Business expenditure: Disallowance u/s. 43B r.w.s. 36(1)(va): A. Y. 2006-07: Employees’ contribution to PF: Paid by the employer-assessee to the Fund before the due date for filing of return of income for the relevant year: Allowable as deduction in the relevant year u/s. 43B r.w.s. 36(1)(va):

For
the A. Y. 2006-07, the Assessing Officer disallowed the claim for
deduction of the employees’ contribution to the Provident Fund on the
ground that the same was paid by the employer after the due date under
the Provident Fund Scheme. The CIT(A) allowed the deduction to the
extent of the payment made during the grace period and disallowed the
balance claim of Rs. 1,82,77,138/- paid by the assesee beyond the grace
period but before the due date for filing the return of income under the
Income-tax Act, 1961. Considering the amendment of section 43B by the
Finance Act, 2003 w.e.f. 01-04-2004 and the Judgment of the Supreme
Court in the case of CIT vs. Alom Extrusion Ltd.; 319 ITR 306 (SC), the
Tribunal allowed the assess’s claim for deduction of the said amount.

In
appeal, the Revenue contended that admittedly there was a delay in
payment of the employees’ contribution to PF amounting to Rs.
1,82,77,138/- and therefore, as per the provisions of section 43B
r..w.s. 36(1)(va) of the Act, deduction on account of the said
contribution towards PF was not allowable if the payments were made
after the due dates specified in the relevant Act.

The Bombay High Court rejected the contention of the Revenue, upheld the decision of the Tribunal and held as under:

“i)
We find that the ITAT was fully justified in deleting the addition of
Rs. 1,82,77,138/- on account of delayed payment of Provident Fund of
employees’ contribution.

ii) We therefore find that no
substantial question of law arises as sought to be contended by Mr.
Malhotra on behalf of the Revenue.”