution to PF Account/ESI Contribution which admittedly which the concerned assessee did not deposit with the PF Department / DSI Department within due date under the PF Act and/or ESI Act.
7.2 To answer the above controversy, the relevant provisions of Income Tax Act, 1961 are required to be referred to.
7.3 "Income" has been defined under section 2(24) of the Act.
Under section 2(24)(x), any sum received by the assessee from his employees as contributions to any provident fund or 4 superannuation fund or any fund set up under the Employees' State Insurance Act, 194S, or any other fund for welfare of such employees, constitute income. Section 2(24)(x) reads as under :--
"Section 2(24)(x) :-- Any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the Employees' State Insurance Act, 1948, or any other fund for welfare of such employees."
7.4 Section 36 of the Act provides for deduction in computing the income referred to in section 2B. The relevant provisions applicable to the present case swould be Section 36(l)(va). As per sub-section 36(l)(va), assessee shall be entitled to the deduction in computing the income referred to in section 28 with respect to any sum received by the assessee from his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employees' accounts in the relevant fund or funds on o rbefore the "Due Date". As per explanation to Section 36(l)(va) for the purpose of the said clause, "Due Date" means the date by which the assessee is required as an employer to credit the employees' contribution to the employees account in the relevant fund under the Act, Rule, Order or Notification issued thereunder or under any Standing Order, Award, Contract or Service or otherwise. Section36(l)(va) reads as under:
"Section 36(1) : The deductions provided for in ths following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28--
Section 36(1) (va): any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date.
Explanation :-- For the purpose of this clause, "due date"
means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract or service or otherwise."
7.5 Another provision which is required to be considered while considering the above controversy would be Section 43B of the Act, which stood prior to the amendment of section 436 of the Act vide Finance Act, 2003 and after the amendment to Section 5 43B of the Act by Finance Act, 2003. Section 43B of the Act prior to the amendment of Section 43B of the Act vide Finance Act, 2003 reads as under:
"Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) or clause (c) or clause
(d) or clause (e) or clause (f), which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by th assessee along with such return:
Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36, and where such payment has been made, otherwise than in cash, the sum has been realised within fifteen days from the due date."
By the Finance Act, 2003, Second Proviso to section 43B of the Act came to be deleted and even the first proviso to section 43B of the Act came to be amended. The first proviso to section 438 of the Act, after its amendment by the Finance Act, 2003 reads as under :--
"Provided that Bathing contained in this section apply in relation no any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return."
7.6 Considering the aforesaid provisions of the Act, as per section 2(24)(x), any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employees shall be treated as an 'Income'. Section 36 of the Act deals with the deductions in computing the income referred to in section 28 and as per section 36(l)(va) such sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 apply, the assessee shall be entitled to deduction of such .amount in computing the income referred to in section 28 if such sum is credited by the assessee to the 6 employee's account in the relevant fund or funds'on or before the "due date" i.e. date by which the assessee is required as an employer to credit the employee's contribution to the employee's account in the relevant fund, in the present case, the provident fund and ESI Fund under the Provident Fund Act and ESI Act. Section 438 is with respect to certain deductions only on actual payment. It provides that notwithstanding anything contained in any other provisions of the Act, a deduction otherwise liable under the Act in respect of (B) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him. It appears that prior to the amendment of section 438 of the Act vide Finance Act, 2003, an assessee was entitled to deductions with respect to the sum paid by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees (employer's contribution) provided such sum - employer's contribution is actually paid by the assessee on or before the due date applicable in his case for furnishing return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred and the evidence of such payment is furnished by the assessee along with such return. It also further provided that no deduction shall, in respect of any sum referred to in clause (B) i.e. with respect to the employer's contribution, be allowed unless such sum is actually been paid in cash or by issue of cheque or draft or by any other mode on or before the due date as defined in explanation below clause (va) of sub- section (1) of section 36 and where such sum has been made otherwise that in cash, the sum has been realised within 15 days from the due date. By the Finance Act 2003, Second Proviso of section 438 of the Act has been deleted and First Proviso to section 438 has also been amended which is reproduced hereinabove. Therefore, with respect to employer's contribution as mentioned in clause (b) of section 43(8), if any sum towards employer's contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of the income under sub-section (1) of section 139 assessee would be entitled