Employee provident fund and ESI contributions paid within the year may still qualify for deduction despite marginal delay under the scheme deadline.

Employees' contributions to provident fund and ESI were treated as income under section 2(24)(x) and were deductible under section 36(1)(va) only if credited by the due date under the relevant welfare scheme. The text notes ambiguity in Rule 38 of the EPF Scheme on whether the monthly due date ran from the wage month or the salary-payment month, and states that section 43B, with its non obstante clause, gives overriding effect to actual payment made during the previous year. On that reasoning, contributions paid within the previous year, even if marginally delayed, were not to be disallowed.

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Issues: Whether employees' contribution to provident fund and ESI, deposited within the previous year but after the apparent due date under the relevant welfare schemes, was liable to disallowance under section 36(1)(va) of the Income-tax Act, 1961, or whether deduction was available in view of section 43B of the Income-tax Act, 1961.

Analysis: The contributions received from employees were treated as income under section 2(24)(x) and were ordinarily deductible under section 36(1)(va) if credited within the due date prescribed under the relevant fund law. The expression "within 15 days of the close of every month" in Rule 38 of the Employees' Provident Fund Scheme, 1952, read with the corresponding return requirement in section 36(2) of that Scheme, created ambiguity as to whether the relevant month was the wage month or the month of payment of salary. The Court also noted that section 43B, by reason of its non obstante clause, gave overriding effect to actual payment during the previous year, and that the amended proviso no longer retained the words "during the previous year" in a disabling sense. Reading the scheme provisions with the tax provisions, the Court held that the payments made within the previous year, though marginally delayed in some instances, could not be disallowed.

Conclusion: The disallowance of the employees' provident fund and ESI contributions was not sustainable and deduction was allowable in favour of the assessee.

Ratio Decidendi: Where employees' contributions are paid within the previous year and the statutory due date under the relevant scheme is ambiguous, section 43B prevails over section 36(1)(va) and disallowance cannot be made merely because of a marginal delay in remittance.

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