B.P. Katakey, J.
1. This appeal under Section 260A of the Income-tax Act, 1961, is preferred by the assessee against the order dated July 31, 2000, passed by the learned Income-tax Appellate Tribunal, Guwahati Bench, Guwahati, in I. T. A. No. 432 (Gau) of 1997 and Cross Objection No. 12 (Gau) of 1998, relating to the assessment year 1991-92, vacating the order of the Commissioner of Income-tax (Appeals) and allowing the appeal preferred by the Revenue in so far as it relates to the decision of the Commissioner of Income-tax (Appeals) deleting an amount of Rs. 3,41,911 being the employees' contribution towards provident fund, from the income of the assessee, deduction of which was disallowed by the assessing authority under Section 43B(b) of the Income-tax Act, 1961 (in short 'the Act').
2 The appeal was admitted vide order dated April 30, 2001, on the following substantial questions of law:
1. Whether Section 43B of the Act empowers the assessing authority to make addition to the income of the assessee of the amount representing the employees' contribution to the provident fund, which although credited to the employees account but not deposited during the relevant accounting year and also having not been claimed as a deduction in the profit and loss account of the relevant assessment year ?
2. Whether the Income-tax Appellate Tribunal has not exceeded its jurisdiction in going into the issue not arising out of the order of the Commissioner of Income-tax (Appeals) and which were not the subject matter of appeal before the Tribunal ?
3. Whether in view of the specific grounds of appeal taken by the appellant before the Tribunal and no prayer for amendment of the grounds of appeal having been made before the Tribunal, the Tribunal has not exceeded its power and jurisdiction in deciding on a different issue altogether which was not the subject-matter of appeal before the Income-tax Appellate Tribunal ?
3 We have heard Dr. A.K. Saraf, learned senior counsel for the appellant/assessee and Mr. U. Bhuyan, learned standing counsel appearing on behalf of the Revenue.
4 Dr. Saraf, learned senior counsel, appearing on behalf of the assessee, referring to the provision of Section 43B of the Act has submitted that as the assessee did not claim any deduction in the profit and loss account of the relevant assessment year in respect of the employees' contribution towards provident fund, which was collected by the assessee being the employer but was not deposited during the relevant year, the said amount cannot be added to the income of the assessee by the assessing authority under Section 43B of the Act, in the assessment year of 1991-92 and therefore the order of the assessing authority in adding the said amount in the income of the assessee as well as the order passed by the learned Tribunal allowing the appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals) dated May 1, 1997, passed in Appeal No. Guwa-116/94-95 filed by the assessee, deleting the said amount from the income of the assessee, is liable to be set aside being contrary to the provision of Section 43B of the Act. Dr. Saraf, learned senior counsel has submitted that in any case the Revenue in the appeal preferred before the learned Tribunal having not taken the ground challenging the deletion of the said amount by the Commissioner of Income-tax (Appeals) from the income of the assessee, the learned Tribunal has exceeded its jurisdiction in interfering with the decision of the learned Commissioner of Income-tax (Appeals) in that regard as under Section 254 of the Act the learned Tribunal has to confine itself to the grounds urged in the appeal. The learned senior counsel in support of his contention has placed reliance on a Division Bench decision of this court in Assam Co-operative Apex Bank Ltd. v. CIT reported in and a Division Bench decision of the Calcutta High Court in ITO v. R. L. Rajghoria reported in : [1979]119ITR872(Cal) .
5. Mr. Bhuyan, learned standing counsel appearing on behalf of the respondents, on the other hand, supporting the order passed by the learned Tribunal has submitted that the learned Tribunal has rightly vacated the order of the Commissioner of Income-tax (Appeals) in allowing the claim of Rs. 3,41,911 directing deletion of the said amount from the income of the assessee, as admittedly the said amount was realised by the assessee being the employer from its employees towards the provident fund amount and was not deposited within the previous year and therefore the said amount has to be treated as income of the assessee as he is not entitled to any deduction of such amount from his income under Section 43B of the Act. Learned standing counsel has further submitted that whether he has claimed deduction or not is immaterial as the said amount is automatically treated as income of the assessee and the assessee will be entitled to deduction of the said amount from the income provided such amount is actually paid by him. Countering the argument put forward by the assessee that the learned Tribunal has no jurisdiction to go into the aforesaid question on the ground that the Revenue in the appeal before the learned Tribunal did not set up any ground in that respect, Mr. Bhuyan has submitted that it is evident from the grounds taken in the memorandum of appeal preferred before the learned Tribunal that a ground has specifically been taken challenging the decision of the Commissioner of Income-tax (Appeals) in deleting the said amount from the income of the assessee and therefore the learned Tribunal, in view of the provision contained in Section 254 of the Act read with Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 (in short 'the Rules'), has rightly interfered with the decision of the Commissioner of Income-tax (Appeals). Mr. Bhuyan has further submitted that under Section 254 of the Act, the learned Tribunal has wide power to pass such orders in the appeal preferred before it and even decide a question of law arising from the facts, which are on record of the assessment proceeding, as raised in such appeal. Learned counsel in support of his contention has placed reliance on two decisions of the apex court in Hukumchand Mills Ltd. v. CIT reported in : [1967]63ITR232(SC) , and in National Thermal Power Co. Ltd. v. CIT reported in : [1998]229ITR383(SC) .
6 We have considered the submissions of learned Counsel of the parties and also perused the records more particularly the grounds of appeal taken by the Revenue before the learned Tribunal. Section 28 of the Act provides what income shall be chargeable to income-tax under the head 'Profits and gains of business or profession'. Under Section 43B of the Act certain deductions from the income of an assessee are allowed in computing the income referred to Section 28 of the Act, provided such sum is actually paid by him, on or before the due date applicable to his case for furnishing the return of income under Section 139(1) of the Act in respect of the previous year in which the liability to pay such sum was incurred by the assessee and evidence of such payment is furnished by the assessee along with such return. Clause (b) of Section 43B of the Act provides for allowing deduction of 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 the employees subject to making of actual payment by the assessee, as aforesaid.
