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of <h1>High Court allows deduction for employees' PF and ESI contributions made before tax return due date</h1> <h3>The Commissioner of Income-tax, Bangalore and The Income-Tax Officer, Wared-12(1), Bangalore Versus M/s. Magus Customers Dialog Pvt. Ltd.</h3> The Commissioner of Income-tax, Bangalore and The Income-Tax Officer, Wared-12(1), Bangalore Versus M/s. Magus Customers Dialog Pvt. Ltd. - [2015] 371 ITR ... Issues:Interpretation of section 43B of the Income-tax Act, 1961 regarding employees' contributions to PF and ESI.Applicability of section 36(1)(va) and section 2(24)(x) of the Act on employees' contributions.Analysis:The High Court addressed the appeal filed by the Revenue against the Tribunal's decision, which allowed the employees' contribution made by the assessee before the due date for filing the return under section 139(1) of the Income-tax Act, 1961, to be eligible for the benefit under section 43B(b) of the Act.The substantial questions of law raised in the appeal focused on whether the deduction for employees' contributions to PF and ESI made belatedly was allowable under section 43B of the Act. Additionally, the applicability of section 36(1)(va) and section 2(24)(x) of the Act was questioned concerning the treatment of employees' contributions as the income of the assessee if not deposited within the stipulated time.The Court referred to a previous case, CIT v. Spectrum Consultants India Pvt. Ltd., where it was established that under the Provident Fund Act, both employer and employee contributions are mandatory. The employer is required to pay both contributions initially and can recover the employee's contribution later. Section 2(24)(x) of the Act treats the employee's contribution deducted by the employer as the income of the employer, eligible for deduction if paid before the due date under section 139(1) of the Act. The Court emphasized that Parliament did not differentiate between employee and employer contributions in providing deductions under section 36(1) of the Act.Based on the interpretation of the law and the precedent set by the previous case, the Court found no merit in the Revenue's appeal. Consequently, the substantial questions of law were answered in favor of the assessee, and the appeal was dismissed.
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