D.T. Garasia, J.M.: These three appeals are by assessee against orders of CIT(A) for asst. yrs. 1999-2000, 2000-01 and 2002-03. ITA No. 1019/Rjt/2004 (Asst. yr. 1999-2000): only grievance raised by learned Authorised Representative of assessee is against confirmation of disallowance of loss of Rs. 226.74 crores claimed to be arising out of normal business transaction of issuing drafts in favour of four banks on instructions of Mr. Harshad Mehta on presentation of cheque of NHB in favour of assessee bank during its normal business activity. assessee State Bank of Saurashtra (in short SBS ) is public enterprise wholly owned subsidiary of State Bank of India (SBI) and is engaged in business of banking and allied activities. assessee has suffered loss of Rs. 226.74 crores during year under consideration as result of banking transactions undertaken solely in regular course of carrying on its business of banking. suit was filed by National Housing Bank against SBS for refund of principal amount of Rs. 95.40 crores pertaining to cheque brought by Mr. Harshad Mehta at Fort Branch of SBS for disposal accounting to his instructions was decreed against SBS and bank was directed to refund principal amount of Rs. 95.40 crores along with interest @ 9 per cent per annum from date of cheque i.e., 3rd Jan., 1992. decree passed against assessee has been reproduced in para 2 on p. 2 of appellate order. assessee filed appeal against judgment of Special Court. While not granting interim stay applied for, Hon ble Supreme Court directed bank assessee to pay decretal amount to NHB by 31st Dec., 1999. decretal amount with interest thereon worked out at 19 per cent, in terms of order/judgment of Special Court comes to Rs. 226.74 crores, which assessee claimed as liability arose from transactions undertaken by assessee bank solely in regular course of carrying on its business of banking which has been crystalised during year ending on 31st March, 1999 and accordingly deduction of said amount of Rs. 226.74 crores is claimed by assessee. AO observed that in return of income for asst. yr. 1996-97 deduction of Rs. 243.21 crores was claimed on account of liability on similar facts which was disallowed by AO and order of AO, on this issue, has been confirmed by learned CIT(A). appeal filed by assessee bank is pending before Tribunal. In return of income for asst. yr. 1997-98 also, deduction of Rs. 159.72 crores was claimed on similar facts which has been disallowed and appeal filed by assessee bank is pending with CIT(A). In view of this, AO disallowed loss as claimed during year under consideration. Matter was carried to CIT(A) and CIT(A) has confirmed same. learned Authorised Representative of assessee submitted that assessee has claimed similar loss in asst. yr. 1996-97 which is amount of liability finally determined by Hon ble Supreme Court in respect of loss suffered in security transactions with Punjab National Bank (PNB). assessee has claimed business loss and Tribunal vide order dt. 31st Dec., 2004 for asst. yr. 1996-97 in ITA No. 5/Rjt/2004 filed by assessee has allowed loss of Rs. 212 crores and vide order dt. 21st April, 2006 for asst. yr. 1997-98 has allowed loss of Rs. 147.75 crores. order of Tribunal was challenged before Hon ble High Court but COD did not grant permission to Department to pursue matter in High Court. Therefore, Revenue s appeals were withdrawn. Similarly in asst. yr. 1997-98, issue relating to allowance of loss incurred in security transactions with PNB and CANFINA became final. Therefore, learned Authorised Representative of assessee submitted that loss claimed in year under consideration is business loss, which is to be allowed. learned Authorised Representative of assessee contended that issue in controversy is covered by decision of Tribunal in ITA No. 5/Rjt/2004 dt. 31st Dec., 2004 [since reported in State Bank of Saurashtra vs. Dy. CIT (2005) 95 TTJ (Ahd) 225: (2005) 93 ITD 662 (Ahd)]. Therefore, loss as claimed for year under consideration may be allowed. learned Departmental Representative, on other hand, relied on orders of authorities below. We have heard rival contentions of both parties. Looking to facts and circumstances of case, we find that Tribunal in case of assessee for asst. yr. 1996-97, (supra)], has discussed disallowance of loss on account of transactions with PNB and SBS. Tribunal has discussed contractual liability and statutory liability and has also verified Special Court s order in detail and interim