Section 143(1) adjustments depend on clear audit-report indication, while delayed welfare-fund contributions remain disallowable.

Employees' contribution to provident fund and ESI deposited after the due date under the relevant welfare enactments remained disallowable, because deduction under section 36(1)(va) depends on deposit within the statutory due date and the later payment before filing the return did not cure the default; the adjustment under section 143(1)(a)(iv) was therefore sustained. Club subscription and fee expenditure, however, could not be disallowed through an intimation under section 143(1)(a)(iv) where the tax audit report only showed payment details and did not state that the expense was inadmissible; that adjustment was deleted.

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Issues: (i) whether the adjustment under section 143(1)(a)(iv) of the Income-tax Act, 1961 could sustain disallowance of employees' contribution to provident fund and ESI deposited after the due date under the respective welfare enactments though paid before the due date for filing the return; (ii) whether club subscription and fee expenditure could be disallowed as an adjustment under section 143(1)(a)(iv) when the tax audit report only furnished payment details and did not indicate that the expenditure was inadmissible.

Issue (i): Whether the adjustment under section 143(1)(a)(iv) of the Income-tax Act, 1961 could sustain disallowance of employees' contribution to provident fund and ESI deposited after the due date under the respective welfare enactments though paid before the due date for filing the return.

Analysis: Employees' contribution becomes income under section 2(24)(x) and deduction under section 36(1)(va) is available only if the amount is credited to the relevant fund within the due date prescribed under the respective Acts. The later deposit before the due date under section 139(1) does not override that condition. The adjustment under section 143(1)(a)(iv) was also held permissible where the audit report clearly indicated the delay and the assessee did not suo motu disallow the amount in the return.

Conclusion: The disallowance of employees' contribution to provident fund and ESI was rightly sustained and this issue was decided against the assessee.

Issue (ii): Whether club subscription and fee expenditure could be disallowed as an adjustment under section 143(1)(a)(iv) when the tax audit report only furnished payment details and did not indicate that the expenditure was inadmissible.

Analysis: Section 143(1)(a)(iv) permits only a disallowance of expenditure indicated in the audit report and not taken into account in computing income. The audit material in this case merely disclosed payments made to clubs and did not record that the expenditure was disallowable. In the absence of such an indication, the adjustment could not be made in the intimation under section 143(1).

Conclusion: The club expenditure disallowance was deleted and this issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent of the club expenditure adjustment, while the disallowance relating to delayed employees' contribution to provident fund and ESI was upheld.

Ratio Decidendi: An adjustment under section 143(1)(a)(iv) can be made only when the audit report clearly indicates the inadmissible expenditure, and employees' contribution to welfare funds is deductible only if deposited within the due date prescribed under the relevant welfare enactment.

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