|Employee’s contribution unpaid is disallowable u/s. 43B?
|Section 43B reads as under:
“Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under the Act in respect of –
(b) Any sum payable by the assessee as an employer by way of contribution of any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees, or ------
shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him.”
Section 36(1) provides that “the deduction provided for the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28:
(va) Any sum received by the assessee from any of his employees to which the provisions of sub clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee’s account in the relevant fund or funds on or before the due date.
Explanation – For the purpose of this clause “due date” means the date by which the assessee is required as an employer to credit an employee’s contribution to the employee’s account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order or notification issued thereunder or under any standing order, award, contract of service or otherwise.”
From reading both the sections, it is clear that section 43B overrides section 36 and therefore delayed payment of employee’s contribution by the employer is allowable under section 43B.
The aforesaid view has been approved by the Rajasthan High Court in CIT v. Jaipur Vidyut Vitaran Nigam Ltd. [363 ITR 307], while dismissing the Department’s appeal, the High Court held that though the amount could not be paid on or before the due date under respective Acts, they were deposited on or before the due date for furnishing of income tax returns under section 139 of the Income-tax Act, 1961 and, therefore, in view of section 43B read with section 36(1)(via) of the Act the entire amounts were allowable.
|CA. H. N. Motiwalla
|139, 28, 36(1), 43B
|deductions, disallowance, employee’s contribution
Opinion Of Eminent Legal Luminaries On Controversial Issues
Whether Employee’s Contribution, If Paid Before Due Date Of Filing ROI Is Disallowable?
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