THE COMMISSIONER OF INCOME TAXVALSAD vs. AMOLI ORGANICS (P) LTD.

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1] Feeling aggrieved and dissatisfied with the order dated 12.01.2007 passed by the Income Tax Appellate Tribunal, Ahmedabad (hereinafter be referred to as “the ITAT”) in ITA No.2230/Ahd/2006 for AY 2003-2004, the revenue has preferred the present appeal with the following substantial question of law.

Whether on the facts and circumstances of the case and in law, was the Appellate Tribunal is right in deleting the disallowance of belated payment of PF and ESIC, even though the specific provision in the form of Proviso to Section 43B of the I.T. Act existed in this regard? [2] Heard Mr.Sudhir Mehta, learned counsel appearing on behalf of the appellant and Mr.S. N. Soparkar, learned senior counsel appearing for the assessee. [3] At the outset, it is required to be noted that the dispute is whether the amendment brought into force in the FY 2004 in section 43B of the Income Tax Act (hereinafter be referred to as “the Act”), which came into force with effect from 01.04.2004, would be made applicable retrospectively w.e.f. 01.04.1988 or not. [4] It is required to be noted at this stage that as such it was the case on behalf of assessee that as such their employee’s contribution was in fact deposited with the Provident Fund Authority within the grace period permissible under the relevant Provident Fund Act with respect to substantial amount and, therefore, it can be said that the actually the amount has been deposited with the concerned Provident Fund Authority within the stipulated time under the relevant Provident Fund Act. However, in the alternatively, it was submitted that in view of second amendment in section 43B of the Act brought into force by the Financial Act, 2003 which was made applicable from 01.04.2004, as the employer’s contribution was deposited with the Provident Fund Authority on behalf of the assessee before the due date of filing the return, they were entitled to deduction under section 43B of the Act. The Assessing Officer did not accept the above and held that as the amendment in section 43B of the Act which is brought into effect by Financial Act, 2003 is made applicable with effect from 01.04.2004, assessee shall not be entitled to benefit of the same and the said provisions cannot be made applicable retrospectively. Consequently, the Assessing Officer did not allow the deduction and added the amount of assessee – employers’ contribution into the income of the assessee in particular assessment year. Being aggrieved by the said order, the assessee preferred appeal before the CIT(A) and the learned CIT(A) deleted the addition made by the Assessing Officer and held that the assessee shall be entitled to claim benefit under section 43B of the Act. [5] Feeling aggrieved and dissatisfied with the order passed by the CIT(A), the revenue preferred the appeal being ITA No.2230 of 2006 before the ITA and by impugned order, learned ITAT has partly allowed the said appeal. However, the learned ITAT has held that the assessee was entitled to the exemption as the amount was paid during grace period permissible / available under the Provident Fund Act and, therefore, the asseessee shall be entitled to exemption / deduction under section 43 to the extent payment was made within the grace period. [6] Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the revenue has preferred the present appeal. [7] At the outset it is required to be noted that as such, the assessee shall be entitled to the benefits of the amendment under section 43B amended by the Financial Act, 2003. Even with respect to the amount of provident fund deposited with the appropriate authority prior to date of filing of the return, in view of the decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd, reported in [2009] 319 ITR 306 (SC).

However, as the assessee has not preferred any appeal, we are not concerned with the amount which the assessee deposited with the provident fund authority prior to filing of the return and we are concerned with whether the learned Tribunal is justified in holding that as the assessee has deposited the amount of provident fund within the extended grace period, the assessee would be entitled to deduction under section 43 or not? [8] Considering the fact that the learned Tribunal has granted relief to the assessee with respect to the amount of provident fund which the assessee deposited with the department within extended grace period under the Provident Fund Act, it cannot be said that the learned Tribunal has committed any error in granting the reliefs, which calls for interference by this Court. Under particular Act or law, in the present case Provident Fund Act, if the assessee was entitled to make payment within the grace period and if within that grace period, its employer contributions have been deposited by the assessee, it cannot be said that the assessee has not deposited the amount with the department within the due date as prescribed under the Provident Fund Act. Under such circumstances, as such no error and/or illegality has been committed by the learned Tribunal in granting deduction to the assessee with respect to the amount deposited with the provident fund department within the extended period / grace period. Under the circumstances, no other issues are required to be considered. No question of law muchless any substantial question of law arises in the present Appeal. [9] In view of the above, the present appeal deserves to be dismissed and accordingly, the same is dismissed. There shall be no order as to costs. Notice is discharged. (M.R.SHAH, J.) (R.P.DHOLARIA,J.) vijay