Court overturns Tribunal decision, deems delayed PF payment not income under Tax Act. Emphasizes timely actual payment.

M/s Bihar State Warehousing Corporation Ltd. Versus Commissioner of Income Tax-1, Dy. Commissioner of Income Tax

M/s Bihar State Warehousing Corporation Ltd. Versus Commissioner of Income Tax-1, Dy. Commissioner of Income Tax - [2017] 393 ITR 386 Issues:
1. Treatment of delayed payment of employees' provident fund as income under Section 2(24)(x) read with Section 36(1)(va) of the Income Tax Act.

Analysis:
The judgment pertains to an appeal filed by a Public Sector Undertaking of the Government of Bihar regarding the treatment of delayed payment of employees' provident fund as income under the Income Tax Act. The Assessing Officer had treated a delayed payment of a specific amount as income under Section 2(24)(x) read with Section 36(1)(va) of the Act. The Commissioner of Income Tax (Appeals) upheld this order, but the Income Tax Appellate Tribunal partially allowed the appeal. The Tribunal held that certain dues had been paid before the due date, and hence, the addition of that amount was deleted. However, for the remaining balance amount, the Tribunal agreed with the Assessing Officer and the Commissioner of Income Tax (Appeals) that the delayed payment should be treated as income. The Tribunal restricted the addition to the balance amount. The appellant then filed an appeal under Section 260A of the Income Tax Act, and the substantial question of law framed was whether the Tribunal was justified in upholding the addition made under the relevant sections of the Act.

The Court referred to a previous decision and relied on the Supreme Court's judgment in another case to analyze the issue. The Supreme Court's decision highlighted the provisions of section 43B of the Income Tax Act and the importance of actual payment of taxes, duties, and contributions to welfare funds. The Court emphasized that if the contributions were paid before the date of filing the return under the Income Tax Act, the assessee would be entitled to deduction. The Court concluded that since the amounts in question were credited before the date of filing the return, the addition should be deleted. Therefore, the substantial question of law was answered in favor of the assessee and against the Revenue.

In light of the above analysis, the Court allowed the appeal filed by the assessee, thereby overturning the decision of the Tribunal and holding that the delayed payment of employees' provident fund should not be treated as income under the relevant sections of the Income Tax Act.