Employees' PF and ESI contribution delay remains disallowable despite return filing, with clear audit-report disclosure supporting adjustment.

Employees' contribution to PF and ESI is treated as income under section 2(24)(x) and is deductible only if deposited within the due date under the relevant welfare statute; filing the return within section 139(1) does not extend that payment time. Where the audit report clearly shows the due date and actual date of deposit, the resulting disallowance falls within prima facie adjustment under section 143(1)(a)(iv). The article also notes that earlier High Court views cannot prevail over the Supreme Court ruling in Checkmate Services, so the disallowance is supportable on these facts.

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Issues: Whether disallowance of employees' contribution towards PF and ESI, deposited after the due date under the relevant welfare statutes but before the due date for filing the return, could be sustained under section 36(1)(va) and adjusted in intimation under section 143(1)(a)(iv).

Analysis: The contribution by employees to the relevant welfare funds forms part of the employer's income under section 2(24)(x) and is allowable as deduction only if deposited within the due date prescribed under the respective welfare enactments. The later filing of the return under section 139(1) does not enlarge the time for payment under section 36(1)(va). The Court also held that where the audit report clearly discloses the due date and the actual date of payment, the resulting disallowance is within the scope of the prima facie adjustment contemplated by section 143(1)(a)(iv). The assessee's reliance on earlier High Court decisions could not prevail in view of the binding law declared by the Supreme Court in Checkmate Services.

Conclusion: The disallowance was validly made and sustained; the issue was decided against the assessee.

Ratio Decidendi: Employees' contribution to PF and ESI is deductible only on compliance with the due date under the relevant welfare law, and a clear delay reflected in the audit report can be adjusted while processing the return under section 143(1)(a)(iv).

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