Provident fund and employer contribution deductibility: late deposits made before filing the return held allowable, decided for assessee

Payment of employer or employee provident fund contributions after the statutory due date but before filing the income-tax return is deductible if the assessee actually deposits the amounts and adduces evidence before filing. Section 43B's notwithstanding clause operates to restrict routine claims, yet the explanation to the deduction provision allows amounts paid on or before return filing to be claimed. The court applied this principle to hold that PF/EPF/CPF/GPF paid after their statutory due dates but before return submission cannot be disallowed; outcome was decided against the revenue.

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Issues: Whether deposit of employees' provident fund contribution made after the statutory due date under the relevant provident fund enactment but before filing the return of income entitles the assessee to deduction under Section 36(1)(va) and/or Section 43B(b) of the Income-tax Act, 1961.

Analysis: A conjoint reading of Section 36(1)(va) and Section 43B(b), and the provisos and amendments thereto, requires consideration of the legislative purpose to prevent non-payment of statutory liabilities while also addressing unintended hardship caused by literal application. Judicial precedents treat certain amendments as curative and retrospective; Section 43B operates notwithstanding other provisions but contains provisos that permit deduction where payment is made on or before the due date for furnishing the return and evidence is furnished. Authorities recognize that payments made after the statutory due date under the provident fund enactments but before filing the return, with evidence of payment, fall within the proviso-related regime and are thereby allowable for deduction.

Conclusion: The deduction is allowable where the employees' contribution to provident/similar funds is paid after the statutory due date under the fund enactment but before filing the return of income, subject to furnishing evidence of such payment; issue answered in favour of the assessee.

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