KWALITY MILK FOODS LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX
[Citation -2006-LL-0316-2]

Citation 2006-LL-0316-2
Appellant Name KWALITY MILK FOODS LTD.
Respondent Name ASSISTANT COMMISSIONER OF INCOME TAX
Court ITAT
Relevant Act Income-tax
Date of Order 16/03/2006
Assessment Year 2002-03
Judgment View Judgment
Keyword Tags profits and gains of business or profession • mercantile system of accounting • contribution to provident fund • public financial institution • employees provident fund • substantive provision • method of accounting • statutory liability • superannuation fund • acknowledgement of • tax administration • long-term finance • statutory payment • payment of tax • labour welfare • actual payment • special bench • gratuity fund • co-operative • postal delay • late payment • excise duty • sales-tax
Bot Summary: The first proviso seeks to provide that the section shall not apply in respect of the payment of any tax or duty under any law if the sum is actually paid on or before the date on which the return of income is due to be furnished under s. 139(1) for the previous year in which the liability to pay such sum was incurred. The second proviso seeks to provide that no deduction shall be allowed in regard to any sum payable by the taxpayer 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 the employees unless such sum has actually been paid during the previous year on or before the due date. To avoid any hardship being caused in such cases, it is proposed to provide that, if any sum payable by 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, if made by a 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. In the context 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, deduction shall be allowed in computing the income of the year in which such sum is actually paid. After the aforesaid amendment the provisions of s. 43B stood as under : 43B. Certain deductions to be only on actual payment Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or 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 any sum referred to in cl. Words in any language are not scientific symbols having any precise or definite meaning. 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 for payment of the labour-related liability.


M.K. CHATURVEDI, VICE PRESIDENT: ORDER Under s. 255(3) of IT Act, 1961 (hereinafter called as "the Act") Hon ble President of Income-tax Appellate Tribunal (hereinafter called "the Tribunal") has constituted this Special Bench to consider following question : "Whether amendment in proviso to s. 43B by Finance Act, 2003 could be construed to be curative, as such retrospective in nature ?" 2 . We have heard rival submissions in light of material placed before us and precedents relied upon. We have also heard learned counsel for intervener. assessee in this case paid contribution to provident fund before due date applicable in its case for furnishing return under s. 139(1) of Act, albeit payment was made beyond due date prescribed in s. 36(1)(va) of Act for making contribution to employee s account in relevant fund under law. Question posed before Tribunal was whether deduction can be allowed in respect of said payment in view of amendment in proviso to s. 43B by Finance Act, 2003 by holding same as retrospective. 3 . question whether statutory provision has retrospective effect or not depends primarily on language in which it is couched. In case of statutes which are merely declaratory or which relate to only matters of procedure, it may have retrospective effect if manifest purpose compels one to construe Act as such. It is therefore sine qua non to examine purpose of enactment. 4. As per prescription of s. 145 of Act profits and gains of business or profession are computed in accordance with method of accounting regularly employed by assessee. Where assessee follows mercantile system of accounting, income and expenditure are accounted for on basis of accrual and not on basis of actual receipts or disbursements. word "paid" is defined under s. 43(2) of Act to mean "actually paid or incurred" according to method of accounting on basis of which profits or gains are computed. 5. It had come to notice of Government that statutory liabilities such as in respect of sales-tax, excise duty, employer s contribution to provident fund, employees state insurance scheme, etc., remained pending for long time, extending sometimes to several years, whereas for purpose of income-tax assessment, these liabilities were claimed on basis of accrual and deduction was granted on principle of mercantile accountancy. For some reason or other these liabilities were disputed and not discharged and in some cases even undisputed liabilities were also not paid on certain grounds. 6 . To curb this practice, Finance Act, 1983 has inserted s. 43B to provide that deduction for any sum payable by assessee by way of tax or duty under any law for time being in force or any sum payable by assessee as employer by way of contribution to provident fund or superannuation fund or gratuity fund or any other fund for welfare of employees shall irrespective of previous year in which liability to pay such sum was incurred, be allowed only in computing income of that previous year in which such sum is actually paid by assessee. 