Employees' PF and ESI contributions must be deposited by the statutory due date; delayed payment attracts disallowance.

Employees' contribution to provident fund and ESI is deductible only if deposited within the due date fixed under the relevant welfare scheme, and delay triggers disallowance with the amount treated as income under section 2(24)(x). The Tribunal rejected the argument that the fifteen-day deposit period should be linked to the month of actual salary disbursement, holding instead that the due date is tied to the relevant wage month and the statutory scheme. The addition made through processing under section 143(1) was sustained, and the assessee's challenge failed.

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Issues: Whether the disallowance of employees' contribution to PF and ESIC for delay in deposit was sustainable under section 36(1)(va) of the Income-tax Act, 1961, and whether the due date under clause 38 of the Employees' Provident Fund Scheme, 1952, could be reckoned with reference to the month of actual salary disbursement.

Analysis: The addition arose from delayed deposit of employees' PF and ESIC contributions processed under section 143(1) of the Income-tax Act, 1961. The binding rule applied was that employees' contribution is allowable only if deposited on or before the due date prescribed under the relevant statutory scheme, and any default attracts disallowance and treatment of the amount as income under section 2(24)(x). The argument that the expression relating to deposit within fifteen days from the close of the month should be linked to the month of actual disbursement of wages was rejected. The interpretation adopted was that the statutory due date is linked to the relevant wage month and the welfare enactment, not to a deferred date of salary payment. The Tribunal also noted that the Supreme Court's decision on the governing principle is binding.

Conclusion: The disallowance was upheld and the assessee's challenge failed.

Ratio Decidendi: Employees' contribution to provident fund and ESI is deductible only if deposited within the due date prescribed under the relevant welfare law, and the due date cannot be shifted by reference to the month of actual salary disbursement.

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