to deduction under section 436 on actual payment and such deduction would be admissible for the accounting year. However, It is required to be noted that as such there is no corresponding 7 amendment in section 36(1) (va). Deletion of Second Proviso to section 43B vide Finance Act 2003 would be with respect to section 43B and with respect to any sum mentioned in section 43(B) (a to f) and in the present case, employers contribution as mentioned In section 43B(b). Therefore, deletion of Second Proviso to section 43B and amendment In first proviso to section 43B by Finance Act 2003 is required to be confined to section 43B alone and deletion of second proviso to section 43B vide amendment pursuant to the Finance Act, 2003 cannot be made applicable with respect to section 36(l)(va) of the Act. Therefore, any sum with respect to the employees' contribution as mentioned in section 36(l)(va), assessee shall be entitled to the deduction of such sum towards the employee's contribution if the same is deposited in the accounts of the concerned employees and in the concerned fund such as Provident Fund, ESI Contribution Fund, etc. provided the said sum is credited by the assessee to the employees accounts in the relevant fund or funds on or before the 'due date under, Provident Fund Act, ESI Act, Rule, Order or Notification issued thereunder or under any Standing Order, Award, Contract or Service or otherwise It ,s require, to be noted that as such there is no amendment in section 36(1) (va) and even explanation to section 36(l)(va) is not deleted and is still on the statute and ,s required to be complied with. Merely because with respect to employer's contribution Second Proviso to section 43B which provided that even with respect to employers' contribution [(section 43(B)b], assessee was required to credit amount in the relevant fund under the PF Act or any other fund for the welfare of the employees on or before the due date under the relevant Act, is deleted, it cannot be said that section 36(l)(va) is also amended and/or explanation to section 36(l)(va) has been deleted and/or amended.
It is also reader! to be noted at this stage that as per the definition of "income" as per section 2(24)(x), any sum received by the assessee from his employees as contribution to any Provident Fund or Superannuation Fund of any fund set up under the provisions of ESI, Act or any other fund for the welfare of the such employees is to be treated as income and on fulfilling the condition as mentioned under section 36(1) (va), the assessee shall be entitled to deduction with respect to such employees' contribution. Section 2(24)(x) refers to any sum received by the assesseefrom his employees as contribution and does not refer to employer's contribution. Under the circumstances and so long as and with respect to any sum received by the assessee from any of his employees to which 8 provisions of sub-clause (x) of sub-section 24 of section 2 applies, assessee shall not be entitled to deduction of such sum in computing the income referred to in section 28 unless and until such sum is credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as mentioned in explanation to section 36(l)(va). Therefore, with respect to the employees contribution 'received by the assessee if the assessee has not credited the said sum to the employees' account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1) (va), the assessee shall not be entitled to deductions of such amount in computing the income referred to in section 28 of the Act.
7.7 Now so far as the reliance placed upon the decision of the Hon'ble Supreme Court, in the case of Alom Extrusions Ltd. (supra), by the learned ITAT as well as learned advocates appearing on behalf of the assessee in support of their submission that in view of amendment in section 438 pursuant to Finance Act, 2003, by which the second proviso to section 438 has been deleted and therefore even with respect to employees contribution despite section 36(l)(va), and explanation to section 36(l)(va), if the employees' contribution is credited after the due date mentioned in the* particular Act but credited on or before the due date by filing return under section 139 of the Act, assessee shall be entitled to the deduction of such amount, is concerned, on considering the controversy before the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra), the said decision would not be applicable to the facts of the present case. In the said case before Alom Extrusions Ltd., the controversy was whether the amendment in section 438 of the Act, vide Finance Act, 2003 would operate retrospectively w.e.f. 1/4/1988 or not. It is also required to be noted that in the case before the Hon'ble Supreme Court, the controversy was with respect to employers' contribution as per section 43(B)(b) of the Act and not with respect to employees' contribution under section 36(1)(va). Before the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra) the Hon'ble Supreme Court had no occasion to consider deduction under section 36(l)(va) of the Act and with respect to employees' contribution. As stated above, the only controversy before the Hon'ble Supreme Court was with respect to amendment (deletion) of the Second Proviso to section 43(B) of the Income Tax Act, 1961 by the Finance Act, 1963 operates w.e.f. 1/4/2004 or whether it operates retrospectively w.e.f. 1/4/1988. Under the circumstances, the learned tribunal has committed an error in relying upon the decision of the Hon'ble Supreme Court in the case of Alom 9 Extrusions Ltd. (supra) while passing the impugned judgement and order and deleting disallowance of the respective sums being employees' contribution to PF Account / ESI Account, which were made by the AO while considering the proviso to section 36(1} (va) of the Income Tax Act.