7. section also contained Explanation for removal of doubts. It was stipulated in Explanation that where deduction in respect of any sum aforesaid is allowed in computing income of any previous year, being previous year relevant to asst. yr. 1983-84, or any earlier assessment year, in which liability to pay such sum was incurred by assessee, assessee shall not be entitled to any deduction under s. 43B in respect of such sum on ground that sum has been actually paid by him in that year. In other words, assessee who has already been allowed deduction of liability on account of tax or duty or in respect of any sum payable as contribution to any fund for asst. yr. 1983-84, or any earlier year in which liability to pay was incurred, cannot, in respect of that liability, be allowed deduction in asst. yr. 1984-85, or any subsequent year on ground that he has actually made payment towards such liability in that year. 8. Sec. 43B of Act was further amended by Finance Act, 1987. Two provisos were added w.e.f. 1st April, 1988, namely, "Provided that nothing contained in this section shall apply in relation to any sum referred to in cl. (a) which is actually paid by assessee on or before due date applicable in his case for furnishing return of income under sub- s. (1) of s. 139 in respect of previous year in which liability to pay such sum was incurred as aforesaid and evidence of such payment is furnished by assessee along with such return : Provided further that no deduction shall, in respect of any sum referred to in cl. (b), be allowed unless such sum has actually been paid during previous year on or before due date as defined in Explanation below cl. (va) of sub-s. (1) of s. 36." 9 . scope of amendment was explained in Memorandum Explaining Provisions in Finance Bill, 1987 [ (1987) 60 CTR (St) 59 : (1987) 165 ITR (St) 156 ] as under : "Under existing provisions of s. 43B of IT Act, any statutory liability outstanding as on last day of previous year, is not deductible for purposes of computation of income. It is proposed to insert two provisos in this section. first proviso seeks to provide that section shall not apply in respect of payment of any tax or duty under any law if sum is actually paid on or before date on which return of income is due to be furnished under s. 139(1) for previous year in which liability to pay such sum was incurred. second proviso seeks to provide that no deduction shall be allowed in regard to any sum payable by taxpayer as employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for welfare of employees unless such sum has actually been paid during previous year on or before due date. due date for purposes of this proviso will mean date by which assessee is required as employer to credit such contribution to employee s account in relevant fund under provisions of any law or term of contract of service or otherwise." 1 0 . Again by Finance Act, 1989 second proviso to s. 43B was substituted by following proviso : "Provided further that no deduction shall, in respect of any sum referred to in cl. (b), be allowed unless such sum has actually been paid in cash or by issue of cheque or draft or by any other mode on or before due date as defined in Explanation below cl. (va) of sub-s. (1) of s. 36, and where such payment has been made otherwise than in cash, sum has been realised within fifteen days from due date." 1 1 . As per Memorandum Explaining Provisions in Finance Bill, 1989 [ (1989) 76 CTR (St) 56 : (1989) 176 ITR (St) 124 ], aforesaid proviso was introduced to remove hardship caused to certain taxpayers. relevant note is reproduced here as under : "Under existing provisions of s. 43B of IT Act, it is also provided that any sum payable by assessee as employer by way of contribution to provident fund or superannuation fund, etc., is not allowable as deduction unless same is paid during previous year on or before due date . payment in respect of last month of previous year shall have to be made by due date and cannot possibly be made in previous year itself. It is, therefore, proposed that words during previous year occurring in second proviso to s. 43B be deleted......... Unlike other payments referred to in s. 43B of IT Act, deduction regarding employer s contribution, if denied in year, is not available as deduction in any subsequent year also. On account of various reasons like postal delay, strikes or long holidays, payment of employer s contributions to respective authorities is delayed even though payment by cheque or draft is tendered before due date. To avoid any hardship being caused in such cases, it is proposed to provide that, if any sum payable by employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for welfare of employees, if made by cheque, draft or any other mode, has been tendered by due date, and actual payment has been realized within fifteen days of due date, deduction shall be allowed." 1 2 . By s. 21 of Finance Act, 2003 following amendments were incorporated in s. 43B of Act : "(a) in cl. (e), (i) xxxxxxx (ii) xxxxxx (b) in first proviso, words, brackets and letters referred to in cl. (c) or cl. (d) or cl. (e) or cl. (f) have been omitted. (c) second proviso has been omitted." 