Delayed employees' PF and ESIC contribution disallowance upheld, and prima facie adjustment allowed where audit report shows the delay.

Belated employees' contributions to provident fund and ESIC are treated as income under section 2(24)(x), and deduction under section 36(1)(va) is unavailable where remittance is delayed. On that basis, the Tribunal followed binding Supreme Court and co-ordinate bench authority to sustain disallowance of the delayed employee contribution. It further held that, where the audit report itself records the delay, the resulting adjustment is permissible in processing under section 143(1). The taxpayer's challenge to both the disallowance and the prima facie adjustment therefore failed.

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Issues: Whether disallowance of belated employees' contribution to Provident Fund/ESIC under section 36(1)(va) read with section 43B of the Income-tax Act, 1961 was sustainable, and whether such adjustment was permissible under section 143(1) of the Income-tax Act, 1961.

Analysis: The issue of taxability of delayed employees' contribution was treated as settled in view of the binding Supreme Court ruling that belated employees' contribution is taxable under section 2(24)(x) and deduction under section 36(1)(va) is not available where payment is delayed. The Tribunal also followed co-ordinate bench decisions holding that the resulting disallowance can be made in processing under section 143(1) where the audit report itself reflects the delay.

Conclusion: The disallowance and the adjustment under section 143(1) were upheld, and the assessee's challenge failed.

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