7 In the instant case there is no dispute that the employees' contribution towards provident fund was deducted by the appellant/assessee from their salaries but the said amount was not deposited with the authority but was kept with the assessee and therefore there was no actual payment of the said amount during the previous year. It is also not in dispute that the assessee is entitled to deduction of the said amount from the income in computing the income referred to in Section 28 of the Act. The benefit of deduction from an income allowable under Section 43B will be available to the assessee only if the amount so deducted by the employer/assessee from the salaries of the employees is actually paid by him within the time allowed under the said provision. The assessee having not paid the same after deduction from the salaries of the employees and keeping with him is not entitled to claim deduction. The said amount therefore has to be treated as the income of the assessee in computing the income referred to in Section 28 of the Act. The assessing authority has therefore, rightly taken the said amount of Rs. 3,41,911 as income of the appellant/assessee in computing the income under Section 28 of the Act. The contention of learned senior counsel for the appellant/assessee that no deduction was claimed in respect of the said amount and therefore it cannot be treated as income for the purpose of computation of income under Section 28 of the Act also cannot be accepted in view of the fact that the computation of the said amount as income is not dependent on whether the assessee claimed any deduction or not.
8. The next ground of challenge to the order passed by the learned Tribunal is that it has exceeded its jurisdiction in interfering with the order passed by the Commissioner of Income-tax (Appeals), in so far as it relates to the decision of the Commissioner of Income-tax (Appeals) in respect of allowing the appeal of the assessee filed before the said authority by setting aside the order of the assessing authority in disallowing the deduction of the said amount of Rs. 3,41,911 from the income of the assessee under Section 43B of the Act and consequently treating the said amount as income in computing the income, as in the memorandum of appeal before the learned Tribunal such ground was not taken by the Revenue and therefore the learned Tribunal cannot decide such question in view of the provisions contained in Section 254 of the Act.
9. Section 254(1) of the Act provides that the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. Rule 11 of the Rules also provides that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal, provided the party who may be affected thereby has had sufficient opportunity of being heard on that ground. It is therefore evident from the provision contained in Section 254 of the Act and Rule 11 of the Rules that the power of the learned Tribunal while dealing with the appeal is in the widest possible terms and the word 'thereon', occurring in Section 254 of the Act restricts the jurisdiction of the learned Tribunal to the subject-matter of the appeal only. The learned Tribunal has therefore jurisdiction to go into every aspect of the assessment proceeding before the taxing authorities and also to go into the question as to whether such assessment was made in accordance with law or not provided a ground is taken before the learned Tribunal in that respect or additional ground by way of amendment is allowed to be taken by the learned Tribunal. The Tribunal has also the jurisdiction to examine the question of law, which arose from the facts as found by the taxing authorities, which has a bearing on the tax liability on the assessee.
10. In Assam Co-operative Apex Bank Ltd. , a Division Bench of this court while dealing with the provision of Section 254 of the Act has held that the Appellate Tribunal has to confine itself to the grounds raised in the appeal but it is not open to the Tribunal to raise a ground or permit the party who had not appealed to raise a ground which will work adversely to the appellant. It has also further been held that if the Department did not file any appeal or cross objection it cannot be allowed to agitate other matters, which were not the subject-matter of the appeal before the Tribunal. A Division Bench of the Calcutta High Court in ITO v. R.L. Rajghoria : [1979]119ITR872(Cal) has also held that the jurisdiction of the Tribunal is confined to the question decided by the assessing authority or by the first appellate authority and the question whether the loss was capital loss or revenue loss which never arose before the said authority and not taken up in the grounds before the learned Tribunal, originally or subsequently, cannot be the subject-matter of the appeal.
11. The apex court in Hukumchand Mills Ltd. : [1967]63ITR232(SC) , while considering the provisions of Section 33(4) of the Indian Income-tax Act, 1922, which is exactly the same provision as in Section 254 of the Act, has held that the powers of the Appellate Tribunal in dealing with the appeals are expressed in Section 33(4) of the Indian Income-tax Act, 1922, in the widest possible terms and the word, 'thereon' occurring in the said section restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The apex court in National Thermal Power Co. Ltd. : [1998]229ITR383(SC) , has held that the power of the learned Tribunal under Section 254 of the Act in dealing with the appeals is expressed in the widest possible terms and its power was not restricted only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). It has further been held that though the Tribunal has the discretion to allow or not to allow a new ground to be raised, but where the Tribunal is required to consider the question of law arising from the facts which are on record in the assessment proceedings, there is no reason why such question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. In view of the aforesaid decisions of the apex court, the Division Bench decisions of this court as well as of the Calcutta High Court cited by learned senior counsel for the assessee/appellant, cannot be treated as the authority in support of the contention of the assessee/appellant.
12. In the instant case the Revenue in the appeal memo filed before the learned Appellate Tribunal has specifically taken the ground challenging the decision of the Commissioner of Income-tax (Appeals) in deleting the amount in question from the income of the assessee, therefore, the learned Tribunal has not exceeded its jurisdiction in dealing with the said question as to whether the said amount is to be treated as income in computing the income of the assessee under Section 28 of the Act.
13. In view of the aforesaid discussions, we do not find any merit in the 13 present appeal and hence the same is dismissed.
14. Keeping in view the facts and circumstances of the instant case, we, 14 however, do not make any order as to cost.