13. In context of payments made by assessee as employer by way of contribution to any provident fund or superannuation fund or any other fund for welfare of employees, deduction shall be allowed in computing income of year in which such sum is actually paid. sums shall also foe allowed as deduction in previous year in which liability to pay same was incurred in case same is paid before due date of filing return of income for previous year. 14. After aforesaid amendment provisions of s. 43B stood as under : "43B. Certain deductions to be only on actual payment Notwithstanding anything contained in any other provision of this Act, deduction otherwise allowable under this Act in respect of (a) any sum payable by assessee by way of tax, duty, cess or fee, by whatever name called, under any law for time being in force, or (b) any sum payable by assessee as employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for welfare of employees, or (c) any sum referred to in cl. (ii) of sub-s. (1) of s. 36, or (d) any sum payable by assessee as interest on any loan or borrowing from any public financial institution or State financial corporation or State industrial investment corporation, in accordance with terms and conditions of agreement governing such loan or borrowing, or (e) any sum payable by assessee as interest on any loan or advances from scheduled bank in accordance with terms and conditions of agreement governing such loan or advances or (f) any sum payable by assessee as employer in lieu of any leave at credit of his employee, shall be allowed irrespective of previous year in which liability to pay such sum was incurred by assessee according to method of accounting regularly employed by him only in computing income referred to in s. 28 of that previous year in which such sum is actually paid by him : Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by assessee on or before due date applicable in his case for furnishing return of income under sub-s. (1) of s. 139 in respect of previous year in which liability to pay such sum was incurred as aforesaid and evidence of such payment is furnished by assessee along with such return. Explanation 1 : For removal of doubts, it is hereby declared that where deduction in respect of any sum referred to in cl. (a) or cl. (b) of this section is allowed in computing income referred to in s. 28 of previous year (being previous year relevant to assessment year commencing on 1st day of April, 1983, or any earlier assessment year) in which liability to pay such sum was incurred by assessee, assessee shall not be entitled to any deduction under this section in respect of such sum in computing income of previous year in which sum is actually paid by him. Explanation 2 : For purposes of cl. (a), as in force at all material times, any sum payable means sum for which assessee incurred liability in previous year even though such sum might not have been payable within that year under relevant law. Explanation 3 : For removal of doubts, it is hereby declared that where deduction in respect of any sum referred to in cl. (c) or cl. (d) of this section is deduction in respect of any sum referred to in cl. (c) or cl. (d) of this section is allowed in computing income referred to in s. 28 of previous year (being previous year relevant to assessment year commencing on 1 day of April, 1988, or any earlier assessment year) in which liability to pay such sum was incurred by assessee, assessee shall hot be entitled to any deduction under this section in respect of such sum in computing income of previous year in which sum is actually paid by him. Explanation 3A : For removal of doubts, it is hereby declared that where deduction in respect of any sum referred to in cl. (e) of this section is allowed in computing income referred to in s. 28 of previous year (being previous year relevant to assessment year commencing on 1st day of April, 199 6, or any earlier assessment year) in which liability to pay such sum was incurred by assessee, assessee shall not be entitled to any deduction under this section in respect of such sum in computing income of previous year in which sum is actually paid by him. Explanation 3B : For removal of doubts, it is hereby declared that where deduction in respect of any sum referred to in cl. (f) of this section is allowed in computing income, referred to in s. 28, of previous year (being previous year relevant to assessment year commencing on 1st day of April, 2001, or any earlier assessment year) in which liability to pay such sum was incurred by assessee, assessee shall not be entitled to any deduction under this section in respect of such sum in computing income of previous year in which sum is actually paid by him. Explanation 4 : For purposes of this section, (a) public financial institutions shall have meaning assigned to it in s. 4A of Companies Act, 1956 (1 of 1956); (aa) scheduled bank shall have meaning assigned to it in Explanation cl. (iii) of sub-s. (5) of s. 11 (b) State financial corporation means financial corporation established under s. 3 or s. 3A or institution notified under s. 46 of State Financial Corporations Act, 1951 (63 of 1951); (c) State industrial investment corporation means Government company within meaning of s. 617 of Companies Act, 1956 (1 of 1956), engaged in business of providing long-term finance for industrial projects and eligible for deduction under cl. (viii) of sub-s. (1) of s. 36". 15. If language of statute is plain, obvious meaning is to be applied. Rules of interpretation are applied only to resolve ambiguities. object and purpose of interpretation is to ascertain mens legis, i.e., intention of law, as evinced in statute. key to opening of every law is reason and spirit of law. To be literal in meaning is to see body and miss soul. judicial key to interpretation is composite perception of Deha (body) and Dehi (soul) of provision. 