7.8 Now, so far as the reliance placed upon the decision of the Division Bench of this Court in the case of Alembic Glass Industries Ltd. (supra) is concerned, on facts and considering the provisions of section 36(l)(va) of the Act as is stands, the said decision would not be applicable to the facts of the case on hand and the controversy in question.
7.9 Now, so far as the reliance placed upon the decision of the Karnataka High Court in the case of Sabari Enterprises (supra) is concerned, on facts and controversy raised in the present appeals, the said decision would not be any assistance to the assessee. In the case before the Karnataka High Court, the dispute was with respect to the employer's contribution and the controversy was whether the amendment to section 43B of the Act would be retrospective in nature or not. In the aforesaid case before the Karnataka High court, there was no dispute with respect to employees' contribution as is there in the present case.
7.10 Similarly, the decision of the Bombay High Court in the case of Pamwi Tissues Ltd. (supra) also would not be applicable to the facts of the case on hand. In the case before the Hon'bie Bombay High Court, the dispute was whether deletion of Second Proviso to section 43B would be applicable retrospectively or not and in that case the dispute wcs also with respect to employer's contribution.
7.11 Now, so far as the reliance placed upon the decision of the Himachal Pradesh High Court in the case of Nipso Polyfabriks Ltd. (supra); decision of the Karnataka High Court in the case of Spectrum Consultants India (P.) Ltd. (supra); decision of the Rajasthan High Court in the case of Udaipur Dugdh Utpadak Sahakari Sandg Ltd. (supra) and decision of the Punjab and Haryana High Court in the case of Hernia Embroidery Mills (P.) Ltd. (supra) taking view that where the assessee deposited employees' contribution to ESI and Provident Fund before the due date of filing the return under section 139(1) of the Act, the same would be allowable as deduction, are concerned, With respect and for the reasons stated hereinabove, we are not in agreement with the view taken by the aforementioned High courts. As discussed .hereinabove, as there is no amendment in Section section 10 36(l)(va) of the Income Tax Act and considering section 36(1) (va) of the Income Tax Act as it stands, with respect to any sum received by the assessee from any of his employees to which the provisions of clause (x) of sub-section (24) of section 2 applies, assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is not credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as per explanation to section 36(l)(va) of the Act. Merely because Second Proviso to Section 43B of the Act in which there was a reference to due date as defined in explanation be'ow clause (va) of sub-section (1) of section 36, it cannot be held that even section 36(l)(va) is amended and/or even explanation below clause (va) of sub-section (1) of section 36 is also deleted. It can be said that there was a reference to explanation below clause (va) of sub-section (1) of section 36 in second proviso of section 43B (which has been deleted by Finance Act, 2003), only for the purpose of defining due date as per explanation below clause (va) of sub-section (1) of section 36. Therefore, by deleting Second Proviso to section 43B by Finance Act, 2003, it cannot be said that Section 36(1) (va) is amended and/or explanation below clause (va) of sub- section (1) of section 36 is deleted, which is with respect to employees' contribution. Under the circumstances, we are not in agreement with the view expressed by the Himachal Pradesh High Court; Karnataka High Court; Rajasthan High Court and Punjab and Haryana High Court in the cases refereed to hereinabove.
