Business expenditure: Disallowance u/s. 43B r.w.s. 2(24)(x) and 36(1)(va): A. Y. 2008-09: Employer’s and Employees’ contributions to Provident fund deposited before due date for filing return u/s. 139(1):

For the A. Y. 2008-09, the assessee company had deposited the Employer’s and Employees’ contribution to the provident fund after the due date under the Provident Fund Scheme but before the due date for filing the return of income u/s. 139(1) of the Income-tax Act, 1961. The Assessing Officer added the amounts to the income of the assessee u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act and did not allow the deduction. The Tribunal upheld the disallowance.

On appeal by the Revenue, the Karnataka High Court reversed the decision of the Tribunal and held as under:

“i) F rom a bare perusal of clause (va) of section 36(1) of the Act, it is clear that if any sum received by the assessee employer from any of his employees towards the employees’ contribution to provident fund is deposited in the relevant fund within the time stipulated in the scheme then the assessee is straightway entitled to deduction as contemplated u/s. 36(1)(va) of the Act.

ii) Section 43B states that notwithstanding anything contained in any other provision of the Income-tax Act, a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution to any fund such as provident fund shall be allowed if it is paid on or before the due date as contemplated u/s. 139(1) of the Act. This provision has nothing to do with the consequences, provided for under the Employees’ Provident Funds Act for not depositing the “contribution” on or before the due date therein.

iii) T he word “contribution” used in clause (b) of section 43B of the Act means the contribution of the employer and the employee. That being so, if the contribution is deposited on or before the due date for furnishing the return of income u/s. 139(1) of the Act, the employer is entitled to deduction.

iv) I n the result, the appeal is allowed and the substantial question of law is answered in favour of the appellantassessee and against the Revenue.”