ORDER
1. In this reference made by the Tribunal under Section 256(1), two questions were referred to us for decision. Those are as follows :
“1. Whether, on the facts and in the circumstances of the case the Tribunal was right in law in directing to allow deduction in respect of delayed payment of provident fund dues even accepting that the amounts could be disallowed on strict interpretation of Section 43B ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing relief of Rs. 64,267 being delayed payment of provident fund dues, accepting an interpretation of the provision of Section 43B, other than the strict interpretation, for the sake of equity though it is a settled principle that equity has no place in interpretation of taxing statute ?”
2. There had been delay in payment of provident fund contributions for the month of September, 1987 and the month of July, 1988, the payments being respectively made on the 23rd Oct., 1987 and 22nd Aug., 1988.
Questions arose, whether the claims for deduction in regard to those payments could be allowed. The prescribed period of 15 days after the lapse of the month having elapsed, the point of the payments not being made within the due date became an important one.
The CIT(A) passed an order directing that the due date in each of the payments involved, including the above two, would have to be considered by the AO and in case those were found to have been paid within the due date, then, and then only, would the deductions be allowed.
Instead of going before the AO on the basis of this order and trying to demonstrate that the due dates were complied with in any event (we are not entering into the question whether such demonstration is at all possible) the assessee went instead directly to the Tribunal.
There it was argued that notwithstanding the changes in the law made before the assessment order in question, the payments being only slightly, if at all, delayed, the deductions in respect thereof could still be claimed.
3. The provisions in issue are Section 43B(b) and the further Explanation to that section in the IT Act. The section and the Explanation are not set out below verbatim but the purport thereof is as follows :
(i) unless provident fund contributions are actually paid, deductions cannot be claimed even if a mercantile system is followed by the assessee;
(ii) in case of provident fund contributions, if the due date for payment has once slipped, the deduction can never be claimed thereafter, even if the full payment is made after the due date and very much within the financial year in question.
The further Explanation uses the word “shall” and specifies that unless payment is made within the due date no deduction shall be allowed.
4. These provisions have been dealt with by our Division Bench in three cases, and also by the Kerala High Court in one case. Although in some of the above cases, the observations were, strictly speaking, obiter, yet the consistent judicial view is that for the purpose of getting provident fund contribution deductions, the due date has to be strictly observed. The cases are those of CIT v. Sree Kamkhya Tea Co. (P) Ltd. , CIT v. K.L Thirani , CIT v. Edcons (India) (P) Ltd. and CIT v. South India Corporation .
5. On the basis of the wording of the above section and the consistent judicial opinion, it is quite clear that so long as the sub-section and the Explanation exist in unmodified terms in the statute book, provident fund contributions must be made within the due date for those to qualify for deductions under the IT Act.
Such being the law, both the questions are answered in the negative and in favour of the Department.
The result of these answers would be that in regard to these contributions the order of the CIT(A) is restored and all subsequent actions will be taken thereupon by the parties in accordance with law.