16. To decipher real meaning of word is difficult task. Words, in addition to normal meaning, have penumbra, dim fringe. Cases falling within periphery of penumbra or fringe are apt to give rise to sharp difference of opinion. There is no possibility of mistaking midnight for noon; but at what precise moment twilight becomes darkness is hard to determine. Words in any language are not scientific symbols having any precise or definite meaning. Language is imperfect medium to convey one s thought. 17. Words are used in statute as medium of expression. particular thought is communicated through words. Language is often misunderstood even in ordinary conversation. person who has spoken words can be approached for clarification. Legislature cannot be approached. It becomes functus officio after enactment of Act. Therefore, for construing correct meaning of statute, it may be necessary to determine how its meaning was understood when it was originally enacted. 18. For this purpose recourse could be made to sources of that time. This is known as contemporanea expositio. This is abbreviated form of maxim given by Lord Coke in form contemporanea expositio est optima et fortissima in lege. It means contemporaneous exposition is best and most powerful in law. Maxwell refers to this maxim by saying that best exposition of statute or any other document is that which it has received from contemporary authority. language of statute must be understood in sense in which it was understood when it was enacted. Those who lived at or near time of its enactment may reasonably be supposed to be better acquainted than their descendants, with circumstances to which it had relation, as well as with sense than attached to legislative expressions. 19. Adverting to Finance Bill, 2003 paras 137 to 144 of Finance Minister s Budget Speech at (2003) 180 CTR (St) 27, 28 : (2003) 260 ITR (St) 26, 27 we find that Hon ble Finance Minister indicated setting up of Task Force on Direct-Indirect Taxes under Chairmanship of Dr. Vijay Kelkar and gave due acknowledgement of work of Task Force as per para 140 of Bill. Further in para 143 Hon ble Finance Minister has stated that basic philosophy as laid down by these reports is sound. There is need to eventually move away from exemption and discretion based system to different, more current order. That is ideal that Task Force, particularly in respect of direct taxes have suggested. Hon ble Finance Minister in his speech also stated that ideal presented by Task Force is difficult to achieve in one leap. It was suggested that Task Force be implemented in gradual manner and in phases. In para 144 it is stated that most of suggestions made by Task Force to eliminate procedural complexities, reduce paper work, simplify tax administration and to enhance efficiency, also integrate such tax proposals as system can at present absorb. Further Hon ble Finance Minister proposed whole basket of reforms in tax administration based on Kelkar Committee s report. 20. Final report of Kelkar Committee was published in (2003) 179 CTR (St) 5 : (2003) 126 Taxman (St) 1. Relevant extract in regard to removal of total disallowance of late payment of labour welfare payments at para 5.7 of report at page No. 122 is reproduced as under : "In terms of provisions of s. 43B of IT Act, deduction for statutory payments relating to labour, taxes and State and public financial institutions are allowed as deduction, if they are paid during financial year. However, under provisions payment of taxes and interest to State and public financial institutions are deemed to have been paid during financial year even if they are paid by due date of filing of return. Further if liability is discharged in subsequent year after due date of filing of return, payment is allowed as deduction in subsequent year. In case of statutory payment relating to labour, deduction for payment is disallowed if such payment is made any time after last date for payment of labour-related liability. Trade and industry across country represented that delayed payment of statutory liability related to labour should be accorded same treatment as delayed payment of taxes and interest, i.e., they should be allowed in year of account. Since objective of proviso is to ensure that taxpayer does not avail of any statutory liability without actually making payment for same, we are of view that these objectives would be served if deduction for statutory liability relating to labour are allowed in year of payment. complete disallowance of such payments is too harsh punishment for delayed payments. Therefore, we recommend that deduction for delayed payment of statutory liability relating to labour should be allowed in year of payment like delayed taxes and interest." 2 1 . It is sound rule of construction of statute firmly established in England as far back as 1584 when Hayden s case (1584) 76 E.R. 637 was decided that for sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of common law) four things are to be discerned and considered : 1st what was common law before making of Act; 2nd what was mischief and defect for which common law did not provide; 3rd what remedy Parliament hath resolved and appointed to cure disease of Commonwealth; and 4th true reason of remedy; and then office of all Judges is always to make such construction as shall suppress mischief, and advance remedy and to suppress subtle inventions and evasions for continuance of mischief, and to add force and life to cure and remedy according to true intent of makers of Act, pro bono publico (for public good). 