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2018 Supreme(Mad) 3307
IN THE HIGH COURT OF JUDICATURE AT MADRAS
K. RAVICHANDRABAABU, J.
Unifac Management Services (India) Private Ltd - Appellant
Versus
Deputy Commissioner of Income Tax - Respondent
W.P. No. 5264 of 2018, Writ Miscellaneous Petition No. 6461 of 2018
Decided On : 23-10-2018
K. Sakthivel, Adv., Rajkumar Jhabakh, Adv.
Headnote:
Income Tax Act, 1961 - Section 36(1)(va) and Section 43B - Section 143(3) - Section 36(1)(va) - Section 139(1) - Employees State Insurance Act, 1948 (-Section 36 - Finance Act, 2003 - Employees Provident Fund - Payment Of Amount - Petitioner is a Company registered under Companies Act - It is an assessee under respondent - For assessment, petitioner filed its return of income on, admitting an income of Rs. 8,16,570/ - A sum of Rs. 12,25,257/- paid by petitioner towards Employees Provident Fund and ESI beyond due date, but prior to filing of return, was treated by petitioner company as deduction towards EPF and ESI - Return filed by petitioner was processed and impugned order was passed by respondent, disallowing said sum of Rs. 12,25,257/- paid by petitioner towards employees provident fund and ESI on reason that it was paid beyond due date mentioned in relevant enactment - Petitioner sent a letter to respondent informing that though said contribution was remitted beyond due date, but same has been done in accordance with respective acts and that remittance was before due date for filing returns of income for assessment year - Therefore, petitioner requested respondent to reconsider disallowance - However, respondent sent a notice impugned in this writ petition demanding payment of amount determined in assessment order – Held, Respondents have deposited contributions with R.P.F.C. but before filing of returns under IT Act and date of payment falls the due date under Employees Provident Fund Act, they will be denied deduction for all times - In view of second proviso, which stood on statute book at relevant time, each of such assessees would not be entitled to deduction under s.43B of Act for all times - They would lose benefit of deduction even in year of account in which they pay contributions to welfare funds, whereas a defaulter, who fails to pay contribution to welfare fund – Court have already pointed out that scope of Section 43B and Section 36(1)(va) are different and thus, there is no question of reading both provisions together to consider as to whether assessee is entitled to deduction in respect of sum belatedly paid towards such contribution, especially when such sum is, admittedly, a sum received by assessee/employer from his employee - Therefore, for considering such question, application of Section 36(1)(va) read with Section 2(24)(x) alone is proper course and any other interpretation would only defeat object and scope of both provisions - Consequently, with great respect, Court is not in agreement with other decisions rendered by High Courts of Karnataka, Punjab and Haryana and Allahabad, which in court view, did not consider distinction of scope and ambit of Section 36(1)(va) and Section 43B - Accordingly, Court find no error apparent on face of order passed by Assessing Authority, based on admitted facts – Petition Dismissed.
K. RAVICHANDRABAABU, J.
1. The petitioner is aggrieved against the assessment order of the respondent passed under Section 143(3) of the Income Tax Act dated 29.06.2017 and consequential letter of the respondent dated 16.02.2018.
2. The case of the petitioner is as follows:
The petitioner is a Company registered under the Companies Act. It is an assessee under the respondent. For the assessment year 2015-2016, the petitioner filed its return of income on 31.10.2015, admitting an income of Rs. 8,16,570/-. A sum of Rs. 12,25,257/- paid by the petitioner towards Employees Provident Fund and ESI beyond the due date, but prior to filing of return, was treated by the petitioner company as deduction towards EPF and ESI under Section 36(1)(va) and Section 43B of the Income Tax Act. The return filed by the petitioner was processed under Section 143(3) of the said Act and the impugned order was passed by the respondent, disallowing the said sum of Rs. 12,25,257/- paid by the petitioner towards employees provident fund and ESI on the reason that it was paid beyond the due date mentioned in the relevant enactment. The petitioner sent a letter dated 28.07.2017 to the respondent informing that though the said contribution was remitted beyond the due date, but the same has been done in accordance with the respective acts and that the remittance was before the due date for filing the returns of income for the assessment year 2015-2016. Therefore, the petitioner requested the respondent to reconsider the disallowance. However, the respondent sent a notice dated 16.02.2018 impugned in this writ petition demanding payment of the amount determined in the assessment order. Hence, the present writ petition.
3. The respondent filed a counter affidavit, wherein it is stated as follows:
The writ petition is not maintainable, since an efficacious and statutory alternative remedy of appeal is available to the petitioner. A cumulative reading of Section 2(24)(x) with Section 36(1)(va) would show that it can be interpreted that the employees' contribution towards the Social Security Schemes shall be treated as income for the employer, if such contributions are not deposited within the due date specified under the relevant legislation. In Finance Act, 2003, with effect from the assessment year 2004-05, second proviso to Section 43B of the said Act was deleted also by amending the first proviso, which states that no disallowance will be called for if the payment is made before the due date of filing of return of income under Section 139(1) of the said Act. A plain reading of Section 43B as amended would show that the deduction shall be allowable on the employers' contribution made before the due date for filing the return of income. The petitioner company not having complied with Section 36(1)(va) read with the provisions of Section 2 (24)(x) of the Act in accordance with the Circular No.22 of 2015 dated 17.12.2015, the belated payment made towards the contribution was credited back to the total income of the petitioner company. In the present case, there can be only one view that can be carved out taking into consideration the applicability of the said circular dated 17.12.2015 and therefore, reliance placed on several other High Court Judgments is incorrect, since interpretation of the circular is not taken into consideration at all in those cases.
4. Learned counsel for the petitioner Mr. K. Sakthivel submitted as follows:
Even though the petitioner did not pay the contribution before the concerned authority within the due date stipulated under the relevant enactment, admittedly, the petitioner had paid the same before filing the return of income before the respondent/Assessing Officer. Therefore, as contained in the proviso to Section 43B(b) of the Income Tax Act, the petitioner's interest is protected for getting deduction. Even otherwise, the delayed payment of the contribution before the concerned authority would only attract interest and penalty. T
