Provident fund due date and deduction rules: delayed employee contribution remains non-deductible despite payment within the same year.

Employees' provident fund contributions are computed by reference to wages earned for the relevant month, so the due date in paragraph 38 of the Employees' Provident Funds Scheme, 1952 runs from the close of that month rather than the month of actual salary payment. For income-tax purposes, employees' contribution received by the employer is income under section 2(24)(x) and is deductible only if deposited within the due date under the governing provident fund law. Section 43B does not override section 36(1)(va); the provisions operate cumulatively, so payment after the statutory due date disallows deduction even if made within the same previous year.

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Issues: (i) Whether the expression "15 days from the close of the month" in paragraph 38 of the Employees' Provident Funds Scheme, 1952 is to be understood with reference to the month in which wages are actually paid or the month for which salary is earned; (ii) whether section 36(1)(va) of the Income-tax Act, 1961 yields to section 43B of the Income-tax Act, 1961 so as to permit deduction of employees' provident fund contribution paid with delay but within the previous year.

Issue (i): Whether the expression "15 days from the close of the month" in paragraph 38 of the Employees' Provident Funds Scheme, 1952 is to be understood with reference to the month in which wages are actually paid or the month for which salary is earned.

Analysis: The contribution under the scheme is to be computed on wages earned during the relevant month, and the employer bears the initial statutory obligation to remit both employer's and employees' contributions. The timing of actual salary disbursement under the Payment of Wages Act does not alter the scheme requirement. Paragraphs 29, 30, 32 and 38 of the Scheme show that the due date runs from the end of the month for which the salary is payable, not from the month in which salary is paid.

Conclusion: The issue is answered against the assessee and in favour of the Revenue.

Issue (ii): Whether section 36(1)(va) of the Income-tax Act, 1961 yields to section 43B of the Income-tax Act, 1961 so as to permit deduction of employees' provident fund contribution paid with delay but within the previous year.

Analysis: Employees' contribution received by the employer is treated as income under section 2(24)(x) and is deductible under section 36(1)(va) only if credited to the relevant fund by the due date prescribed under the governing law. Section 43B allows deduction only on actual payment and the second proviso imposes a stricter due-date condition. The provisions operate cumulatively, and delay beyond the prescribed due date disentitles the assessee from deduction even if payment is made within the same previous year.

Conclusion: The issue is answered against the assessee and in favour of the Revenue.

Final Conclusion: The reference was resolved by holding that delayed remittance of employees' provident fund contribution beyond the statutory due date is not deductible, and the Tribunal's contrary view was rejected.

Ratio Decidendi: Employees' provident fund contributions must be remitted within the statutory due date fixed by the relevant provident fund law, and deduction under section 36(1)(va) read with section 43B is unavailable when the payment is made after that due date, irrespective of payment within the same previous year.

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