order of Hon ble Supreme Court. In this case, loss arising out transactions with NHB as per judgment and decree of Special Court pertaining to asst. yr. 1996-97, Tribunal has allowed loss arisen out of transactions with PNB and State Bank of Patiala which pertains to security transactions with Mr. Harshad Mehta. loss has arisen due to decree passed by Special Court being contractual liability and admitted Rs. 182 crores in 1996-97, paid Rs. 30 crores in asst. yr. 1997-98 and allowed by Tribunal in asst. yrs. 1996-97 and 1997-98 as business loss. We find that in year under consideration assessee has claimed deduction of Rs. 226.74 crores liability to NHB as per judgment/decree in Special Court No. 2/1995. We find that Tribunal has allowed similar claim of assessee in asst. yrs. 1996-97 and 1997-98. Therefore, respectfully following said decision of Tribunal [reported in (2005) 95 TTJ (Ahd) 225: (2005) 93 ITD 662 (Ahd) (supra)], we allow claim of assessee by allowing deduction of Rs. 226.764 crores being loss arising out of normal business transaction. In result, ITA No. 1019/Rjt/2004 (Asst. yr. 1999-2000) is allowed. ITA No. 1020/Rjt/2004 (Asst. yr. 2000-01): only ground raised in present appeal is against disallowance of payment of Rs. 10.30 crores by way of interest to NHB. Having heard both parties, we are of considered view that reasons given by us for allowability of sum of Rs. 226.74 crores as deduction in asst. yr. 1999-2000, as discussed in foregoing paras, is squarely applicable in respect of amount of Rs. 10.30 crores which has been claimed as deduction in asst. yr. 2000-01, and therefore, for same reasoning, we allow deduction of Rs. 10.30 crores as allowable business expenditure in year under consideration i.e., 2000-01. In result, ITA No. 1020/Rjt/2004 (Asst. yr. 2000-01) is allowed. ITA No. 1423/Rjt/2005 (Asst. yr. 2002-03) During course of hearing, learned Authorised Representative of assessee did not press grounds Nos. I, II-A, II-B, IV(ii), and therefore, these grounds are dismissed as not pressed. Ground No. III relates to disallowance of Rs. 91,92,519 under s. 43B of Act. In Annexs. J and K to their tax audit report in Form No. 3CD for asst. yr. 2001-02, auditors have pointed out that actual payment of bank s contribution to PF amounting to Rs. 91,92,519 was not made within time stipulated under relevant Provident Fund Rules. It is on this basis, AO disallowed claim of assessee and made impugned addition of Rs. 91,92,519 under s. 43B of Act. In appeal, CIT(A) confirmed same. learned Authorised Representative of assessee contended before u s that payments were made before filing of return and therefore, it should have been allowed as deduction. learned Authorised Representative of assessee placed reliance on unreported judgment of Hon ble Karanataka High Court in group of cases in IT Appeal No. 1088 of 2006 and others in case of CIT vs. Sabari Enterprises & Ors. [reported at (2007) 213 CTR (Kar) 269 Ed.] (a copy of said judgment found placed in paper book). learned Departmental Representative on other hand, supported impugned orders of authorities below. He also placed reliance on decision of Hon ble Madras High Court in case of CIT vs. Synergy Financial Exchange Ltd. (2006) 205 CTR (Mad) 481: (2007) 288 ITR 366 (Mad). We have heard both parties. In present case at hand. It is not disputed that employees contribution to PF has not been paid within statutory time-limit as prescribed under Provident Funds Rules, but it is claim of assessee that same has been paid before filing of return. We have gone through judgments relied upon by both parties. We find that on very much similar set of facts, relating to asst. yr. 1994-95. Hon ble Madras High Court in case of Synergy Financial Exchange Ltd. (supra) has considered second proviso to s. 43B and decided case in favour of Revenue and concluded that "Omission of second proviso to s. 43B by Finance Act, 2003, w.e.f. 1st April, 2004, has no retrospective operation so as to make it applicable to earlier period and, therefore, PF payments made after due dates under Provident Fund Act were not deductible in view of second proviso to s. 43B then in force." relevant portions of said judgment are extracted below: "....By Finance Act, 2003 which came into force from 1st April, 2004, second proviso to s. 43B was omitted result being, assessee is entitled to deduction of payment made towards PF, etc. when such payment is actually made by assessee on or before due date