Allowed

The Commissioner of Income Tax, Aurangabad. v. Godavari Manar S S K Ltd, Biloli

Bombay HC8 Oct 2007ITXA/256/2007

Case brief

AI extract

What is this about?

The Bombay High Court addressed whether employer PF contributions paid after the statutory due date but before the income tax return filing date were allowable as deductions under Section 43B for assessment years prior to the 2004 amendment. The Court held the 2003 amendment was prospective and dismissed the appeal.

What did the court decide?

The substantial question of law was answered in the negative in favour of the Revenue and against the Assessee.

The Commissioner of Income Tax, Aurangabad. Vs Godavari Manar S S… — Income Tax | Bombay HC (2007)

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 (-1-)

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MGN

¶3

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION

¶4

 INCOME TAX APPEAL NO.256 OF 2007

¶5

 The Commissioner of Income Tax

¶6

 Aayakar Bhavan, Near Holi
 Cross High School, Contonment,

¶7

 Aurangabad ..Appellant

¶8

Vs.

¶9

 Godaveri (Mannar) Sahakari
 Sakhar Karkhana Ltd., Shankar
 Nagar, Tal. Biloli, Dist. Nanded..Respondent

¶10

 WITH
 INCOME-TAX APPEAL NO.259 OF 2007

¶11

 The Commissioner of Income Tax

¶12

 Aayakar Bhavan, Near Holi
 Cross High School, Contonment,
 Aurangabad ..Appellant

¶13

Vs.

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 Godaveri (Mannar) Sahakari
 Sakhar Karkhana Ltd., Shankar

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 (-2-)

¶16

 Nagar, Tal. Biloli, Dist. Nanded..Respondent

¶17

 Mr. B.M. Chatterjee with Mrs. P.P. Bhosale and Mr.
 P.S.Sahadevan for the Appellants
 Mr. S.N. Inamdar with Mr. A.K. Jasani, for the
 Respondents

¶18

 CORAM: F.I. REBELLO & J.P. DEVADHAR, JJ.
 DATE : 8TH OCTOBER, 2007

¶19

JUDGMENT (PER F.I. REBELLO, J.):

¶20

 . Tax Appeal No.256 of 2007 is in respect of
 Assessment Year 1991-92 and Tax Appeal No.259 of
 2007 is in respect of Assessment Year 1994-95.

¶21

 2. The substantial question of law as

¶22

 formulated in both the Appeals is as under:-

¶23

 "Whether on the facts and in the
 circumstances of the case, the Tribunal was
 right in law in directing to allow the claim
 in respect of delayed payment of PF, if it
 has been paid upto the date of filing of
 Return of Income ignoring the fact that said
 amendment to the provisions of Section 43B
 of the I.T. Act was made with effect from
 1st April, 2004 i.e. from Assessment Year
 2004-05 and prior to that period, such
 contribution is to be allowed only when the
 same is paid before the due date of

¶24

 (-3-)

¶25

 respective month."

¶26

 2. In both the Appeals the Assessment Officer
 disallowed the payment towards P.F. as being beyond
 the due date prescribed under the P.F. Act. The
 Assessee preferred an Appeal. The Commissioner of
 Income-tax (Appeals) followed the judgment of the
 Delhi Bench of the ITAT in the case of Additional
 C.I.T. vs. Vestas RRB India Ltd., dated 28th May,
 2004 and relying on the said decision allowed the
 Appeal. The Revenue aggrieved preferred an Appeal
 to ITAT. The learned ITAT observed in para.3 as
 under;-

¶27

 "3. The first issue is in respect of
 delayed payment of P.F. and the
 disallowance was made u/s.43B of I.T. Act
 of the amounts as per the above chart of
 respective Assessment Years. In respect of
 this ground, we hereby follow a decision of
 Pune bench in the case of Indian Card
 Clothing Co. Ltd., ITA No.214/PN/98 and
 direct to consider the following three
 points before deciding the issue of
 disallowance to P.F. contribution.

¶28

 (i) The Section 43B would apply only to
 employer’s contribution while the deduction

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 (-4-)

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 in respect of employees contribution would
 be governed by the provisions of Section
 36(1)(va);

¶31

 (ii) The deduction in respect of employers
 contribution is to be allowed if the payment
 has been made by the assessee before the due
 date of filing of return;

¶32

 (ii) In case of employees contribution, the
 deduction is to be allowed if the payment is
 made within the grace period of the due date
 as specified in section 36(1)(va)."

