TMI Blog2010 (8) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... avikiran ORDER Per Pramod Kumar, Accountant Member: 1. By way of this appeal, the assessee has called into question correctness of CIT(A)'s order dated 25th July 2007, for the assessment Year 2005-06, on the following grounds : "1. The learned Commissioner of Income Tax (Appeals) erred in confirming disallowance under section 43B read with section 2(24)(x) of the Act of an amount of Rs.1,62,983/- from payments made for Employees Contribution to Provident Fund on the ground that the same is not paid on or before the due date being 15th of each month. 2. The learned Commissioner of Income Tax (Appeals) erred in not appreciating the fact that Employees Contribution to Provident Fund has been paid by the appellant within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgments of Hon'ble Kerala High Court in the case of CIT vs South India Corporation Ltd (242 ITR 114) in support of the said proposition. The belated PF and ESI payments, according to the Assessing Officer, are liable to be added to the income. It was on the basis of this reasoning that the Assessing Officer made an addition of Rs 4,49,670, for aggregate of belated payments of employees' contribution to provident fund, and of employees' contribution to ESIC dues. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The CIT(A) confirmed the action of the Assessing Officer, barring for one payment which was not made within prescribed period as it ended on independence day, and observed as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to by him and reproduced in this order was biding on the appellate authorities. With due respect, it is submitted that it is nowhere clear from the order that whether employee's contribution was under consideration before High Court. Moreover even if it is to my mind the fact that employees' contribution are governed by deeming provisions under the income tax Act never brought to the knowledge of the Hon'ble High Court. It is therefore held that as far as the employees' contribution are concerned, the can be allowed only when these amounts are paid to the account of government authorities within the due date, to the exclusion of the grace period. It needs to be mentioned that when employees contribution are deducted the amount so deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed appeals, it has been opined by the Tribunal in Para 16 that since the contribution of the employees' is withheld by the employer by deducting the same from the wages and salaries, the dues of the employees' merged with the funds of the employer and the employees' contribution thus becomes similar to the employer's contribution. It has been observed that the nature of the source of both employer's as well as employees' contribution is the same, namely, the funds of the employer. In this view of the matter it has been held that the contribution of the employees' paid within the due date for filing the return of income is allowable under section 43B. This order of the Tribunal has not been referred to in the subsequent order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal on the issue and respectfully following them we delete the disallowance of Rs.14,02,512/-, out of which Rs.5,62,450/- was paid after the due date but before the grace period and Rs.8,40,062/- was paid after the grace period but before the due date for filing the return of income. The first ground is accordingly allowed." 6. The above observations, with which we are in respect agreement, apply to the fact situation before us as well. In this view of the matter, as long as even employees' contribution to PF and ESIC are paid by the assessee before the due date of filing the income tax return, the same are to be allowed as deduction in computation of income of the assessee. It is an undisputed position that the assessee has paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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