Employee contribution deductions depend on timely statutory payment, while delayed tax deduction remittance interest remains non-deductible business expenditure.

Employee provident fund contributions require verification of the actual payment date against the due date prescribed under applicable provident fund and ESI law; deduction is available only if payment was made within that deadline. Interest for delayed remittance of tax deducted at source is characterised as inseparable from the underlying income-tax liability rather than compensatory business expenditure; it is therefore not deductible. The employee-contribution claim remains subject to factual verification, while the disallowance of interest on delayed tax deduction remittance is sustained.

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Issues: (i) Whether employees' provident fund contribution was deposited within the prescribed due date and is deductible; (ii) Whether interest paid for delayed remittance of tax deducted at source is allowable as business expenditure.

Issue (i): Whether employees' provident fund contribution was deposited within the prescribed due date and is deductible.

Analysis: The adjustment was based on the tax-audit report recording the payment date as 08.05.2022. Payment records placed on record indicated payment on 08.05.2021 for April 2021 wages, before the stated due date. Verification of the actual payment date and compliance with the due date under the applicable provident fund and ESI law was required.

Conclusion: The issue was restored for verification; deduction shall be allowed if the employee contribution was deposited within the prescribed due date.

Issue (ii): Whether interest paid for delayed remittance of tax deducted at source is allowable as business expenditure.

Analysis: Interest for delayed remittance of tax deducted at source takes its character from the underlying income-tax liability. Since income-tax is not deductible as business expenditure, such interest cannot be treated as compensatory business expenditure.

Conclusion: Interest paid under Section 201(1A) is not allowable as a business deduction, against the assessee.

Final Conclusion: The allowability of the employee-contribution deduction remains subject to factual verification, while the disallowance of interest on delayed remittance of tax deducted at source stands sustained.

Ratio Decidendi: Interest payable for delayed remittance of tax deducted at source, being inseparable from the underlying income-tax liability, is not deductible as business expenditure.

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