¶33

 On examination of above mentioned requirement of
 law, the A.O. can allow the claim if the payment is
 within the ambit of following two conditions:-

¶34

 i) In so far as the employer’s contribution is
 concerned, the same shall be allowed if it has been
 paid up to the date of the filing of the return, as
 provided u/s.43-B; and

¶35

 ii) In so far as the employee’s contribution is
 concerned, the same shall be allowed if it is paid
 within the period allowed under the relevant rules
 including the grace period reckoning from the date
 of payment of wages/salary to the employees.

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 (-5-)

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 We hereby restore this ground to be decided

¶38

 pro-tanto, hence may be treated as allowed for
 statistical purposes."

¶39

 . Revenue is aggrieved by the decision of the
 Tribunal referring the matter to the A.O. to the
 extent of the finding that in so far as the
 employer’s contribution is concerned, the same shall
 be allowed if it has been paid up before the due
 date of filing of the return.

¶40

 3. On behalf of the Revenue their learned

¶41

 Counsel submits that the deletion of the second
 proviso to Section 43B by the Finance Act 2000 with
 effect from 1st April, 2004 would only mean that
 Section 43B as it stands in so far as employer’s
 contribution is concerned will be governed by the
 1st proviso from 1st April, 2004.

¶42

 . On the other hand on behalf of the assessee
 the learned Counsel submits that the amendment is

¶43

 curative. The amendment is resorted to for the

¶44

 purpose of removing the hardship occasioned by

¶45

 virtue of the proviso. In so far as Section 43B(a)
 is concerned the Supreme Court in the case of Allied
 Motors (P) Ltd. vs. Commissioner of Income-Tax 224
 ITR 677 has held that the amendment to be curative

¶46

 (-6-)

¶47

 and retrospective. It is submitted that the proviso
 which is inserted to remedy unintended consequences
 and to make the provision workable, a proviso which
 supplies an obvious omission in the section and is
 required to be read into the section to give the
 section a reasonable interpretation, requires to be
 treated as retrospective in operation, so that a
 reasonable interpretation can be given to the
 section as a whole.

¶48

 . Counsel for the parties have made reference
 to judgment as also to other material in aid of
 their respective contention to the construction that
 should be given. Consequent to the deletion of the
 proviso by to the Finance Act, 2003.

¶49

 4. Section 43B was inserted by the Finance Act
 1983 with effect from 1st April 1984. The two
 provisos were added by Finance Act 1987 with effect
 from 1st April, 1988. The second proviso was
 substituted by Finance Act, 1989 with effect from
 1st April, 1989. The relevant portion of Section
 43B as first enacted with the provisos reads as
 under:-

¶50

 "43B. "Notwithstanding anything contained
 in any other provision of this Act, a
 deduction otherwise allowable under this Act

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 (-7-)

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 in respect of --

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 (a) any sum payable by the assessee by way
 of tax, duty, cess or fees, by whatever name
 called, under any law for the time being in
 force, or

¶54

 (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, or

¶55

 (c) any sum referred to in clause (ii) of
 sub-section (1) of Section 36, or

¶56

 (d) any sum playable by the assessee as
 interest on any loan or borrowing from any
 public financial institution or a State
 financial Corporation or a State industrial
 investment corporation, in accordance with
 the terms and conditions of the agreement
 governing such loan or borrowing, or

¶57

 ()e) any sum payable by the assessee as
 interest on any loan or advances from a
 scheduled bank in accordance with the terms

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 and conditions of the agreement governing

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 (-8-)

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 such loan or advances, or

¶61

 (f) any sum payable by the assessee as an
 employer in lieu of any leave at the credit
 of his employee,

¶62

 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:

¶63

 Provided that nothing contained in this
 section shall apply in relation to any sum
 which is actually paid by the assessee on or
 before the due date applicable in his case
 for furnishing the return of income under
 sub-section (1) of section 139 in respect of
 the previous year in which the liability to
 pay such sum was incurred as aforesaid and
 the evidence of such payment is furnished by
 the assessee along with such return."

¶64

 "Provided further that no deduction shall in
 respect of any sum referred to in clause (b)

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 (-9-)

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 be allowed unless such sum has actually been
 paid during the previous year on or before
 the date as defined in the explanation below
 Clause (va) of sub-section (1) of Section
 36.

