Commissioner of Income Tax-III vs Sri Sakthi Textiles Ltd.

K. Raviraja Pandian, J.—The revenue is on appeal against the order of the Income Tax Appellate Tribunal, Madras ''A'' Bench, dated

07.11.2003 made in ITA No. 2176/Mds/1996 for the assessment year 1992-93.

The assessee filed its return of income for the assessment year 1992-93 on 30.12.1992 declaring taxable income of Rs. 35,62,410/-. The

assessing officer, while completing the assessment found that the assessee had paid contribution to gratuity fund amounting to Rs. 7,83,495/-

beyond the accounting period. The assessing officer held that the extended due date as per the proviso to Section 43B of the Act was not

applicable to gratuity and superannuation fund. He, therefore disallowed the claim for deduction u/s 43B of the Act. On appeal, the Commissioner

of Income Tax (Appeals) upheld the claim and directed the assessing officer to allow the deduction. The revenue on its turn filed an appeal before

the Income Tax Appellate Tribunal. The Tribunal held that the assessee has paid the amount before the due date for filing the return and therefore,

the assessee was entitled to get the benefit under the first proviso to Section 43B of the Act. The Tribunal allowed the claim by following the

decision of the Calcutta High Court in the case of Commissioner of Income Tax Vs. Edcons (India) Pvt. Ltd., . The correctness of the same is

canvassed before this Court by filing this appeal and by formulating the following substantial question of law:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the deduction for payment

towards gratuity fund made beyond the due dates could not be disallowed u/s 43B of the Act, if the payment has been made before the due date

for filing the return of income, without observing that the extended period under the first proviso to Section 43B did not apply to payments of any

sum referred to in Clause (b) of Section 43B of the Act?

We heard the learned Counsel on either side and perused the materials available on record.

Learned Counsel for the revenue submitted that the Division Bench judgment of this Court in the case of The Commissioner of Income Tax Vs.

Synergy Financial Exchange Ltd., is in favour of the revenue. However, learned Counsel for the assessee submitted that subsequently, a Division

Bench of this Court in which one of us is a party (Raviraja Pandian, J.) in the case of CIT v. Nexus Computer (P) Ltd. (2008) 219 CTR 54 has

considered the Division Bench judgment of this Court in Synergy Financial Exchange Ltd and also the judgment of Gujarat High Court in the case

of Commissioner of Income Tax Vs. George Williamson (Assam) Ltd., , which has taken a contrary view. George Williamson''s case has been

taken to the Supreme Court by the revenue and the Supreme Court has held that the assessee was entitled to claim the benefit u/s 43B of the Act

for the period, particularly, in view of the fact that he has contributed to the provident fund before filing of the return. Thus, the Supreme Court has

positively decided the issue and affirmed the view taken by the George Willamson''s case, in which a contrary view than the one taken by this

Court in Synergy Financial Exchange Ltd. The latter Division Bench, in the case of in the case of Nexus Computer (P) Ltd. taking all these factors

into consideration, and further taking note of the merger theory as contemplated in the case of Kunhayammed and Others Vs. State of Kerala and

Another, as to the binding nature of the order, which has been passed at the time of the disposal of the SLP, held that the Gujarat High Court

judgment has been confirmed by the apex Court and following the Supreme Court order, this Court held the issue in favour of the assessee.

The facts in this case are no different than the one which was considered by us in Nexus Computer (P) Ltd. (2008) 219 CTR 54. Admittedly, in

this case also it could be seen from the records that the assessee has paid the gratuity before the due date for filing of the return. Hence the

decision in the case of Nexus Computer (P) Ltd. (2008) 219 CTR 54 squarely covers the issue in favour of the assessee and against the revenue.

The appeal is dismissed. No costs.