Provident fund and ESI contributions paid within grace period, plus computer-room air-conditioners as equipment, allowed tax deductions The dominant issue was whether statutory contributions to provident fund and employees' state insurance paid within the statutory grace period are ...
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Provident fund and ESI contributions paid within grace period, plus computer-room air-conditioners as equipment, allowed tax deductions
The dominant issue was whether statutory contributions to provident fund and employees' state insurance paid within the statutory grace period are allowable deductions. The HC held that payments made within the grace time permitted under the relevant statute must be deducted while computing taxable income, affirming the Tribunal's view; the deduction was consequently allowed. A second issue was whether air-conditioners installed in computer rooms qualify for investment allowance. The HC held that where air-conditioning is necessary for optimum and safe operation of computers, it is an adjunct to the computer equipment (akin to a stabilizer) and is therefore eligible; investment allowance was consequently allowed. The revenue's challenge was dismissed.
The High Court of Madras held that payment towards provident fund and employees State insurance made within the grace period should be deducted in the computation of taxable income. Air-conditioners used in rooms with computers qualify for investment allowance if needed for optimum use and safety. The court dismissed the tax case petition.
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