Provident fund deduction allowed when employees' contribution is paid before the return-filing deadline despite welfare law delay.

Employees' contribution to provident fund remains deductible where it is deposited before the due date for filing the return of income, even if payment was made after the due date prescribed under the provident fund law. Applying a beneficial construction of the relevant provisions and its earlier view on similar facts, the ITAT Visakhapatnam held that the disallowance under the Income-tax Act could not survive and the addition was rightly deleted.

---

---

Issues: Whether employees' contribution to provident fund, remitted after the due date under the relevant welfare statute but before the due date for filing the return of income, is deductible and whether the disallowance made under the Income-tax Act survives.

Analysis: The payment of employees' provident fund contribution beyond the statutory due date was not disputed, but it was also admitted that the amount was deposited before the due date under section 139(1). The Tribunal followed its own earlier view on similar facts and the line of authority adopting a beneficial construction of the relevant provisions, holding that where the contribution is paid before the return-filing deadline, the deduction cannot be denied merely because the payment was delayed under the welfare enactment. On that basis, the order deleting the addition was found to call for no interference.

Conclusion: The disallowance of employees' contribution to provident fund was not sustainable, and the revenue's challenge failed.

Ratio Decidendi: Employees' contribution to provident fund, if paid before the due date for filing the return of income, is allowable notwithstanding delay beyond the due date prescribed under the provident fund law.

---