7.12 Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Sarabhai Sons Ltd. (supra), by the learned counsel appearing on behalf of the assessee and his submission that if two views are possible and different High Courts have taken a particular view, this Court may not take a different view, is concerned, we are of the opinion that in the present case, and as discussed hereinabove, only one view is possible as canvassed on behalf of the revenue and as observed by under section hereinabove and we are not in agreement with the view taken by the Himachal Pradesh High Court; Karnataka High Court; Rajasthan High Court and Punjab and Haryana High Court in the cases refereed to hereinabove, and therefore, the submission made on behalf of the assessee to follow the decisions of the different High Courts refereed to hereinabove and/or not to take a contrary view cannot be accepted.
118. In view of the above and for the reasons stated above, and considering section 36(l)(va) of the Income Tax Act, 1961 read with sub-clause(x) of clause 24 of section 2, it is held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees' account in the relevant fund or funds on or before the "due date" mentioned in explanation to section 36(l)(va). Consequently, it is held that the learned tribunal has erred in deleting respective disallowances being employees' contribution to PF Account,/ ESI Account made by the AO as, as such, such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds (In the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(l)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employees' account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act.
9. Consequently, all these appeals are allowed and the impugned judgement and orders passed by the tribunal in deleting the disallowances made by the AO are hereby quashed and set aside and the disallowances of the respective sums with respect to the Provident Fund / ESI Fund made by the AO is hereby restored. The questions raised in present appeal are answered in favour of the revenue. With this, all these appeals are allowed."
6. A g g r i e v e d b y t h e s a m e , t h e a s s e ss e e h a s c o m e u p i n a p p e al b e fo r e u s . D u r i ng t h e c o u r s e o f h e a r i n g , t h e L d.
c o u n s e l fo r a s se s s e e s t at e d t ha t t h e i ss u e w as s q u a r e ly c o v e r e d i n f a v ou r o f t h e a s s e ss e e b y t h e d e c i s i o n o f t h e Hon'ble H i m a c ha l P r a d es h H i gh C o u r t ,t h e j u ri s d i c t i o na l High C o ur t of the a s s e ss e e , in the case of C I T V s . Ni p s o P ol y f a b r i k a L t d . , 23 5 0 I TR 3 2 7 ( H P) . S e v e r al o t h e r d e c i si o n s w e r e a l s o r e l i e d u p o n b y t h e L d . c o u n s e l f o r a s s e s s e e a s u n der :
12 1) C I T V s . H e m l a Em b r o i d e r y M i l l s ( P ) L t d ,
3 6 6 I TR 1 6 7 ( P &H )
2) C I T V s . N u c h e m L t d . , 5 9 t a x m a nn. c o m 4 5 5 ( P & H
3) S a g u n F o un d r y ( P ) L t d . V s. CI T,
7 8 t a x m a nn . c o m 4 7 ( A l l a h ab a d )
4) C I T V s . U d a i p u r D u g d h U t pa d a k S a h a k a r i
S a n g h L t d. , 3 6 6 I TR 1 6 3 ( Ra j . )
5) S p e c t r u m C o n s u l t a n t s I n di a ( P ) L td V s .
C I T, 3 4 t a x m a n n .c o m 2 0 ( K ar )
7. Th e L d . D R , o n t h e o t h e r ha n d , r e l i e d u p on t h e o r d e r o f t h e L d. CI T( A p p e a l s ) .
8. We have heard the c o n t e n t i on s of both the parties. W e f i n d m e r i t i n th e c on t e n t i o n s r a i se d b y t h e L d.
c o u n s e l f o r a s s ess e e . W e h a v e g o n e t h e o r d e r o f th e H o n ' b l e j u r i s d i c ti o n a l H i g h C o u r t i n t he c a s e o f N i p s o P o l y f a b r i k a L t d . ( s u p r a ) c i ted b e f o r e u s b y t h e L d . c o u n s e l fo r a s s e s s e e a n d f i n d t h a t i t w a s c a t e g o ri c a l l y h e l d i n t h e s a i d c a s e t h a t t h e e m p l o y e e s ' co n t r i b u t i o n p ai d b e f o r e fu r n i s hi ng o f r et u r n of income was to be al l o w e d d e d u c t i on . Th e r e l e v ant f i n d i n g s o f t h e H o n ' b l e H i g h C ou r t a t p a r a 2 2 of t h e o r d e r a r e a s u nd e r :
"22. We are dealing with cases where though the amount was not deposited by the due date under the Welfare Acts, it was definitely deposited before furnishing the returns. We see no reason to make any distinction between the employees' contribution or the employers' contribution. Once the contribution is there, whether by the employee or by the employer, it is a contribution to a welfare fund held in trust by the employer, who is bound to deposit the same. When the employer does not deposit the same within the time prescribed under the Welfare Acts, such as the Provident Fund Act, ESI Act etc., he may face criminal prosecution under the said Act. He may also become liable to pay interest or penalty. However, that is no reason to deny him the benefit of Section 43B, which starts with a non obstante clause and which clearly lays down that the assessee can take benefit of deduction of such contributions, if the same are paid before furnishing of the 13 return."
