EPF and ESI contribution timing under section 36(1)(va) determined allowability, with late employee deposits disallowed.

Employees' contribution to EPF and ESI paid within the statutory timeline linked to the month in which salary or wages were actually paid remained allowable under section 36(1)(va), so the two remittances made on 17.11.2020 were excluded from disallowance. The balance employees' contributions, however, were admittedly deposited after the prescribed due dates under the welfare enactments, and were held disallowable under the rule in Checkmate Services notwithstanding payment before the return-filing due date. The addition survived only for those delayed items, resulting in partial relief to the assessee.

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Issues: (i) Whether employees' contribution to EPF and ESI for October 2020, paid on 17.11.2020, was deductible under section 36(1)(va) of the Income-tax Act, 1961 read with section 38 of the Employees' Provident Funds Scheme, 1952. (ii) Whether the remaining belated employees' contributions to EPF and ESI were allowable as deduction.

Issue (i): Whether employees' contribution to EPF and ESI for October 2020, paid on 17.11.2020, was deductible under section 36(1)(va) of the Income-tax Act, 1961 read with section 38 of the Employees' Provident Funds Scheme, 1952.

Analysis: The liability under the EPF Scheme was held to arise with reference to the payment of salary or wages to the employee, and not merely by reference to the month to which the wages related. On that basis, where salary for October 2020 was paid in November 2020, the due date for remittance was taken as 15.12.2020. Since the disputed EPF and ESI amounts were paid on 17.11.2020, they fell within time and could not be treated as delayed contributions for the purpose of disallowance.

Conclusion: The issue was decided in favour of the assessee and the deduction of the two payments was allowed.

Issue (ii): Whether the remaining belated employees' contributions to EPF and ESI were allowable as deduction.

Analysis: The balance items were admittedly remitted after the prescribed due dates under the relevant welfare enactments. The decision in Checkmate Services was applied to hold that employees' contributions not deposited within the statutory due date are not allowable merely because they are paid before the due date for filing the return. The further claim for allowance of those items was therefore rejected.

Conclusion: The issue was decided against the assessee.

Final Conclusion: The addition survived only to the extent of the undisputed delayed payments, while the two contributions paid on 17.11.2020 were deleted from disallowance, resulting in partial relief to the assessee.

Ratio Decidendi: For employees' contributions governed by the EPF Scheme, the due date is to be computed with reference to the month in which salary or wages are paid, and contributions remitted within that statutory timeline remain allowable under section 36(1)(va).

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