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Issues involved: Appeal against order of CIT(A) deleting addition made by Assessing Officer regarding employee's contributions to Provident Fund (PF) and Employees' State Insurance (ESI) u/s 154 of the Income-tax Act, 1961 for assessment year 2006-07.
Summary: The Revenue appealed against the CIT(A)'s decision to delete the addition made by the Assessing Officer concerning employee's contributions to PF and ESI. The Assessing Officer disallowed the amounts as they were paid after the due date prescribed in the Acts. However, the CIT(A) relied on a Tribunal decision and deleted the addition, stating that the contributions were paid before the due date of filing the income tax return. The Revenue contended that there is a distinction between employee's and employer's contributions, with different rules governing their allowability. The Tribunal, considering previous decisions and judgments, upheld the CIT(A)'s decision, stating that even if the contributions were paid after the due date under the Acts but before the due date of filing the return of income, they are allowable expenditures. Therefore, the appeal of the Revenue was dismissed. In this case, the main issue was the allowability of employee's contributions to PF and ESI, which were disallowed by the Assessing Officer but later deleted by the CIT(A) based on a Tribunal decision and relevant legal provisions. The Revenue argued that there is a distinction between employee's and employer's contributions, with different rules governing their allowability, specifically referring to Section 43B and Section 36(1)(va) of the Income-tax Act, 1961. The Tribunal considered previous decisions and judgments, including those of the Hon'ble Delhi High Court and the Hon'ble Punjab and Haryana High Court, to conclude that even if the employee's contributions were paid after the due date under the Acts but before the due date of filing the return of income, they are allowable expenditures. Ultimately, the Tribunal affirmed the CIT(A)'s decision and dismissed the Revenue's appeal, stating that the contributions in question were allowable expenses as they were paid before the due date of filing the income tax return.
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