Recurring business provisions and delayed provident fund remittance: one deduction allowed, the other disallowed for statutory non-compliance.

A recurring and ascertainable liability for special memento expenditure and staff leave encashment was treated as allowable business expenditure, because the payments were claimed year after year and related to the relevant period; the fact that they were booked as provisions did not by itself justify disallowance, so that addition was deleted. By contrast, employees' provident fund contribution deposited after the statutory due date remained non-deductible, since delayed remittance of amounts collected from employees attracts disallowance under the tax law even if the delay is only for a few days.

---

---

Issues: (i) whether the provision debited towards special memento to members and staff leave encashment was allowable as a recurring and ascertainable business expenditure; and (ii) whether delayed deposit of employees' provident fund contribution was allowable as a deduction.

Issue (i): whether the provision debited towards special memento to members and staff leave encashment was allowable as a recurring and ascertainable business expenditure.

Analysis: The expenditure on special memento to members was shown to be claimed every year and was supported by prior year expenditure extracts, indicating a recurring business outlay. The fact that it was booked as a provision did not by itself make it disallowable when the nature of the liability was regular and incurred in the course of the society's operations. The leave encashment claim was also treated as a period cost representing an ascertainable liability relatable to the relevant year.

Conclusion: The addition on account of provision for special memento to members and staff leave encashment was not sustainable and was deleted in favour of the assessee.

Issue (ii): whether delayed deposit of employees' provident fund contribution was allowable as a deduction.

Analysis: The employees' contribution was deposited beyond the prescribed due dates under the respective welfare law. Such sums, once collected from employees, retain their statutory character and delay in remittance attracts disallowance under the tax law. The fact that the delay was only of a few days did not alter the legal consequence of non-compliance with the due date requirement.

Conclusion: The disallowance of employees' provident fund contribution was upheld against the assessee.

Final Conclusion: The appeal succeeded only on the disallowance relating to the provision for memento and leave encashment, while the disallowance for delayed employees' contribution remained undisturbed, resulting in a partial relief to the assessee.

Ratio Decidendi: A recurring and ascertainable business liability cannot be disallowed merely because it is booked as a provision, but employees' contribution deposited beyond the statutory due date is not deductible.

---