Employees' provident fund contribution paid before return due date remains deductible, defeating revision under section 263.

Employees' contribution to provident fund paid before the due date for furnishing the return was held allowable as a deduction, and the assessment could not be revised on the ground that it was erroneous and prejudicial to Revenue. The Tribunal applied the view that, for provident fund compliance and section 43B purposes, no material distinction survives between employees' and employer's contributions once payment is made before the section 139(1) due date. Following Karnataka High Court and coordinate bench authority, it concluded that invocation of section 263 was unsustainable on this issue.

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Issues: Whether the Commissioner was justified in invoking section 263 to revise the assessment on the ground that employees' contribution to provident fund, paid before the due date for filing the return, was not allowable as deduction.

Analysis: The assessment was revised on the premise that employees' contribution to provident fund falls under section 36(1)(va) and must be deposited within the due date under the relevant provident fund law. The Tribunal held that, for the purposes of the provident fund scheme and section 43B, there is no material distinction between employees' and employer's contribution when the amount is actually paid before the due date for furnishing the return under section 139(1). Following the Karnataka High Court decisions and the coordinate bench view, the Tribunal concluded that such payment is allowable and the original assessment could not be treated as erroneous and prejudicial to the interests of Revenue on this issue.

Conclusion: The revision under section 263 was unsustainable and the assessee was entitled to deduction of the employees' contribution to provident fund, having paid it before the due date for filing the return.

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