applicable for filing return, irrespective of fact that such payment is made on or before due date by which assessee is required to credit contribution to employee s account in relevant fund under relevant Act. (Para 4.5) It is settled law that fiscal legislation imposing liability is generally governed by normal presumption that it is not retrospective. It is cardinal principle of tax law that law to be applied is that in force in assessment year unless otherwise provided expressly or by necessary implication. above rule is applicable not only to charging section, but also other substantive provision such as, provision imposing penalty and it does not apply to machinery or procedural provisions of taxing Act which are generally retrospective and apply even to pending proceedings. Union of India vs. Madan Gopal AIR 1954 SC 158: 1954 SCR 541, Reliance Jute & Industries Ltd. vs. CIT (1979) 13 CTR (SC) 186: 1980 (1) SCC 139 and CWT vs. Sharvan Kumar Swarup & Sons (1994) 122 CTR (SC) 380: (1994) 210 ITR 886 (SC) applied. (Para 4.12) It is not permissible in law to take liberal view or lenient approach to give retrospective effect to deletion of second proviso to s. 43B so as to apply same to asst. yr. 1994-95, particularly when there is no indication in Finance Act, 2003 from language used and from object indicated that legislature intended expressly or by implication that second proviso to s. 43B was deleted to cure acknowledged evil for benefit of community as whole or to remove any such hardship, nor there is any express provision in statute that such deletion of second proviso to s. 43B will have any retrospective effect. Allied Motors (P) Ltd. vs. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC) distinguished. (Para 4.13) test to be applied for deciding as to whether later amendment should b e given retrospective effect, despite legislative declaration specifying prospective date as date from which amendment is to come into force, is as to whether without aid of subsequent amendment unamended provision is capable of being so construed as to take within its ambit subsequent amendment. Applying this test to facts of present case, it is not possible to hold that without aid of subsequent Finance Act, 2003 by which second proviso to s. 43B was omitted, unamended provision of s. 43B would allow deduction of payment of PF, etc. when such payment was made by assessee on or before due date applicable for filing return. CWT vs. B.R. Theatres & Industrial Concerns (P) Ltd. (2004) 188 CTR (Mad) 63: (2005) 272 ITR 177 (Mad) applied. There is no material available to hold that impugned deletion is either clarificatory or declaratory or intended for removal of doubts to give consequential retrospective effect to impugned deletion so as to make it applicable to asst. yr. 1994-95. Tribunal was not therefore right in law in deleting disallowance of PF payments. CIT vs. Madras Radiators & Pressings Ltd. (2003) 183 CTR (Mad) 332: (2003) 264 ITR 620 (Mad) followed; CIT vs. Standard Tile & Clay Works (P) Ltd. (2004) 265 ITR 525 (Ker), Halmira Estate Tea (P) Ltd. vs. CIT (2003) 179 CTR (Cal) 312: (2004) 268 ITR 498 (Cal), CIT vs. Sudera Services (P) Ltd. (2003) 179 CTR (Cal) 310: (2004) 268 ITR 505 (Cal) and CIT vs. Udaipur Distillary Co. Ltd. (2004) 187 CTR (Raj) 369: (2005) 274 ITR 429 (Raj) relied on. (Para 4.18) Omission of second proviso to s. 43B by Finance Act. 2003, w.e.f. 1st April, 2004, has no retrospective operation so as to make it applicable to earlier period and, therefore, PF payments made after due dates under Provident Fund Act were not deductible in view of second proviso to s. 43B then in force." Before Hon ble High Court, Karnataka, in case of CIT vs. Sabari Enterprises & Ors. (supra), question for decision was as follows: "Whether Tribunal was correct in holding that contributions made by assessee to PF and ESI are allowable deduction even though it is made beyond stipulated period as contemplated under mandatory provisions of s. 36(1)(va) r/w s. 2(24)(x) and s. 43B of Act as same was paid by assessee on or before due date for furnishing return of income as per s. 139(1) of Act?" above question has been answered by Hon ble Court against Revenue viz., in negative. relevant portion of said decision is quoted herein below. "8. learned counsel Sri Parthasarathy and Dr. Krishna, appearing for respondents, also drew our attention to deletion of second proviso to s. 43B of IT Act by Finance Act, 2003 which provision has come