DCIT, NEW DELHI vs. M/S. PARASRAMPURIA SYNTHETICS LTD., NEW DELHI

Briefly stated, the facts of this case are that during the processing of I.T. return filed by the assessee for the Assessment Year 2009-2010 showing ‘Nil’ income, the case was put under scrutiny and consequently, notice u/s 143(3) of the Act was issued to the assessee on 26.08.2010. Shri P. K. Jain, CA, Ld. A.R. of the assessee appeared and filed reply and documents. The assessee (sick company as per BIFR letter dated 07.11.2006 under the provision of Sick Industrial Companies Special Provisions Act, 1985) having accumulated loses of Rs.1,62,514.78 lakhs, is in the business of manufacture of polyester filament yarn, cotton yarn, blended yarn and terry towel.

On the basis of examination of documents and in the light of the facts and circumstances of the case, the A.O. has made addition of Rs.40,88,631/-. The assessee’s appeal preferred before Ld. CIT(A), has been allowed. Feeling aggrieved, the Revenue has come up by filing the present appeal before the Tribunal. 4. We have head learned representatives of the parties, gone through the documents relied upon by the parties and circumstances of the case. 5. Undisputedly, the assessee company has been declared as sick company as per BIFR letter date 07.11.2006 under the provisions of Sick Industrial Companies (Special Provisions) Act 1985 having accumulated losses of Rs.1,62,514.78; the assessee company had deposited Rs.40,88,631/- i.e. employees contribution to Provident Fund after the due date but before the due date of filing of return for the year under consideration.

The sole question arises for determination of this case is; “as to whether Ld. CIT(A) has erred in deleting the addition of Rs.40,88,631/-, made by the A.O.” To decide the controversy, provisions contained u/s 43B(b) are reproduced for facility of reference as under: “43B. Notwithstanding anything contained in Assessment Year other provision of this Act, a deduction otherwise allowable under this Act in respect of – (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him.”

A bare perusal of the provisions contained u/s 43B(b) of the Act, goes to crystallize that now Section 43B(b) are having overriding effect, which has made the contribution on account of Provident Fund or superannuation fund or gratuity fund or any other fund for the welfare of employees even after the due date of relevant act, but before the due date of filing of income tax return u/s 139(1) of the I. T. Act, 1961, eligible for deduction.

Hon’ble Uttara Khand High Court in similar case entitled CIT Vs M/s. Kuchha Sugar Co. Ltd. of 2009 held that due date referred in Section 36(1)(va) of the income tax act must be read in conjunction with section 43B(b) i.e. payment / contribution made to the P.F. Authorities any time before filing of return for the year in which the liability to pay accrued, qualifies for deduction, so the instant case is squarely covered by the judgement CIT Vs Kuchha Sugar Co. Ltd. (supra).

In the light of what has been discussed above, Ld. CIT(A) has passed reasoned order deleting the addition of Rs.40,88,631/- made by the A.O. vide order dated 16.12.2011, consequently, the appeal of Revenue is hereby dismissed. Order pronounced in the open court on 13th Oct., 2015. 10.