High Court Explains Why S. 43B applies To Employees PF

CIT vs. Kichha Sugar Company Ltd (Uttarakhand High
Court)<http://itatonline.org/archives/?p=6888>

*"Due date" in s. 36(1)(va) for payment of employees' Provident Fund, ESIC
etc contribution should be read with s. 43B(b) to mean "due date" for
filing ROI
*



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 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 s. 43B did not
apply to employees' contribution. HELD by the High Court dismissing 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.


*Note*: The same view is taken in
*AIMIL<http://itatonline.org/archives/index.php/cit-vs-aimil-limited-delhi-high-court-even-employees-contribution-to-pf-paid-before-due-date-of-filing-roi-is-allowable-us-43b/>
* 321 ITR 508 (Del) & *Bharati
Shipyard<http://itatonline.org/archives/index.php/bharati-shipyard-ltd-vs-dcit-itat-mumbai-special-bench-s-40aia-amendment-by-fa-2010-is-not-retrospective/>
* 132 ITD 53 (SB)(Mum). However, the ITAT Mumbai has refused to follow this
law in *LKP Securities<http://itatonline.org/archives/index.php/ito-vs-lkp-securities-ltd-itat-mumbai-employees-pf-esi-contribution-is-not-covered-by-s-43b-is-only-allowable-as-a-deduction-us-361va-if-paid-by-the-due-date-prescribed-therein/>
* on the ground that s. 43B applies only to "*employer's contribution*"

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