¶67

 The second proviso was substituted by Finance Act,
 1989 with effect from 1st April, 1989 and read as
 under:-

¶68

 "Provided further that no deduction shall in
 respect of any sum referred to in clause (b)
 be allowed unless such sum has actually been
 paid in cash or to by issue of a cheque or
 draft or by any other mode on or before the
 due date as defined in the explanation below
 Clause (va) of sub-section (1) of Section
 36, and where such payment has been made
 otherwise than in cash, the same has been
 realised within 15 days from the due date."

¶69

 The second proviso was deleted by Finance Act, 2003.
 The first proviso was also amended by the Finance
 Act, 2003 with effect from 1st April, 2004 by
 omitting the following words:-

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 "referred to in clause (a) or clause (c) or

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 (-10-)

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 clause (d) or clause (e) or clause (f)."

¶73

 The section as it stood before the Finance Act,
 2003, treated payments in respect of tax, duty, cess
 or fee, payment made to an employee, as bonus or
 commission or services rendered as set out therein
 any sum payable by the assessee as interest on any
 loan or borrowing from any public financial
 institution as set out therein, any sum payable by
 the assessee as interest or any loan advances from a
 scheduled bank as set out therein and any sum
 payable by the assessee as an employer in lieu of
 any leave at the credit of his employee as one class
 of deductions and employer’s contribution by way of
 contribution to the Provident Fund as another class.

¶74

 5. Section 36(va) with the explanation reads as
 under:-

¶75

 "(va) any sum received by the assessee from
 any of his employees to which the provisions
 of sub-clause (x) of clause (24) of section
 2 apply, if such sum is credited by the
 assessee to the employee’s account in the
 relevant fund or funds on or before the due
 date.

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 Explanation.-- For the purpose of this

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 (-11-)

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 clause, due date means the date by which the

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 assessee is required as an employer to
 credit an employee’s contribution to the
 employee’s account in the relevant fund
 under any Act, rule, order or notification
 issued thereunder or under any standing
 order, award, contract of service or
 otherwise."

¶80

 6. We may now briefly trace the history of
 Section 43B and the relevant amendments from time to
 time. In terms of Section 145 of the Act, profit
 and gains of business or profession are computed in
 accordance with either cash or mercantile system of
 accounting regularly employed by the assessee. An
 assessee who had adopted the mercantile system of
 accounting would be entitled to account for his
 income and expenditure on the basis of accrual and
 not on the basis of actual receipt or disbursement.

¶81

 Word "paid" is defined under Section 43(2) of the
 Act to mean actually paid or incurred according to
 the method of accounting on the basis of which the
 profits or gains are computed.

¶82

 7. The Finance Act, 1983 inserted Section 43B
 as the Government noted that statutory liabilities
 including employer’s contribution to P.F. remained
 pending for a long time, some times extending over

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 (-12-)

¶84

 several years whereas the assessee for the purpose
 of income tax assessment claimed the liability as
 deduction on the ground that they made accounts on
 mercantile or account basis. On the other hand,
 they dispute the liability and do not pay the same.
 For some reason or the other these liabilities were
 disputed and not discharged. In some cases
 undisputed liabilities were not paid on certain
 grounds.

¶85

 8. The Memorandum explaining the provisions of
 the Finance Act, 1989 which substituted the second
 proviso set out that the aforesaid proviso was
 introduced to remove hardship caused to certain tax
 payers (1989) 176 ITR (St.) 124. The relevant note
 read as under:-

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 "Under the existing provisions of section

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 43B of the Income-tax Act, it is also
 provided that any sum payable by the
 assessee as an employer by way of
 contribution to the provident fund or
 superannuation fund, etc., is not allowable
 as a deduction unless the same is paid
 during the previous year on or before the
 due date. The payment in respect of the

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 last month of a previous year shall have to
 be made by the due date and cannot possibly

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 be made in the previous year itself. It is,
 therefore, proposed that the words during
 the previous year occurring in the second

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 proviso to Section 43B be deleted."

¶92

 Noting the hardship being occasioned in the matter
 of deduction regarding employer’s contribution,
 unlike other payment referred to in Section 43B of
 the Income-tax Act, the memorandum noted that to
 avoid any hardship being caused on account of
 reasons of postal delay, strikes or long holidays,
 it is proposed to provide that if any sum payable by
 the employer by way of contribution to any P.F. or
 superannuation fund or gratuity fund or any other
 fund for the welfare of employees, if made by
 cheque, draft or any other mode, has been tendered
 by the due date, and the actual payment has been
 realized within fifteen days of the due date,
 deduction shall be allowed.

¶93

 9. By Section 21 of the Finance Act, 2003, the
 following amendments were incorporated in Section
 43B of the Act, 2003.

¶94

 . In the first proviso, the words, brackets
 and letters "referred to in clause (a) or clause (c)
 or clause (d) or clause (e) or clause (f) have been
 omitted. The second proviso was omitted.

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 (-14-)

¶96

 . In the Finance Minister’s Budget Speech Act

¶97

 (2003) 260 ITR (St.) 26, 27 pars. 137 to 144 of the
 Finance Bill, the Honourable Finance Minster
 indicated the setting up of the Task Force on
 Direct-Indirect Taxes under the Chairmanship of Dr.
 Vijay Kelkar. The Minister noted in his speech,
 that the suggestions made by the Task Force were to
 eliminate procedural complexities, reduce paper
 work, simplify tax administration and to enhance
 efficiency, also integrate such tax proposals as the
 system can at present absorb. The report of the
 Kelkar Committee has been published in (2002) 258
 ITR (J) 1. It would be necessary to reproduce the
 following paragraph:-

¶98

 "In terms of the provisions of section 43B
 of the Income-tax Act, deduction for
 statutory payments relating to labour, taxes
 and State and public financial institutions
 are allowed as deductions, if they are paid
 during the financial year. However, under
 the provisions payment of taxes and interest
 to State and public financial institution
 are deemed to have been paid during the
 financial year even if they are paid by the
 due date of filing of return. Further if
 the liability is discharged in the

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 (-15-)

¶100

 subsequent year after the due date of filing
 of return, the payment is allowed as a
 deduction in the subsequent year. In the
 case of statutory payment relating to
 labour, the deduction for the payment is
 disallowed if such payment is made any time
 after the last date of payment of the about
 related liability. Trade and industry
 across the country represented that the
 delayed payment of statutory liability
 related to labour should be accorded the
 same treatment as delayed payment of taxes
 and interest, i.e. they should be allowed
 in the year of account.

¶101

 Since the objective of the provision is to
 ensure that a tax-payer does not avail of
 any statutory liability without actually
 making a payment for the same, we are of the
 view that these objectives would be served
 if the deduction for the statutory liability
 relating to labour are allowed in the year
 of payment. The complete disallowance of
 such payments is too harsh a punishment for
 delayed payments. Therefore, we recommend
 that the deduction for delayed payment of
 statutory liability relating to labour
 should be allowed in the year of payment

¶102

 (-16-)

¶103

 like delayed taxes and interest."

¶104

 10. We may also refer to the Memorandum
 explaining the provisions in the Finance Bill, 2003
 in the matter of Section 43B. The relevant portion
 reads as under:-

¶105

 "The Bill also proposes to provide that in
 case of deduction of payments made by the
 assessee as an employer by way of
 contribution to any provident fund or
 superannuation fund or any other fund for
 the welfare of the employees shall be
 allowed in computing the income of the year
 in which such sum is actually paid. In case
 the same is paid before the due date of
 filing the return of income for the previous
 year, the allowance will be made in the year
 in which the liability was incurred.

¶106

 These amendments will take effect from 1st
 April, 2004 and will, accordingly apply in
 relation to the assessment year 2004-05 and
 subsequent years. (Clause 18)"

¶107

 The Notes on Clauses the relevant portion reads as
 follows:-

¶108

 (-17-)

¶109

 "It is also proposed to amend the first
 proviso to the said section so as to omit
 the references of clause (a), clause (c),
 clause (d), clause (e) and clause (f) which
 is consequential in nature.

¶110

 It is also proposed to omit the second
 proviso to the said section. These
 amendments will take effect from 1st April,
 2004 and will, accordingly, apply in
 relation to the assessment year 2004-2005
 and subsequent years."

¶111

 11. With the above background we may consider
 the judgment in Allied Motors (P) Ltd. vs.
 Commissioner of Income-tax 224 ITR 677. The Supreme
 Court relied on the Memorandum explaining the
 provisions in the Finance Bill, 1983 as also the
 Budget Speech of the Finance Minister in the year
 1983-84 and observed as under:-

¶112

 "Section 43B was, therefore, clearly aimed
 at curbing the activities of those
 tax-payers, who did not discharge their
 statutory liability of payment of excise
 duty, employer’s contribution to provident
 fund, etc., for long periods of time but
 claimed deductions in that regard from their

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 (-18-)

