K. Raviraja Pandian, J.
1. The Revenue is on appeal against the order of the Tribunal dt. 28th April, 2006, made in ITA No. 719/Mad/2004. The relevant assessment year is 2000-01.
2. The assessee company is engaged in the business of manufacture and trading in computer system. For the asst. yr. 2000-01, the company filed its return of income under Section 143(1) (sic). The AO disallowed the payment of provident fund and ESI contribution as the payments were made belatedly in terms of Section 43B. Aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A), who partly allowed the appeal by directing the AO to restrict the disallowance to Rs. 37,692 on the ground that they were paid within the grace period allowed under the statute. Aggrieved by that portion of the order of the CIT(A), which went against the assessee, the assessee filed further appeal before the Tribunal. The Tribunal, following the decision of the Special Bench rendered in the case of Kwality Milk Foods Ltd. v. Asstt. CIT made in ITA No. 856/Mad/2006, dt. 16th March, 2006 reported at (2006) 102 TTJ (Mad) 1, wherein, it was held thus:
34. We have considered the entire conspectus of the case. As per the prescription of Section 43B of the Act, deduction for statutory payments pertaining to labour, taxes, etc., are to be allowed as deductions, if they are actually paid during the financial year. However, to mitigate the unintended hardship it is stipulated in the proviso that taxes are deemed to have been paid during the financial year even if they are paid by the due date of filing of return. In the case of statutory payment relating to labour, it was sine qua non to make the payment any time before the last date for payment of labour related liability. It was represented before the Government that the delayed payment of statutory liability related to labour should be accorded the same treatment as delayed payment of taxes, etc. The deduction if denied in a year could not be claimed in subsequent year. On account of various reasons like postal delay, strikes or long holidays, the payment of employer's contributions to the respective authorities at times delayed even though the payment tendered before the due date. Having regard to this unintended hardship, by the Finance Act, 2003, in the first proviso to Section 43B the words, brackets and letters referred to Clause (c) or Clause (d) or Clause (e) or Clause (f) have been omitted and second proviso was also omitted. Legislature removed the differentiation between employee welfare payments and others. Uniform criteria was prescribed for the allowability of the claim. The amendment was made to eliminate unintended consequences that caused undue hardship to the taxpayers. Therefore, amendment in proviso to Section 43B by Finance Act, 2003, was curative in nature. Accordingly, it should be applied retrospectively.
The Tribunal having noted that in the instant case the exact dates of payment of provident fund and ESI contribution specified in Section 43B(b) of the Act are not available, set aside the order of the CIT(A) and remitted the case back to the AO with a direction to find out the exact date of payments and allowed the assessee's claim. Aggrieved by the said order of the Tribunal, the Revenue filed this appeal by formulating the following questions of law:
1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the omission of the second proviso to Section 43B is deemed to have retrospective effect?
2. Whether on the facts and circumstances of the case, deduction of payments to provident fund made belatedly beyond the time and grace period under that statute be allowed under Section 43B?
3. The learned Counsel appearing for the Revenue submitted that the above two questions of law has been considered by the Division Bench of this Court and decided in favour of the Revenue in the case of CIT v. Synergy Financial Exchange Ltd. : [2007]288ITR366(Mad) by holding that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. A statute or a section in it is not to be construed so as to have larger retrospective operation than its language renders necessary. The Division Bench also held that the second proviso to Section 43B of the IT Act, 1961, as it stood prior to its omission by the Finance Act, 2003, w.e.f. 1st April, 2004, imposed a condition that no deduction shall, in respect of any sum referred to in Clause (b) of the section be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or before the due date as defined in the Explanation below Clause (va) of Sub-section (1) of Section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date. With the omission of the proviso the assessee is entitled to the deduction of payment made towards provident fund, etc., when such payment is actually made by the assessee on or before the due date applicable for filing the return, irrespective of whether such payment is made on or before the due date by which the assessee is required to credit the contribution to the employee's account in the relevant fund under the relevant Act. It is not permissible in law to take a liberal view or lenient approach to give retrospective effect to the deletion of the second proviso to Section 43B of the Act so as to apply it to earlier assessment years, particularly when there is no indication in the Finance Act, 2003, from the language used and from the object indicated that the legislature intended expressly or by implication that the second proviso to Section 43B was deleted to cure an acknowledged evil for the benefit of the community as a whole or to remove any such hardship, or any express provision in the statute that such deletion of the second proviso to Section 43B of the Act would have any retrospective effect. On that basis the Division Bench held that any payment made subsequent to the due date or the extended date would not entitle to the exemption under Section 43B of the Act.
4. The very same provision has been considered by the Gauhati High Court in the case of CIT v. George Williamson (Assam) Ltd. . In that case it was contended that the question raised in the appeal is covered by the decision of the Gauhati High Court in the case of CIT v. Assam Tribune , wherein it was held that the contributions towards provident fund, etc., paid before the filing of the return by the assessee are entitled for the deduction. That decision in the case of CIT v. Assam Tribune (supra) was rendered by that Court based on the earlier decision of that Court in the case of CIT v. Bharat Bamboo & Timber Suppliers and the Gauhati High Court has also taken note of the contrary decision of the Kerala High Court in the case of CIT v. South India Corporation Ltd. : [2000]242ITR114(Ker) . After considering the same, the Gauhati High Court held that the contribution made towards PF, etc., after the close of the accounting period, but before the due date for filing return of income for the asst. yr. 1992-93 are entitled for deduction under Section 43B(b) of the IT Act, 1961.
5. This judgment of George Willamson (supra) was taken on appeal by the Revenue by way of special leave petition to the Supreme Court. The Supreme Court in the case of CIT v. Vinay Cement Ltd. (2007) 213 CTR (SC) 268, while affirming the case of George Willamson (supra) has held as follows:
Delay condoned.
2. In the present case, we are concerned with the law as it stood prior to the amendment of Section 43B. In the circumstances the assessee was entitled to claim the benefit in Section 43B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return.
The special leave petition is dismissed.
6. Thus, the apex Court affirmed the view taken in the case of George Willamson (supra), which is contrary to the view taken by the Division Bench of this Court in the case of CIT v. Synergy Financial Exchange Ltd. (supra). What is the effect of the said order of the Supreme Court, which is rendered by dismissing the special leave petition by a speaking order is well said by the judgment of the apex Court in the case of Kunhayammed and Ors. v. State of Kerala and Anr. : [2000]245ITR360(SC) . The proposition has been summed up by the Supreme Court in para 43. The 5th proposition of law reads as follows:
If the order refusing leave to appeal is a speaking order, i.e., gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the Court, Tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex Court of the country, But, this does not amount to saying that the order of the Court, Tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.
7. Admittedly the decision reported in (2007) 213 CTR (SC) 268 (supra), which has been extracted above, is a speaking order passed by the Supreme Court by giving reasons for rejecting the special leave petition. The reasoning given in the dismissal of the special leave petition in the decision reported in (2007) 213 CTR (SC) 268 (supra) would bind this Court, as law declared by the apex Court under Article 141 of the Constitution.
8. Admittedly in this case, the contribution has been paid prior to the filing of the return. The Supreme Court decision reported in (2007) 213 CTR (SC) 268 (supra) squarely covers the issue and the assessee is entitled to the benefit under Section 43B of the IT Act.
9. Hence, the appeal under consideration has to be dismissed and the same is dismissed. No costs.