LexCOMMISSIONER OF INCOME TAX versus M/S. ALOM EXTRUSIONS LIMITED
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2009) 15 (ADDL.) S.C.R. 1154 A COMMISSIONER OF INCOME TAX v. M/S. ALOM EXTRUSIONS LIMITED ,..... (Civil Appeal No. 7771 of 2009) B NOVEMBER 25, 2009 [S.H. KAPADIA AND H.L. DATTU, JJ.] Income Tax Act, 1961 - s. 43-8 second proviso - Payment made by employer towards contribution to provident - c fund or any other welfare fund allowable as deduction, if paid ~ before date for filing return of income - Omission/deletion of second proviso w.e.f. 01.04.2004 by Finance Act, 2003 - Effect of - Held: Amendment of s. 438 is curative in nature - Finance Act, 2003 deleted the second proviso and brought D about uniformity in first proviso by equating tax, duty, cess and fee with contributions to welfare funds of employee - Hence, is retrospective and would operate w.e.f. 01.04.1988-when first )<-- proviso came to be inserted - Finance Act, 2003. E The question which arose for consideration in these appeals is whether omission/deletion of the second proviso to section 43-B of the Income Tax Act, 1961, by the Finance Act, 2003, operated with effect from 1st April, 2004, or whether it operated retrospectively with effect from 1st April, 1988? ,...._ F Dismissing the appeals by the Revenue, and allowing the appeals by the assessees, the Court HELD: 1.1. Section 43-B [main section] of the the Income Tax Act, 1961, which stood inserted by Finance . .;- G Act, 1983, with effect from 1st April, 1984, expressly commences with a non-obstante clause, the underlying object being to disallow deductions claimed merely by ,. making _a Book entry based on Merchantile System of H 1154 COMMISSIONER OF INCOME TAX v. ALOM 1155 EXTRUSIONS LIMITED Accounting. At the same time, section 43-B [main section] A ,....,.,. made it mandatory for the Department to grant deduction in computing the income under section 28 in the year in which tax, duty, cess, etc., is actually paid. However, the Parliament took cognizance of the fact that accounting year of a company did not always tally with the due dates B under the Provident Fund Act, Municipal Corporation Act [octroi] and other Tax laws. Therefore, by way of first proviso, an incentive/relaxation was sought to be given ~ in respect of tax, duty, cess or fee by explicitly stating that if such tax, duty, cess or fee is paid before the date of c :filing of the Return under the Income Tax Act [due date], the assessee(s) then would be entitled to deduction. However, this relaxation/incentive was restricted only to tax, d,Uty, cess and fee. It did not apply to contributions to labour weifcfre funds. The reason appears to be that D ..,.. the employer(s) should not sit on the collected .. contributions and deprive the workmen of the rightful J benefits under Social Welfare legislations by delaying payment of contributions to the welfare funds. However, the second proviso resulted in implementation problems, E which resulted in the enactment of Finance Act, 2003, deleting the second proviso and bringing about uniformity in the first proviso by equating tax, duty, cess ...LJ. and fee with contributions· to welfare funds. Once this uniformity is brought about in the first proviso, then, the F Finance Act, 2003, which is made applicable by the Parliament only with effect from 1st April, 2004, would become curative ~n nature; hence, it would apply ~- retrospectively with effect from 1st April, 1988. [Para 15] [1163-D-H; 1164-A-D] G 1.2. In the instant case, the respondents deposited the contributions with the R.P.F.C. after 31st March [end of accounting year] but before filing of the Returns under the Income Tax Act and the date of payment fell after the H 1156 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R. A due date under the Employees' Provident1Fund Act, they would be denied deduction for all times.! In view of the second proviso, which stood on the statute book at the i._.r.. relevant time, each of such assessee(s) would not be entitled to deduction under section 43-8 of the Act for all B times. They would lose the benefit of deduction even in ... the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, -2004, and who pays the contribution after 1st April, 2004, c would get the benefit of deduction under Section 43-8 of .+ the Act. Therefore, Finance Act, 2003, should be read as retros_pective. It w
Excerpt shown. Read the full judgment & AI analysis in Lexace.