¶114

 income on the ground that the liability to
 pay these amounts had been incurred by them
 in the relevant previous year. It was to
 stop this mischief that Section 43B was
 inserted. It was clearly not realised that
 the language in which section 43B was
 worded, would cause hardship to those
 tax-payers who had paid sales tax within the
 statutory period prescribed for this
 payment, although the payment so made by
 them did not fall in the relevant previous
 year. This was because the sales tax
 collected pertained to the last quarter of
 the relevant accounting year. Therefore,
 even when the sales tax had in fact been
 paid by the assessee within the statutory
 period prescribed for its payment and prior
 to the filing of the income tax return,
 these assessees were unwittingly prevented
 from claiming a legitimate deduction in

¶115

 respect of the tax paid by them. This was
 not intended by section 43B. Hence, the
 first proviso was inserted in section 43B.
 The amendment which was made by the Finance
 Act of 1987 in Section 43B inserting, inter
 alia, the first proviso was remedial in
 nature, designed to eliminate unintended
 consequences which may cause undue hardship

¶116

 (-19-)

¶117

 to the assessee and which made the provision
 unworkable or unjust in a specific
 situation."

¶118

 . It had been argued before the Supreme Court,
 that looking to the curative nature of the amendment
 made by the Finance Act of 1987, the proviso
 inserted by the amending Finance Act of 1987 should
 be given retrospective effect and be read as forming
 part of Section 43B from its inception. Also
 several High Courts had also held that the proviso
 is retrospective. The Supreme Court relied on
 Explanation 2 which was added to Section 43B by the
 Finance Act of 1989 with retrospective effect from
 April 1, 1984. The Memorandum explaining the
 reasons was considered. It set out that certain
 Courts have interpreted that the amount payable in a
 particular year should also be statutorily payable
 under the relevant statute in the same year. It was
 noted that this is against the legislative intent
 and, therefore, by way of inserting a clarificatory
 amendment and for removal of doubts that the words
 "any sum payable" be defined to mean any sum,
 liability for which has been incurred by the
 tax-payer during the previous year irrespective of
 the date by which such sum is statutorily payable.
 The amendment will take effect from 1st April, 1984.

¶119

 (-20-)

¶120

 . The learned Supreme Court also relied on
 Departmental Circular No.550 dated 1st January, 1990
 the judgment in R.B. Jodha Mal Kuthrada vs. CIT
 (1978) 82 ITR 570 and relying on the G.P.Singh’s
 Principles of Statutory Interpretation, 4th Edition,
 page 2901 observed that "it is settled that if a
 statute is curative or merely declaratory of the
 previous law, retrospective operation is generally
 intended". The Court, therefore, held in the
 circumstances set out that the first proviso was in
 the nature of curative legislation and consequently
 held the legislation to be retrospective.

¶121

 12. Is it possible to apply the same
 interpretative principle to Section 43(b) in so far
 as the omission of the second proviso and deletion
 in the first proviso. When the two provisions were
 added 43(b) was covered by the second proviso and
 the first proviso covered the other provisions.
 They were treated as two different classes. The
 Finance Act of 1987, therefore, treated Section
 43B(b) as a distinct class from the other
 provisions. Noting certain hardships that were
 being occasioned by the operation of the second
 proviso, the Finance Act, 1989 substituted the
 second proviso. Parliament in its wisdom chose not
 to delete the second proviso but substituted the
 same by Finance Act of 1989 by noting the hardship

¶122

 (-21-)

¶123

 that may be occasioned by the language of the second
 proviso as it stood. Parliament, therefore,
 intended that Section 43B (b) be treated as a class
 by itself distinct from the other sub-sections.

¶124

 . The Finance Bill of 2003 was basically based
 on the report of the Kelkar Committee and the need
 to simplify the tax laws. Kelkar Committee report
 recorded that Trade and industry across the country
 represented that the delayed payment of statutory
 liability related to labour should be accorded the
 same treatment as delayed payment of taxes and
 interest, i.e. they should be allowed in the year
 of account. This was because even if the employees
 dues towards contributory P.F. were paid but after
 the due date an employer was not entitled to
 deduction of the amounts either for that assessment
 year or any other assessment year. The Notes on
 Clauses and the Memorandum Explaining the provisions
 seeks to give effect to these amendments from 1st

¶125

 April, 2004 and to apply in relation to the
 assessment year 2004-2005. In the face of this
 material, which are normal aids to construction, it

¶126

 cannot be said that because the second proviso has

¶127

 been omitted by the Finance Act, 2003 and Section
 43B is also now covered by the first proviso. The

¶128

 proviso as it now stands has to be read as curative
 and to be read retrospectively from the first

¶129

 (-22-)

¶130

 introduction of Section 43B by the Finance Act. As
 noted earlier the proviso was substituted in 1989 on
 account of hardship noted. Parliament did not do
 away with the proviso, but only substituted the
 same. It is only in 2003 based on the
 recommendations of the Kelkar Committee who
 responded to representation by Trade and Industry
 that the Finance Bill was introduced with the clear
 intent that it would be prospective.