9. In view of the said decision of the Hon'ble j u r i s d i c ti o n a l Hi g h C o u rt we find no reason why the a s s e s s e e s h o u l d n o t b e al l o w e d de d u c t i o n o f t he e m p l o y e e s' c o n t r i b u ti o n t o P F a n d E SI am o u n t i n g t o R s. 3 , 4 9 , 6 4 8/ -
w h i c h a d m i tt e d l y h a s b e e n p a i d be f o r e t h e d u e d ate o f f i l i n g o f r e t u r n o f i n co m e , t h e s a i d fa c t b e i n g e v i de nt f r o m t h e d e t a i l s o f t h e i m p u g n e d ESI an d P F r e pr o d u ce d i n t he a s s e s s m e nt o r d er .
10. Reliance placed b y t h e L d. CI T( A p p e a l s ) o n t he d e c i s i o n of I TA T C h a n d i g a r h Be n c h i n t h e c as e o f M / s H y c r o n E l e ct r o ni c s V s . D CI T, C i r c l e P a r w an o o ( s u p r a ) is m i s p l a c e d. A p er u s a l o f t h e s a i d o r d e r , r e p ro d uc e d a b o ve , reveals that t h e a d d i t i o n i n t h e s a i d c a s e h a s b ee n u p h e l d r e l y i n g up o n t h e d e c i s i o n o f t h e H o n ' b l e Gu j a r a t H i g h C o u rt in the case of CIT Vs. G u jar a t State Ro a d Tr a n s p o r t C o r p o r a t i o n , 4 1 Ta x m a n n . c o m 1 00 ( s u p r a ) . Th e d e c i s i o n of t h e j u r i s d i ct i o n al H i g h C o u r t i n f a v o u r o f t h e a ss e s s e e h as b i n d i n g f o r ce a n d t h e r e f o r e t he s a m e w i l l a pp l y i n t h e p r e s e n t c a s e. M or e o v e r , t h e H o n'b l e G u j a r a t H i g h C o u r t , w e f i n d , t o o k n ot e o f t h e d e c i s i on o f t h e H o n ' b l e H i m a c h a l P r a d e s h H i g h Co u r t i n t h e c a s e o f Ni p s o P o l y fab r i k a Lt d .
( s u p r a ) b u t d i d n o t a g r e e w i t h t h e p r o p o s i ti o n l a i d d o w n t h e r e i n . Th e L d C I T( A ) w a s t h er e f o r e n o t u n a wa r e o f t h e d e c i s i o n o f t he ju r i s d i c t i o n a l H i gh c o u r t a n d th e re f o r e t he r e w a s n o r e a s o n at a l l f o r t h e L d .C I T( A p p e al s ) t o h a v e p l a c e d r e l i a n c e o n t h e c o n t r a r y d e c i s i on o f t h e Tr i b u na l .
1411. I n v i e w o f t h e ab o v e , th e gr o u nd s o f a p p e al N o.2 & 3 r a i s e d b y t he a s s e s s e e a r e al l o w e d .
12. Th e appeal of the assessee therefore st a n d s allowed.
ITA No.325/Chd/2017 ( M/s Smilax Healthcare Pvt. Ltd.):13. It is relevant to observe here that the facts of this case are similar to the facts in ITA No.324/Chd/20167and the findings given in ITA No.324/Chd/2017 shall apply to this case also with equal force.
14. The appeal of the assessee is therefore allowed.
15. In the result, both the appeals of the assessee stand allowed.
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(DIVA SINGH) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 04 July, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh