Gujarat High Court
Commissioner Of Income Tax I vs Checkmate Services P. ... on 11 August, 2014
Bench: M.R. Shah, K.J.Thaker
O/TAXAP/680/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 680 of 2014
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COMMISSIONER OF INCOME TAX I....Appellant(s)
Versus
CHECKMATE SERVICES P. LTD....Opponent(s)
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Appearance:
MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE K.J.THAKER
Date : 11/08/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) Feeling aggrieved and dissatisfied with the impugned judgment and order dated 27.09.2013 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as "Tribunal") in ITA No.371/Ahd/2013 for Assessment Year 200910, the Revenue has preferred the present tax appeal to consider the following proposed substantial questions of law.
"2(i) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the deletion of disallowance of Rs.19,39,017/ u/s 40(a)(ia) of the Incometax Act, 1961 by the CIT(A) holding that if the TDS payment is made before the due date of filing of the return of income, then the same is allowable as an expenditure, without considering the fact that the relevant portion of the Memorandum explaining the provisions of Finance Bill, 2010 clearly states that the amendment to Section 40(a)(ia) allowing deduction for the payment, on which TDS has been made and paid into Govt. Account before the due date for furnishing the return of income is to take effect retrospectively from 01.04.2010 and will, accordingly, apply in relation to the Assessment Year 201011 and subsequent years?
(ii) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the deletion of disallowance of Rs.19,39,017/ u/s 40(a)(ia) of the Incometax Act, 1961 by the CIT(A) holding that if the TDS payment is made before the due date of filing of the return of income, then the same is allowable as an Page 1 of 3 O/TAXAP/680/2014 ORDER expenditure, without appreciating that the amendment in Section 40(a)(ia) made by the Finance Act, 2010 is applicable retrospectively from 01.04.2010 i.e. A.Y. 201011 and, therefore, its retrospective application could not have been extended prior to 01.04.2010 since for that period another retrospective amendment brought in by the Finance Act, 2008 w.e.f. 01.04.2005 was already applicable?
(iii) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the deletion by the CIT(A) of disallowance of Rs.19,39,017/ made by the Assessing Officer u/s 40(a)(ia) of the Incometax Act, holding that if the TDS payment is made before the due date of filing of the return of income, then the same is allowable as an expenditure, without appreciating that the provisions of Section 40(a)(ia) substituted by the Finance Act, 2008 with retrospective effect from 01.04.2005 had not been withdrawn or rescinded by the amendment by Finance Act, 2010 and hence stood rightly applied by the Assessing Officer?
(iv) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the deletion by the CIT(A) of disallowance of employees' contribution towards P.F. and ESIC of Rs.3,14,12,313/ and provision for employees' contribution towards P.F. & ESIC of Rs.43,88,453/, relying on the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. reported in 319 ITR 306 (SC), without appreciating the fact that in the case of Alom Extrusions Ltd. the controversy before the Hon'ble Supreme Court was with respect to employer's contribution as per Section 43B(b) of the Act and not with respect to employees' contribution under Section 36(1)(va) of the Act and, therefore, the Hon'ble Supreme Court had no occasion to consider deduction u/s 36(1)(va) of the Act with respect to employees' contribution?
(v) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the deletion by the CIT(A) of disallowance of employees' contribution towards P.F. and ESIC of Rs.3,14,12,313/ and provision for employees' contribution towards P.F. & ESIC of Rs.43,88,453/ relying on the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. reported in 319 ITR 306 (SC), without appreciating the fact that in the case of Alom Extrusions Ltd. the only controversy before the Hon'ble Supreme Court was with respect to amendment (deletion) of the Second Proviso to Section 43B of the Incometax Act, 1961 by the Finance Act, 2003 w.e.f. 01.04.2004 or whether it operates retrospectively w.e.f.
01.04.1989?
(vi) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the deletion by the CIT(A) of Page 2 of 3 O/TAXAP/680/2014 ORDER disallowance of employees' contribution towards P.F. and ESIC of Rs.3,14,12,313/ and provision for employees' contribution towards P.F. & ESIC of Rs.43,88,453/ relying on the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. reported in 319 ITR 306 (SC), without appreciating 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 apply, 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(1)(va), as held by the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Corporation reported at [2014] 41 Taxmann.com 100 (Gujarat)?"
Now, so far as the proposed substantial questions of law No.2(i) to 2(iii) are concerned, Shri Parikh, learned advocate appearing on behalf of the Revenue has fairly conceded that the aforesaid questions are now not res integra in view of the decision of the Division Bench of this Court in group of appeals, being Tax Appeal No.412/2013 and other allied matters, by which it is held by the Division Bench of this Court that amendment under section 40(1)(ia) of the Income Tax Act, 1961 brought out by the Finance Act, 2010 w.e.f. 01.04.2010 is having retrospective effect.
In view of the above, question Nos.2(i) to 2(iii) are held against the Revenue and in favour of the assessee and consequently the present tax appeal qua the same is hereby dismissed.
Now, so far as rest of the proposed substantial questions of law No.2(iv) to 2(vi) are concerned, considering the decision of the Division Bench of this Court in Tax Appeal No.637/2013 and other allied matters, NOTICE for final disposal returnable on 25th August 2014. Direct service is permitted.
Sd/ (M.R. SHAH, J.) Sd/ (K.J. THAKER, J.) Ajay Page 3 of 3