March 2010
Business expenditure: Deduction only on actual payment: Ss. 43B and 36(1)(va) of I. T. Act, 1961: A. Y. 2002-03: Employee’s contribution to PF: Paid beyond due date under PF Act but before due date for filing return of income: Deduction allowable in the r
By K. B. Bhujle | Advocate
New Page 1
Not Reported
:
49 Business expenditure: Deduction only on actual payment:
Ss. 43B and 36(1)(va) of I. T. Act, 1961: A. Y. 2002-03: Employee’s contribution
to PF: Paid beyond due date under PF Act but before due date for filing return
of income: Deduction allowable in the relevant year:
[CIT
Vs. Animil Ltd. (Del); ITA No1063 of 2008 dated 23/12/2009]
In the previous year relevant to the A. Y. 2002-03 the
assessee had paid the employer’s contribution and the employees’ contribution
towards Provident Fund and ESI after the due date, as prescribed under the
relevant Act/Rules. The Assessing Officer made additions of Rs. 42,58,574/-
being employees’ contribution u/s. 36(1)(va) of the Income-tax Act, 1961 and Rs.
30,68,583/- being employer’s contribution u/s. 43B of the Act. The CIT(A)
deleted the addition and the Tribunal upheld the order of the CIT(A).
In appeal u/s. 260A of the Act, by the Revenue, the following
question was raised:
“Whether the ITAT was correct in law in deleting the
addition relating to employees’ contribution towards Provident Fund and ESI
made by the Assessing Officer u/s. 36(1)(va) of the Income-tax Act, 1961?”
The Delhi High Court upheld the decision of the Tribunal and
held as under:
“If the employees’ contribution is not deposited by the due
date prescribed under the relevant Acts and is deposited late, the employer
not only pays interest on delayed payment but can incur penalties also, for
which specific provisions are made in the Provident Fund Act as well as ESI
Act. Therefore, the Act permits the employer to make the deposit with some
delay, subject to the aforesaid consequences. In so far as the Income-tax Act
is concerned, the assessee can get the benefit if the actual payment is made
before the return is filed, as per the principles laid down by the Supreme
Court in CIT Vs. Vinay Cement Ltd., 213 CTR 268 (SC).”
