Provident fund delay interest falls within Section 43B and is deductible only on actual payment.

Interest statutorily payable for delayed remittance of provident fund contributions is treated as part of the provident fund liability for Section 43B purposes. Although the interest is compensatory rather than penal, it arises from delayed payment of the underlying provident fund dues and therefore assumes the character of that obligation. On that basis, deduction is available only on actual payment. The court answered the questions of law for the Revenue, restored the disallowance, and allowed the appeals.

---

---

Issues: Whether interest payable on delayed payment of provident fund dues is deductible without actual payment, and whether such interest falls within the ambit of Section 43B of the Income-tax Act, 1961.

Analysis: Section 43B is an exception to the general rule of deduction and therefore must be construed strictly. Although interest for delayed PF remittance is not penal in nature and is compensatory under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, it is a statutory liability arising from delayed payment of the provident fund itself. Since the liability accrues as an accretion to the underlying PF dues, it assumes the character of the provident fund obligation. On that basis, the deduction can be claimed only on actual payment.

Conclusion: The interest on delayed PF payment is covered by Section 43B and is not allowable unless actually paid.

Final Conclusion: The questions of law were answered in favour of the Revenue, the disallowance was restored, and the appeals succeeded.

Ratio Decidendi: Interest statutorily payable for delayed remittance of provident fund contributions forms part of the provident fund liability for Section 43B purposes and is deductible only on actual payment.

---