Spectrum Consultants India (P) Ltd. v. CIT

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The Tax Publishers2013 TaxPub(DT) 1668 (Karn-HC) : (2013) 052 (I) ITCL 0556 : (2014) 266 CTR 0094 : (2013) 215 TAXMAN 0597 : (2013) 089 DTR 0274 INCOME TAX ACT, 1961 --Business disallowance under section 43B--Employees' and employer's contribution to PF, ESI, Etc. Paid after due date prescribed under statutes, but before extended due date for filing return under section 139 (1)--Assessee-company claimed deduction of employees' contribution under the EPF and ESI Act, though some of which were remitted beyond the stipulated periods prescribed under the said statutes and the mandatory provisions of section 36(1)(va) read write section 2(24)(x) and section 43B while the same were effected by assessee before the due date for filing returns of income under section 139(1) as extended up to 30-11-2006. Assessing officer disallowed the payment on ground that section 43B(b) allowed payment of only employer's contribution till date of filing return. *Held:* Was not justified as following the decision in case of Sabari Enterprises (supra), wherein it was after extracting section 2(24)(x), section 36(1)(va) and section 43B(b) and regard being had to the expression 'due date', meaning the date by which the assessee is required, as an employer, to credit the contributions to the employees' account in the relevant fund under any Act, Rule or Order or notification issued thereunder or under any standing order, award or contract of service or otherwise, as well as non-obstante clause in section 43B, held that the provisions read along with the first proviso to the section as was inserted by Finance Act, 1987, which came into effect from 1-4-1988, deduction towards the Employees' contribution paid can be claimed by the assessee. It was further held that Explanation to clause (va) of section 36(1) makes it very clear that the amount actually paid by the assessee on or before the due date applicable in this case at the time of submitting returns of income under section 139 to the Revenue in respect of the previous years, can be claimed by the assessee for deduction out of their gross income. Therefore, assessee was entitled to claim deduction. Income Tax Act, 1961 Sections 43B, 36(1)(va) & 139 In the Karnataka High Court Ram Mohan Reddy, J. Spectrum Consultants India (P.) Ltd. v. CIT Writ Petition No. 8834 of 2011 (T-IT) 17 April, 2013 Petitioner by : R. B. Krishna Respondent by : Sanmathi Indra Kumar ORDER Briefly stated facts are, petitioner - an income tax assessee filed its return of income on 23-11-2006 for the assessment year 2006-07 (previous year ending 31-3-2006) under the Income Tax Act, 1961, for short the Act, claiming deduction of Rs. 22,91,791 being the employees contribution under the Employees Provident Fund & Miscellaneous Provisions Act, 1952, for short EPF Act, and the Employees State Insurance Act, 1948, for short ESI Act, though remitted late and beyond the due dates prescribed under the said statutes. The assessing officer concluded the assessment under section 143(1) of the Act by order dt. 29-8-2008 disallowing the deduction of Rs. 22,91,791 on the premise that the remittance was delayed and beyond the period prescribed under the aforesaid statutes. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1668 (Karn-HC) : (2013) 052 (I) ITCL 0556 : (2014) 266 CTR 0094 : (2013) 215 TAXMAN 0597 : (2013) 089 DTR 0274

INCOME TAX ACT, 1961

--Business disallowance under section 43B--Employees' and employer's contribution to PF, ESI, Etc. Paid after due date prescribed under statutes, but before extended due date for filing return under section 139 (1)--Assessee-company claimed deduction of employees' contribution under the EPF and ESI Act, though some of which were remitted beyond the stipulated periods prescribed under the said statutes and the mandatory provisions of section 36(1)(va) read write section 2(24)(x) and section 43B while the same were effected by assessee before the due date for filing returns of income under section 139(1) as extended up to 30-11-2006. Assessing officer disallowed the payment on ground that section 43B(b) allowed payment of only employer's contribution till date of filing return. Held: Was not justified as following the decision in case of Sabari Enterprises (supra), wherein it was after extracting section 2(24)(x), section 36(1)(va) and section 43B(b) and regard being had to the expression 'due date', meaning the date by which the assessee is required, as an employer, to credit the contributions to the employees' account in the relevant fund under any Act, Rule or Order or notification issued thereunder or under any standing order, award or contract of service or otherwise, as well as non-obstante clause in section 43B, held that the provisions read along with the first proviso to the section as was inserted by Finance Act, 1987, which came into effect from 1-4-1988, deduction towards the Employees' contribution paid can be claimed by the assessee. It was further held that Explanation to clause (va) of section 36(1) makes it very clear that the amount actually paid by the assessee on or before the due date applicable in this case at the time of submitting returns of income under section 139 to the Revenue in respect of the previous years, can be claimed by the assessee for deduction out of their gross income. Therefore, assessee was entitled to claim deduction.

Income Tax Act, 1961 Sections 43B, 36(1)(va) & 139

In the Karnataka High Court

Ram Mohan Reddy, J.

Spectrum Consultants India (P.) Ltd. v. CIT

Writ Petition No. 8834 of 2011 (T-IT)

17 April, 2013

Petitioner by : R. B. Krishna

Respondent by : Sanmathi Indra Kumar

ORDER

Briefly stated facts are, petitioner - an income tax assessee filed its return of income on 23-11-2006 for the assessment year 2006-07 (previous year ending 31-3-2006) under the Income Tax Act, 1961, for short the Act, claiming deduction of Rs. 22,91,791 being the employees contribution under the Employees Provident Fund & Miscellaneous Provisions Act, 1952, for short EPF Act, and the Employees State Insurance Act, 1948, for short ESI Act, though remitted late and beyond the due dates prescribed under the said statutes. The assessing officer concluded the assessment under section 143(1) of the Act by order dt. 29-8-2008 disallowing the deduction of Rs. 22,91,791 on the premise that the remittance was delayed and beyond the period prescribed under the aforesaid statutes.