Employees' provident fund and ESI contributions remain deductible when paid before the return-filing deadline despite delay under welfare statutes.

Employees' contributions to provident fund and ESI, though not deposited within the welfare-statute due date, remain deductible when actually paid before the due date for filing the return under section 139(1). Amounts recovered from employees are treated as income under section 2(24)(x), and section 36(1)(va) ordinarily requires credit to the relevant fund within the prescribed time. However, section 43B(b), as a non obstante provision, permits deduction on actual payment before the return-filing deadline, and the curative amendment removing the second proviso to section 43B was treated as retrospective. The deduction was therefore upheld for the assessee.

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Issues: Whether employees' contribution to provident fund and employees' state insurance, though not deposited within the due date under the relevant welfare statutes, is deductible when actually paid before the due date for filing the return under section 139(1) of the Income-tax Act, 1961.

Analysis: Amounts recovered by an employer from employees towards provident fund or ESI are treated as income under section 2(24)(x) and ordinarily fall for deduction only if credited to the relevant fund within the due date contemplated by section 36(1)(va). However, section 43B(b), being a non obstante provision, allows deduction of sums payable by the assessee as an employer by way of contribution to welfare funds if actually paid before the due date for furnishing the return. The Court noted that the statutory schemes governing provident fund and ESI cast the primary obligation on the employer to remit both employer's and employees' contributions, and relied on precedent holding that the curative amendment deleting the second proviso to section 43B operates retrospectively and that the benefit of section 43B extends to such contributions when paid before filing the return.

Conclusion: The question was answered in the affirmative in favour of the assessee; the employees' contribution was held deductible since it was paid before the due date for filing the return.

Final Conclusion: The disallowance sustained by the Tribunal was set aside and the assessee's claim for deduction was upheld for both assessment years.

Ratio Decidendi: Where employees' welfare fund contributions are actually paid before the due date for filing the return, the deduction under section 43B(b) is available notwithstanding the time-limit contemplated by section 36(1)(va).

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