C I T JAIPUR vs. M/S RAJ STATE COP CONSUMERS FED LTD

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ITA/127/2011HC RajasthanRJHC02060122201126 March 2015Author: AJIT SINGH,SUNIL AMBWANI3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that where employee's PF and/or EPF, CPF, GPF etc., are paid after the due date under the respective Act but before filing the return of income under Section 139(1), such payments cannot be disallowed under Section 43B or Section 36(1)(va) of the Income Tax Act. The Court relied on a previous judgment of a Coordinate Bench which interpreted the proviso to Section 43B and the explanation appended to Section 36(1)(va). The reasoning was that the insertion and subsequent removal of certain clauses in Section 43B, along with the explanation to Section 36(1)(va), permit deductions if the payment is made on or before the due date of filing the return. The Court found no good ground to take a different view on the same questions. The substantial question of law was answered in favour of the assessees and against the revenue. Consequently, the appeals were dismissed.

What were the facts?

These are three Income Tax Appeals filed by the Commissioner of Income Tax, Jaipur-II, Jaipur, against M/s. Popular Printers, M/s. Rajasthan Rajya Sahakari Spining & Ginning Mills Federation Ltd., and M/s. Rajasthan State Cooperative Consumers Federation Ltd. The appeals challenge the Income Tax Appellate Tribunal's (ITAT) decision to confirm the Commissioner (Appeals) order allowing delayed payment of employee's Provident Fund (PF) and Employees' State Insurance (ESI) contributions as deductions. The core issue revolves around the applicability of Section 43B of the Income Tax Act, 1961, to such delayed payments. The appeals were admitted on a substantial question of law concerning this matter.

What were the issues?

1. Whether, in the facts and circumstances of the case and in law, the ITAT was justified in confirming the decision of the CIT(A) of allowing the delayed payment of employee's PF contribution and ESI payment and applying the provisions of Section 43B for it? Assessee's Contentions: The judgment does not explicitly record the assessee's arguments. However, it refers to a previous judgment of a Coordinate Bench that addressed similar issues. Revenue's Contentions: The revenue contended that deductions for employee's PF and ESI contributions, if paid after the due date under the respective Acts but before the due date for filing the return of income under Section 139(1), should be disallowed under Section 43B or Section 36(1)(va) of the Income Tax Act. The revenue's argument was based on the interpretation that such payments must be made within the statutory due dates under the respective enactments to be eligible for deduction.

Which sections of the Income-tax Act were involved?

Section 43B,Section 36(1)(va),Section 139

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASHAN AT JAIPUR BENCH, JAIPUR :: JUDGMENT :: D.B. INCOME TAX APPEAL NO.489/2008 Commissioner of Income Tax, Jaipur-II, Jaipur Vs. M/s.Popular Printers, Fateh Tiba, Moti Doongri Road, Jaipur D.B. INCOME TAX APPEAL NO.96/2011 Commissioner of Income Tax, Jaipur-II, Jaipur Vs. M/s.Rajasthan Rajya Sahakari Spining & Ginning Mills Federation Ltd., Jaipur D.B. INCOME TAX APPEAL NO.127/2011 Commissioner of Income Tax, Jaipur-II, Jaipur Vs. M/s.Rajasthan State Cooperative Consumers Federation Ltd., Jaipur 26.03.2015 HON'BLE THE CHIEF JUSTICE MR. SUNIL AMBWANI HON'BLE MR. JUSTICE AJIT SINGH Mr.Nikhil Simlote on behalf of Mr.R.B.Mathur for the appellant. Mr.Mahendra Gargieya with Ms.Manisha Surana, Mr.Sandeep Taneja for the respondents. ******** Reportable

1.

These Income Tax Appeals filed by the Commissioner of Income Tax, Jaipur-II, Jaipur under Section 260A of the Income Tax Act, 1961 were admitted on the question of law, as follows:- “Whether in the facts and circumstances of the case and in law the ITAT was justified in confirming the decision of CIT (A) of allowing the delayed payment of employee's PF contribution and ESI payment and applying the provisions of section 43B for it?”

2.

We are informed that the question of law is covered by the 2 judgment of Coordinate Bench of this Court dated 06.01.2014 rendered

in D.B.Income

Tax

Appeal

No.177/2011 (Commissioner of Income Tax Vs. M/s.State Bank of Bikaner & Jaipur) and other connected cases, in which it was held as follows:- “21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, further more second proviso was removed by Finance Act, 2003 therefore, the deduction towards the employer's contribution, if paid, prior to due date of filing of return can be claimed by the assessee. In our view, the explanation appended to Section 36(1)(va) of the Act further envisage that the amount actually paid by the asssessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Sec.43B starts with a notwithstanding clause & would thus override Sec.36(1)(va) and if read in isolation Sec.43B would become obsolete. Accordingly, contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return.

22.

We have already observed that till this provision is brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction

3 but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act.

23.

Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act.

24.

Accordingly, the substantial question of law is answered against the appellant-revenue and in favour of the assessee.

25.

Consequently, these appeals, being devoid of merit, are hereby dismissed. No order as to costs.”

3.

We do not find any good ground to take a different view, on the same questions, on which these appeals were admitted. The substantial question of law is thus answered in favour of the assessees, and against the Department.

4.

The Income Tax Appeals are dismissed. The Income Tax Department will proceed accordingly.

5.

A copy of this judgment will be placed in the connected files. (AJIT SINGH),J. (SUNIL AMBWANI), CJ. Skant/-, Proof Reader All the corrections made in the judgment/order have been incorporated in the judgment/order being emailed. Shashi Kant Gaur, Proof Reader

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