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2008 (3) TMI 364 - AT - Income TaxDeduction under s. 36(1)(va) r/w s. 2(24)(x) and s. 43B - Disallowance of PF and ESI contributions - deemed income under s. 2(24)(x) r/w s. 36(1)(va) - Payment made before last date of filing the return of income - CIT(A) failed to appreciate the decision (sic-deletion) of the second proviso to s. 43B - HELD THAT:- It is crystal clear from the detailed discussion made by the Hon'ble Karnataka High Court in case of CIT vs. Sabari Enterprises [2007 (7) TMI 169 - KARNATAKA HIGH COURT] that both the employer's and employees' contributions were considered for allowing as a deduction if paid before last date of filing the return under s. 139(1). Undisputedly, in the instant case, both the employer's and employees' contributions were not paid before statutory dates defined under PF Act, but the actual payment, was before the last date of filing the return under s. 139(1) of IT Act. The verdict of Hon'ble Karnataka High Court is squarely applicable to the facts and circumstances of the instant case. Recently, Hon'ble Delhi High Court in case of CIT vs. Dharmendra Sharma [2007 (11) TMI 39 - DELHI HIGH COURT] held that Tribunal was right in deleting the disallowance of payments towards PF and ESI as the same were paid before the due date of filing of return. While so holding Hon'ble Delhi High Court relied on the verdict of Hon'ble Supreme Court in the case of CIT vs. Vinay Cement Ltd.[2007 (3) TMI 346 - SC ORDER], wherein SLP filed by the Department was dismissed by observing that even prior to amendment of s. 43B by the Finance Act, 2003, no disallowance can be made if such payment is made before last date of filing the return of income. However, no contrary decision of any High Court was brought to our notice by the ld DR. We, therefore, respectfully follow the decision of Hon'ble Karnataka High Court, and reverse the orders of the lower authorities declining the deduction of payments actually made before last date of filing the return under s. 139(1) of IT Act Accordingly, we allow the appeal in favour of the assessee. In the result, the appeal of the assessee is allowed.
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