¶131

 13. The Section as amended consequent to the
 omission of the second proviso came up for
 consideration before the Madras High Court in
 Commissioner of Income-tax vs. Synergy Financial
 Exchange Ltd., 288 ITR 366 (Madras). One of the

¶132

 points considered was as under:-

¶133

 "Whether on the facts and in the
 circumstances of the case, the Appellate
 Tribunal is right in law in deleting the
 disallowance of Rs.1,45,399/- being the
 provident fund payments applying the

¶134

 provisions of Section 43B of the Income-tax
 Act, 1961?"

¶135

 In that case the relevant assessment year was
 1994-95. The Court noted that the fiscal

¶136

 legislation imposing liability is generally governed

¶137

 (-23-)

¶138

 by normal presumption that it is not retrospective

¶139

 and that in interpreting the statute, the Courts in
 the first instance have to consider the plain
 literal language of the statute. If on so reading
 it is not possible to give effect to the intent of
 Parliament, then the Courts resort to purposeful
 interpretation to give effect to that intent. The
 Court did not read the amendment as retrospective.

¶140

 . The Assam High Court in Commissioner of
 Income Tax Vs. George Williamson (Assam) Ltd. 284
 ITR 619 rejected the contention that the amendment
 should be read as retrospective.

¶141

 14. After the arguments were concluded and the
 matter was posted for judgment and before the
 judgment could be delivered the learned Counsel
 draws our attention to a judgment of the Karnataka
 High Court in Income-tax Appeal No.1088 of 2006
 between the Commissioner of Income Tax, Central
 Circle vs. M/s.Sabari Enterprises and other matters
 decided on 3rd July, 2007. Considering the Finance
 Act, 2003 the Karnataka High Court has held that

¶142

 if the assessee had paid P.F. dues by the

¶143

 period stipulated under Section 36(1)(va) the
 assessee’s contributions to PF are allowable
 deductions, as the amendment is curative. Reliance
 was placed on the judgment in Allied Motors Pvt.

¶144

 (-24-)

¶145

 Ltd. (supra).

¶146

 15. In the first instance the amendment is made
 applicable from the assessment year 2004-2005.
 Similarly, in interpreting statutory provisions, the
 Court also considers the mischief Rule, namely what
 was the state of law before the Act or the amendment
 and what is the mischief that the Act or the
 amendment seeks to avoid. From the normal aids to
 construction which we have earlier noted the only
 mischief that the amendment if and at all seeks to
 obviate is the need to eliminate the procedural
 complexities, reduce paper work, simplify tax
 administration and to enhance efficiency and also
 integrate such tax proposals as the system can at
 present absorb and acceptance of the representation
 made by Trade and Industry that they should not be
 denied the benefits of deductions on account of
 delayed payment of taxes and interest. The law as
 it stood earlier was that the employers contribution

¶147

 to P.F. if not paid within the due date the
 employer was not entitled to deduction. Right from
 the introduction of Section 43B, apart from the
 amendment carried out by 1989, the law was that if
 the employer did not pay the contribution by the due
 date then it was not liable for deduction. This
 position has been remedied, and the remedial measure
 made applicable from the assessment year 2004-2005.

¶148

 (-25-)

¶149

 Having noted the history of the legislation, the
 Memorandum Explaining the provision in the Finance
 Bill, 2003, the Notes on Clauses and the language of
 the amendment itself we are of the considered view
 that the omission of the second proviso was not
 curative and consequently it cannot be said that the
 amendment is retrospective.

¶150

 16. For the reasons discussed above we are of
 the opinion that it is not possible for us to agree
 with the view taken by the Karnataka High Court.

¶151

 17. In the light of the above conclusion, the
 question as framed in both the Appeals has to be
 answered in the negative, in favour of the Revenue

¶152

 and against the Assessee. Order accordingly.

¶153

(J.P. DEVADHAR, J.) (F.I. REBELLO, J.)

The Commissioner of Income Tax, Aurangabad. v. Godavari Manar S S K Ltd, Biloli

Case brief

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The Commissioner of Income Tax, Aurangabad. v. Godavari Manar S S K Ltd, Biloli

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