Delayed provident fund and ESI deposits remain disallowable when employees' contributions are not paid within the statutory due date.

Employees' contribution to provident fund and ESI had to be deducted before wage payment and deposited within fifteen days from the end of the relevant month; the court rejected shifting the due date by reference to the month of actual salary payment. Applying its earlier interpretation of section 38 of the Employees' Provident Funds and Miscellaneous Provisions Act, it held that delayed deposit could not be treated as compliant for income-tax deduction purposes. The Tribunal's deletion of the disallowance was therefore found incorrect, and the disallowance for delayed deposit was restored in favour of the Revenue.

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Issues: Whether the Tribunal was right in deleting the disallowance relating to delayed payment of employees' contribution to provident fund and ESI under the Income-tax Act, 1961.

Analysis: The dispute concerned disallowance of employees' contribution not deposited within the prescribed time. The governing provisions treated such employee contributions as income and permitted deduction only if credited within the due date. The Court applied its earlier interpretation of section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, holding that the employer must deduct the employees' contribution before payment of wages and deposit it within fifteen days of the close of the relevant month. The reasoning rejected the view that the deposit time could be shifted by reference to the month of actual salary payment in the following month.

Conclusion: The Tribunal's view was held to be incorrect and the disallowance for delayed deposit was restored. The question of law was answered in favour of the Revenue and against the assessee.

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