DCIT, CIRCLE-1(1), KOLKATA, KOLKATA vs. M/S. BUDGE BUDGE COMPANY LTD., KOLKATA

ORDER

Per N.V.Vasudevan, JM

raised by the Revenue read as follows: “1.On the facts and circumstances of the case, the Ld. CIT(A) is not justified in deleting disallowance of Rs. 92,87,864/- for delayed employees' contribution to PF and Rs. 16,79,149/- for delayed employees' contribution to ESI u/s 36(1)(va).

2. On the facts and circumstances of the case, the Ld. CIT(A) is not justified in deleting the- disallowance of Rs. 92,87,864/- and Rs. 16,79,149/- respectively on delayed employees' contribution to PF and ESI, without considering the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Gujarat State Road Development Corporation Ltd. Appeal No. 637 of 2013, in which it has been held that section 43B of the Income Tax Act 1961 is not applicable to employees' contribution to PF, after discussing decision of Hon'ble Supreme Court in the case of Alom Extrusions reported in 319 ITR 306(SC).

3. The appellant craves leave to amend, modify or alter any grounds of appeal during the course of hearing of this case.”

3. The Assessee is a company engaged in the business of Trading and Manufacture of Jute. The Assessee as an employer withheld the provident fund contribution payable by its employees from their salaries payable, as their share of contribution to Provident Fund (PF) and Employees State Insurance (ESI). As per section 36(1)(va) of the Act, the sum so withheld as employees contribution to PF & ESI, if it is not paid on or before the due date as provided under the relevant law governing the ITA No.2140/Kol/2014-M/s. Budge Budge Company Ltd. A.Y.1999-2000 1 provident fund, will not be allowed as deduction. It is the plea of the assessee that the employees’ contribution to PF & ESI had been paid by the assessee on or before the due date of filing the return of income for the relevant assessment year u/s 139(1) of the Act and therefore deduction claimed should be allowed as provided under the proviso to section 43B of the Act. The said plea of the assessee was rejected by the AO for the reason that the proviso to section 43B of the Act cannot be read into the provision of section 36(1)(va) of the Act. On appeal by the assessee, the CIT(A) deleted the addition made by the AO.

4. Aggrieved by the order of CIT(A) the Revenue has preferred the present appeal before the Tribunal. 5. At the time of hearing it was brought to our notice that the Hon’ble Calcutta High Court has also taken the view that employees’ contribution to PF paid on or before the due date of filing the return of income u/s 139(1) of the Act should be allowed as deduction. In this regard the decision of the Hon’ble Calcutta High Court in the case of M/s. Akzo Nobel India Ltd. Vs CIT in ITA 110 of 2011 order dated 14.06.2016 and in the case of CIT vs Vijayshree Ltd., of the Hon’ble Calcutta High Court in GA No.2607 of 2011 order dated 06.09.2011 were brought to our notice. In the order in the case of Vijayshree Ltd., (supra), the Hon’ble Calcutta High Court held as follows :

“The only issue involved in this appeal is as to whether the deletion of the addition by the Assessing Officer on account of Employees’Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not. It appears that the Tribunal below, in View of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306, held that the deletion was justified. Being dissatisfied, the Revenue has come up with the present appeal. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec. 43(B) of the Income Tax Act, as introduced by Finance Act, -M/s. Budge Budge Company Ltd. A.Y.1999-2000 2 2003, was curative in nat.ure and is required to be applied retrospectively with effect from 1 st April, 1988. Such being the position, the deletion of the amount paid by the Employees' Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal.”

Order pronounced in the Court on 12.05.2017.