into force w.e.f. 1st April, 2004. reliance placed upon decision of apex Court in Allied Motors (P) Ltd. vs. CIT (supra) and also on decision in General Finance Co. vs. CIT (supra), in respect of applicability of s. 43B(b) and also omission of cl. (a) or (c) or (d) or (f) referred to above occurred in first proviso to s. 43B supports case of assessees and also relevant paras extracted from Allied Motor s case (supra) and para 59 referred to supra in this judgment from Finance Bill with all fours supports case of assessee/respondents. Therefore, we have to answer substantial question of law No. 1 framed by this Court in these appeals at instance of Revenue against them viz., in negative. Accordingly, we answer substantial question No. 1 framed in these appeals in negative." In case of CIT vs. M/s Vinay Cement Ltd. in CC No. 1934/2007 dt. 7th March, 2007 [reported as CIT vs. Vinay Cement Ltd. (2007) 213 CTR (SC) 268 Ed.] (copy of order placed on record), Hon ble Supreme Court has held as under: "In present case we are concerned with law as it stood prior to amendment of s. 43B. In circumstances assessee was entitled to claim benefit in s. 43B for that period particularly in view of fact that he has contributed to PF before filing of return." Therefore, respectfully following decision of Hon ble Supreme Court in case of CIT vs. Vinay Cement Ltd. (supra) and decision of Hon ble Karnataka High Court in case of CIT vs. Sabari Enterprises & Ors. (supra), we hold that CIT(A) is not justified in confirming disallowance. addition made in this respect is, therefore, deleted. Ground No. V relates to Rs. 43,18,86,000, amount which is sought by assessee to be withdrawn erroneously offered to charge of tax under s. 41(1) of Act. Having heard both parties and perusing material on record, we find that assessee has raised following additional grounds before CIT(A). "(1) ultimate decree having been passed by Supreme Court of India for total sum of Rs. 212 crores on 26th April, 2001, difference between t h e original claim and amount so decreed being Rs. 31,21,86,000 and ultimate decree having been passed by Supreme Court of India in case of CANFINA for total sum of Rs. 147.75 crores on 26th Sept., 2001, difference between original claim and amount so decreed being Rs. 11,97,00,000 and bona fidely offered under s. 41(1) of IT Act, in asst. yr. 2002-03, year under appeal, same deserves to be deducted from computation of income in view of order dt. 31st Dec., 2004 in case of PNB and in view of order passed by CIT(A) for asst. yr. 1997-98 in case of CANFINA. (2) In addition to withdrawal of total amount of Rs. 43,18,86,000 under s. 41(1) referred in detail hereinabove, taking into account relevant observations made by Tribunal in order passed for asst. yr. 1996-97 in relation to Rs. 30 crores being difference between Rs. 212 crores confirmed by Supreme Court of India and Rs. 182 crores allowed by Tribunal (vide para 26 of its order dt. 31st Dec., 2004), further deduction of Rs. 30 crores be allowed in this year." appellant assessee raised additional ground for withdrawal of amount of Rs. 43,18,86,000 offered to tax under s. 41(1) of Act pertaining to asst. yr. 1996-97 and asst. yr. 1997-98. said amount was claimed as deduction as business loss at time of filing return for asst. yr. 1996-97 and asst. yr. 1997-98. However, for assessment year under appeal loss was finally determined by Hon ble Supreme Court and therefore balance amount was offered to tax under s. 41(1) of Act. During pendency of appeal before CIT(A), Tribunal decided appeals for asst. yr. 1996-97 and asst. yr. 1997-98 and determined allowable loss as per decision of apex Court. claim of assessee for loss amounting to Rs. 43,18,86,000 was therefore rejected for both assessment years. assessee therefore preferred additional ground before CIT(A) to withdraw said amount offered to tax under s. 41(1) for assessment year under appeal. In view of above facts AO is directed to examine facts in detail and pass order giving effect to claim of appellant for withdrawal of amount of Rs. 43,18,86,000 offered to tax under s. 41(1) of Act for assessment year under appeal. We cannot examine claim of assessee as same was raised for first time before CIT(A). This ground of appeal is therefore remitted back to AO accordingly. In result, ITA No. 1423/Rjt/2005 filed by assessee for asst. yr. 2002-03 is partly allowed as indicated above. *** STATE BANK OF SAURASHTRA v. ADDITIONAL COMMISSIONER OF INCOME TAX