TMI Blog1995 (3) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... dministrative charges as remitted by the assessee from month to month during the relevant year amounted to Rs. 1,58,739. He also found that similar aggregate amount in respect of employees' contribution to the same funds as remitted by the assessee during the year came to Rs. 1,49,061. The AO also found that the assessee did not actually remit the amounts, within the stipulated period of 15 days from the end of the relevant months, but did so within the further period of grace of five days. On this ground, the AO disallowed the first amount as above under section 43B and the second amount under section 2(24)(x) read with section 36(1)(va). (b) So far as the first addition is concerned, it is found that although the amounts might not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of clause (va) of section 36(1) also enacted from the same date, however, allows the assessee deduction in respect of this amount treated as income as above provided the assessee fulfils his liability of crediting the same on or before the due date. The abovementioned clause reads as below : "36(1)(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 purposes of this clause, 'due date' means the date by which the assessee is required as an employer to credit and employee's contribution to the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This again connotes the idea as if the assessee itself has set up the relevant fund or funds and also maintains the same and goes on crediting the amounts to the individual accounts of the employees by itself. In actual practice however, the funds are maintained by the Provident Fund Commissioner. The act of crediting the amounts concerned to the individual accounts of the employees is done in the office of the said Provident Fund Commissioner and the assessee merely remits or makes payment of the amount to the said office every month. Thus, we find that the actual practice followed by the assessee (and many other employers like it) does not exactly conform to the strict legal prescriptions of clause (va) of section 36(1). In fact, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1987, is that no deduction will be allowed in the assessment of the employer(s) unless such contribution is paid to the fund on or before the 'due date'. Due date means the date by which an employer is required to credit the 'contribution' to the employee's account in the relevant fund under the provisions of any law or term of contract of service or otherwise." Finally therefore, we hold that the amounts deducted by employers from the salary bills of their employees towards employees' contributions to EPF etc., will have to be considered as deemed income of the employer in terms of the provisions of section 2(24)(x). At the same time again, the said amount will be treated as an allowable item interms of the provisions of clause (va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner, not within the formally stipulated period of 15 days after the end of the month, but within the further grace period of five days would be considered as the payments having been made within "due date" as shown in clause (va) of section 36(1). It is required to be mentioned in this connection that for all the months of the accounting year under present consideration, the relevant payments were made within such grace period of five days. (d) As has been discussed by us above, a strict legal approach is not possible in respect of this question, but a practical view only will have to be undertaken. Stroud's Judicial Dictionary (third edition) states in connection with 'Days of grace' that 'a right of action does not accrue until a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the early 15 days and all the consequences of making payment within the said 15 days should be considered to follow if the payment be made within the grace period following the said period of 15 days. The Explanation to clause (va) of section 36(1) again defines "due date" rather in a vague way to mean the date by which the assessee is required to make the payment in accordance with the relevant Act, rule, order or notification or even any Standing Order, award, contract of services or otherwise. It is clear therefrom that the concept of "due date" here is to be taken in a rather very flexible sense. Inasmuch as the assessee is very much under impunity to make payment of the amount under consideration within 20th of the following month ..... X X X X Extracts X X X X X X X X Extracts X X X X
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