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1. These appeals are filed by the revenue questioning the impugned orders passed by the Tribunal in Appeal No ITA 1713/Bang/2005, dated 17-3-2006, framing the following substantial questions of law:

1. Whether the Tribunal was correct in holding that the contributions made by the assessee to PF and ESI are allowable deduction even though it is made beyond the stipulated period as contemplated under the mandatory provisions of Section 36(1)(va) read with Section 2(24)(x) and Section 43B of the Act as the same was paid by the assessee on or before the due date for furnishing the return of income as per Section 139(1) of the Act ?

60. Several cases have come to notice where taxpayers do not discharge their statutory liability such as in respect of excise duty, employer's contribution to PF, ESI Scheme, etc., for long periods of time, extending sometimes to several years. For the purpose of their income-tax assessments, they claim the liability as deduction on the ground that they maintain accounts on mercantile or accrual tests basis. On the other hand, they dispute the liability and do not discharge the same. For some reason or the other, undisputed liabilities also are not paid. To curb this practice, it is proposed to provide that deduction for any sum payable by the assessee by way of tax or duty under any law for the time being in force (Irrespective of whether such tax or duty is disputed or not) or any sum payable by the assessee as an employer by way of contribution to any PF, or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed only in computing the income of that previous year in which such sum is actually paid by him.

(Emphasis herein italicized in print supplied) Regarding Section 43B, it is further held in the said decision as follows:

Section 43B was, therefore, clearly aimed at curbing the activities of those taxpayers, who did not discharge their statutory liability of payment of excise duty, employer's contribution to PF, etc., for long periods of time but claimed deductions in that regard from their income on the ground that the liability to pay these amounts had been incuned by them in the relevant previous year. It was to stop this mischief that Section 43B was inserted. It was clearly not realised that the language in which Section 43B was worded, would cause hardship to those taxpayers who had paid sales-tax within the statutory period prescribed for this payment, although the payment so made by them did not fall in the relevant previous year. This was because the sales-tax collected pertained to the last quarter of the relevant accounting year. It could be paid only in the next quarter which fell in the next accounting year. Therefore, even when the sales-tax had in fact been paid by the assessee within the statutory period prescribed for its payment and prior to the filing of the income-tax return, these assessees were unwillingly prevented from claming a legitimate deduction in respect of the tax paid by them. This was not intended by Section 43B. Hence, the first proviso was inserted in Section 43B. The amendment which was made by the Finance Act of 1987 in Section 43B by inserting, inter alia, the first proviso, was remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the assessee and which made the provision unworkable or unjust in a specific situation.

In the light of the above decision he submitted that employer's contribution payable by the assessee towards PF or superannuation fund or gratuity fund or any other fund for the welfare of the employees, though they are liable for deduction under Section 36(1)(va) read with Section 2(24)(x) of the Act, the same can be claimed as deduction by the assessee only if the contribution is paid within the due date for claiming exemption under the aforesaid provisions of the Act. He has also placed reliance upon various Division Bench judgments of different High Courts, viz., Calcutta, Madras, Kerala and Rajasthan High Courts in support of the aforesaid legal submissions to contend that in these cases the respondents/assessees who are the employers were/are statutorily liable to pay PF contribution to its employees under the provisions of the Provident Fund Act, the same were not paid by them within the due date payable under the provisions of the Act. Therefore, it has been held by the assessing officer that they are not entitled to claim deduction under the provision of Section 43B Clause (b) for the amount of contributions payable by them under Section 36(1)(va) read with Section 2(24)(x) of the Act. With reference to the said decisions, he requests this Court to. answer the above substantial questions of law framed by this Court in favour of the revenue by setting aside the impugned orders passed by the Tribunal in the appeals filed by the assessees.