Ratio of the case: Due date in Section 36(1)(va) for payment of employees™ Provident Fund, ESIC etc contribution should be read with section 43B(b) to mean due date for filing ROI
CLR Editorial Notes: The assessee collected employees™ Provident Fund contribution for payment to the provident fund authorities. However, the amount was not paid to the provident fund authorities within the due date specified in the Provident Fund Act though it was paid before the due date of filing the return of income.
The Assessing Officer purported to disallow payments actually made by the assessee to the Provident Fund Authority on account of employees™ contribution towards provident fund. There was delay. Obligation to pay accrued within an accounting year, but discharged in the next accounting year but before filing of return for the accounting year when obligation accrued. The amount of contribution, thus paid, was disallowed by the Assessing Officer. The Appellate Commissioner has correctly held that the money thus paid is no longer in the hands of the employer and, accordingly, cannot be taken to be the income in the hands of the assessee. The same is the view of the Tribunal. The Department contends that in view of section 36(1)(va) read with section 2(24)(x) of the Income Tax Act, 1961 (hereinafter referred to as the Act), such payment though made to the Provident Fund Authorities, should be treated to be income of the assessee.
The AO assessed the amounts received as income u/s 2(24)(x) but refused to allow a deduction u/s 36(1)(va) on the ground that the amounts were not paid within the prescribed due date. The CIT(A) and Tribunal allowed the assessee™s claim for deduction u/s 43B(b). The Department filed an appeal in the High Court claiming that Section 43B did not apply to employees™ contribution. The Hon’ble High Court of Uttarakhand at Nainital dismissed the department of the appeal:
“S. 2(24)(x) provides that the amounts of employees™ contribution to PF etc collected by the employer shall be assessed as his income. S. 36(1)(va) provides that the said employees™ contribution shall be allowed as a deduction if paid within the due date specified in the relevant legislation. S. 43(B)(b) provides that any sum payable by the assessee as an employer by way of contribution to any provident fund etc shall be allowed if paid before the due date of filing the ROI. The due date referred to in s. 36(1)(va) must be read in conjunction with s. 43B(b) to mean the due date of filing the ROI. The AO wrongly proceeded on the basis that the due date in s. 36(1)(va) is the due date fixed by the Provident Fund authority, whereas read in the context of s. 43B(b) it is the due date fixed for filing the ROI.”
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Case File Available for Download
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CIT vs. Kichha Sugar Company Ltd (Uttarakhand High Court) 43B Employees Contribution