22. Now testing case on touchstone of Hayden s rule, we find that in Budget Speech for year 1983-84 [ (1983) 33 CTR (St) 1 : (1983) 140 ITR (St) 31, 32 ] and Memorandum Explaining Provisions in Finance Bill, 1983 [ (1983) 33 CTR (St) 11 : (1983) 140 ITR (St) 160 ], it was stated that s. 43B was clearly aimed at curbing activities of those taxpayers, 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 deduction in that regard from their income on ground that liability to pay these amounts had been incurred by them in relevant previous year. It was to stop this mischief that s. 43B was inserted. 2 3 . first proviso, which was inserted by Finance Act, 1987 is remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to assessee and which made provision unworkable or unjust in specific situation. Sec. 43B(a), first proviso to s. 43B and Expln. 2 have to be read together as giving effect to true intention of s. 43B. If Expln. 2 is retrospective, first proviso will have to be so construed. Read in this light also first proviso has to be read into s. 43B from its inception along with Expln. 2. Without first proviso, Expln. 2 would not obviate hardship or unintended consequences of s. 43B. first proviso supplies obvious omission. But for this proviso ambit of s. 43B becomes unduly wide bringing within its scope those payments, which were not intended to be prohibited from category of permissible deduction. In that view of matter, first proviso to s. 43B was treated as retrospective in operation for and from asst. yr. 1984-85 by Hon ble Supreme Court in case of Allied Motors (P) Ltd. Etc. vs. CIT ( 199 7) 139 CTR (SC) 364 : ( 199 7) 224 ITR 677 (SC) reversing Escorts Ltd. vs. Union of India ( 199 1) 93 CTR (Del) 169 : ( 199 1) 189 ITR 81 (Del) . In taking above view, apex Court has approved view taken in Jamshedpur Motor Accessories Stores vs. Union of India ( 199 1) 91 CTR (Pat) 19 : ( 199 1) 189 ITR 70 (Pat) . 91 CTR (Pat) 19 : ( 199 1) 189 ITR 70 (Pat) . 24. Provisos carve things out of main enacting provision that would otherwise be included within principal section. It qualifies generality of main enactment by providing exception and taking out from main provision portion, which but for proviso would be part of main provision. proviso must, therefore, be considered in relation to principal matter to which it stands as proviso. proviso should not be read as if providing something by way of addition to main provision which is alien to main provision itself. 25. In case of Allied Motors (P) Ltd. vs. CIT (supra), Hon ble Supreme Court has held that proviso which is inserted to remedy unintended consequences and to make provision workable, proviso which supplies obvious omission in section and is required to be read into section to give section reasonable interpretation, requires to be treated as retrospective in operation, so that reasonable interpretation can be given to section as whole. 2 6 . By Finance Act, 1987 amendment, two provisos were inserted. Second proviso was measure for penalizing employers who misutilised contributions. As such it was stipulated that if any sum payable by assessee as employer by way of contribution to provident fund, superannuation fund, gratuity fund or any other fund for welfare of employees, such payment shall be eligible for deduction only when employer makes actual payment before due date for such payment under relevant statute. Whereas in respect of payment of tax, duty, etc. for allowability of claim, payment was possible till date prescribed for furnishing return of income under s. 139(1) of Act in respect of previous year in which liability to pay such sum was incurred. This differential treatment was abrogated by Finance Act, 2003 by omitting second proviso and in first proviso omitting words, brackets and letters "in cl. (a), or cl. (c) or cl. (d) or cl. (e) or cl. (f)." 27. In case of Allied Motors (P) Ltd. vs. CIT (supra), Hon ble Supreme Court treated first proviso to s. 43B as inserted by Finance Act, 1987 as retrospective in operation for and from asst. yr. 1984-85. On parity of reasoning proviso which is now amended by Finance Act, 2003 can also be treated as retrospective qua payment of tax and duty. Dispute only concerns about retrospectivity of provision qua payment of contribution to provident fund, etc. No objection was raised by learned Departmental Representative in respect of retrospectivity of payment qua sales-tax in view of decision of apex Court. If that be position, how part of this proviso could be said to be prospective and part of it retrospective ? proviso was inserted to help execution of main section and not to hinder its course. 2 8 . Learned Departmental Representative made reference to decision of Hon ble Madras High Court rendered in case of CIT vs. Madras Radiators & Pressings Ltd. (2003) 183 CTR (Mad) 332 : (2003) 264 ITR 620 (Mad) . In this case Hon ble High Court has held that contribution to provident fund must be made within prescribed date. This decision was rendered on 31st Dec., 2002. It is pertinent to note that amended provision was not available at that point of time. As such, on retrospectivity of amendment there was no contemplation in order. In our opinion, this decision is not relevant for deciding issue which is posed before Special Bench. task assigned to this Special Bench is to point out whether amendment in proviso to s. 43B by Finance Act, 2003 could be construed to be curative as such retrospective in nature. Various Benches of Tribunal allowed both types of claims giving rise to inherent contradiction on this aspect. As such, this Special Bench was constituted. question raised before Special Bench is not adjudicated by jurisdictional High Court in case of Madras Radiators & Pressings Ltd. (supra). As such, we decline to accept contention of learned Departmental Representative on this aspect. 