COMMISSIONER OF INCOME-TAX-I vs. AMARSHIV CONSTRUCTION PVT.LTD.

O/TAXAP/551/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 551 of 2007

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME-TAX-I....Appellant(s) Versus AMARSHIV CONSTRUCTION PVT.LTD.....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 MR RK PATEL, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 5

O/TAXAP/551/2007 JUDGMENT

Date : 22/12/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘D’ (hereinafter referred to as ITAT) dated 10.08.2006 in ITA No. 3135/Ahd/2002 for the Assessment Year 1999-00, the revenue has preferred the present Tax Appeal. 2. This appeal was admitted on 17.12.2007 for consideration of the following substantial question of law: Whether on the facts and in law the Tribunal was right in law in allowing deduction u/s. 43B(b) in respect of the payments made to provident fund beyond the due dates under the Provident Fund Act, by holding the amendment made in Section 43B by the Finance Act, 2003, w.e.f. 01-04-2004, omitting the second proviso to section 43B as retrospective? 2.1 The Assessing Officer disallowed amount of Rs. 83,462/- out of employer’s contribution and Rs. 86,393/- out of the employees’ contribution to Provident Fund on the ground that the relevant payments were made beyond the due date as specified in the P.F. Act. On appeal before the CIT(A), the CIT(A) dismissed the appeal and confirmed the disallowance. 2.2 Being aggrieved by the order of the first appellate authority, the assessee preferred appeal before the Tribunal and the Tribunal vide impugned order allowed the appeal and reversed the order passed by CIT(A) thereby deleting the Page 2 of 5

O/TAXAP/551/2007 JUDGMENT disallowance under section 43B of the Act. Being aggrieved by the said order, the present appeal is filed. 3. The question of law raised for consideration in the present Tax Appeal is now not res integra in view of the decision of this Court in the case of Commissioner of Income-tax vs. Gujarat State Road Transport Corporation reported in [2014] 366 ITR 170 (Gujarat). This Court in the aforesaid decision has held that as assessee had not deposited employee’s contribution in respective fund account on date as prescribed in Explanation to section 36(1)(va), the disallowance made by Assessing Officer was just and proper. 3.1 Similarly, so far as controversy regarding employer’s contribution is concerned, the same is also squarely governed by the decision of this Court in the case of Commissioner of Income Tax vs. JMC Projects (India) Ltd, wherein this Court vide judgement and order dated 16.06.2011 rendered in Tax Appeal No. 451 of 2007 has held as under: “(5) The Supreme Court in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd. (supra) has observed that the omission of the second proviso to section 43B of the Income-tax Act, 1961, by the Finance Act, 2003, operated, retrospectively, with effect from April 1, 1988 and not prospectively from April 1, 2004. Earlier under the second proviso to section 43B as amended by the Finance Act, 1989, assessees were entitled to deduction only if the contribution stood credited on or before the due date given in the Provident Funds Act. This created further difficulties and on a representation made to the Finance Ministry one more amendment was made by the Finance Act, 2003. Though this amendment was made applicable with effect from April 1, 2004, the Page 3 of 5

O/TAXAP/551/2007 JUDGMENT amendment was curative in nature and applied retrospectively with effect from April 1, 1988. When a proviso in a section is inserted to remedy unintended consequences and to make the section workable, the proviso which supplies an obvious omission therein is required to be read retrospectively in operation, particularly to give effect to the section as a whole. It was further held that if strict construction leads to a result not intended to be subserved by the object of the legislation, and if another construction is possible apart from the literal construction, then that construction should be preferred. (6) The aforesaid decision of the Supreme Court would be squarely applicable to the facts of the case. In the circumstances, following the aforesaid decision, the question is answered accordingly, that is, in favour of the assessee and against the revenue. The Appellate Tribunal is right in law and on facts in deleting the disallowance made under section 43B of Rs.51,05,963/- being late payment of the employer's contribution to provident fund. The appeal is, accordingly, dismissed with no order as to costs.” 4. Having heard learned advocates for the revenue and the assessee and the question posed for consideration before us reproduced hereinabove and considering the decisions cited which squarely govern the questions raised in the present appeal, question with regard to employee’s contribution is required to be answered in favour of the revenue. Similarly, question with regard to employer’s contribution is required to be answered in favour of the assessee. There is no serious dispute between the learned advocates for the parties about the applicability of the aforesaid decisions on the facts and circumstances of the case. We are not giving further elaborate reasons for the same as this Court in similar cases has answered the very same question in favour of Page 4 of 5

O/TAXAP/551/2007 JUDGMENT assessee/revenue. 5. In view of the above, the question with regard to employee’s contribution is answered in favour of the revenue and against the assessee. Similarly, question with regard to employer’s contribution is answered in favour of the assessee and against the revenue. Consequently, the impugned order passed by the Tribunal is modified. Present Tax Appeal is partly allowed. (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 5 of 5