29. law consists, not in particular instances and precedents, but in reason of law as said in dictum : ubi eadem ratio ibi idem jus like reason doth make like law. Reason is life of law. Reason can be deciphered with reference to context. That interpretation is best which makes textual interpretation match contextual. statute is best interpreted when we know why it was enacted. With this knowledge, statute must be read, first as whole and then section by section, clause by clause, phrase by phrase and word by word. We must look at Act as whole and discover what each section, by word. We must look at Act as whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into scheme of entire Act. No part of statute and no word of statute can be construed in isolation. Statutes have to be construed so that every word has place and every thing is in its place. 30. In case of Allied Motors (P.) Ltd. (supra), apex Court quoted with approval words of Judge Learned Hand and observed that one cannot make fortress out of dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is surest guide to their meaning. It was held (at p. 686) : "A proviso which is inserted to remedy unintended consequences and to make provision workable, proviso which supplies obvious omission in section and is required to be read into section to give section reasonable interpretation, requires to be treated as retrospective in operation, so that reasonable interpretation can be given to section as whole." 31. object of s. 43B was to ensure that deduction claimed was in relation to amount which had in fact been paid by assessee and that payment that is required to be made is made within time allowed by law. It would be clearly unjust to disallow deduction of such payment in assessment of income of assessee. This injustice was realised by Parliament itself which deleted reference to "the previous year" in second proviso. object that was accomplished by amendment was to give effect to true intention behind introduction of section. That amendment is, therefore, required to be regarded as retrospective qua amendment incorporated by Finance Act, 1987. 32. In case of Salem Co-operative Sugar Mills Ltd. vs. CIT (2004) 187 CTR (Mad) 650 : (2004) 266 ITR 166 (Mad) Hon ble High Court has held as under : "This Court has held so in decisions reported in CIT vs. Shri Ganapathy Mills Co. Ltd. (2000) 243 ITR 879 (Mad) and CIT vs. Salem Co-operative Spinning Mills Ltd. (2002) 258 ITR 360 (Mad) . We are unable to accept submission made by counsel for Revenue that Parliament had different intention so far as payments of amounts due under Employees Provident Fund Act was concerned and that it had intended to treat that amount differently from amount of tax which assessees were required to pay. We find no support whatsoever for this submission either in memorandum or in any other document. When s. 43B was introduced all that was sought to be ensured was that statutory liabilities are to be given deduction to only if they had been discharged by actual payment." 3 3 . In view of aforesaid decision of jurisdictional High Court, payments of amounts due under Provident Fund Act cannot be treated on different footings. In our opinion, to eliminate inequality second proviso was omitted. We have further noted that substantive provision remained unaltered. Only provisos were amended to dilute rigour of procedural aspect. 34. We have considered entire conspectus of case. As per prescription of s. 43B of Act, deduction for statutory payments pertaining to labour, taxes, etc. are to be allowed as deductions, if they are actually paid during financial year. However, to mitigate unintended hardship, it is stipulated in proviso that taxes are deemed to have been paid during financial year even if they are paid by due date of filing of return. In case of statutory payment relating to labour, it was sine qua non to make payment any time before last date for payment of labour-related liability. It was represented before Government that delayed payment of statutory liability related to labour should be accorded same treatment as delayed payment of taxes, etc. deduction if denied in year could not be claimed in subsequent year. On account of various reasons like postal delay, strikes or long holidays, payment of employer s contributions to respective authorities at times were delayed even though payment were tendered before due date. Having regard to this unintended hardship, by Finance Act, 2003 in first proviso of s. 43B, words, brackets and letters "referred to in cl. (c) or cl. (d) or cl. (e) or cl. (f) have been omitted and second proviso was also omitted. Legislature removed differentiation between employee welfare payments and others. Uniform criteria was prescribed for allowability of claim. amendment was made to eliminate unintended consequences that caused undue hardship to taxpayers. Therefore, amendment in proviso to s. 43B by undue hardship to taxpayers. Therefore, amendment in proviso to s. 43B by Finance Act, 2003 was curative in nature. Accordingly, it should be applied retrospectively. 35. As regards intervener, we have not examined facts of case. regular Bench while deciding these appeals may keep in view principles laid down in this case. In result, appeal of assessee stands allowed. *** KWALITY MILK FOODS LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX
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