Employees' provident fund and ESI deductions remain allowable when paid before return filing, despite delayed welfare-statute compliance.

Employees' contribution to provident fund and ESI, though treated as income under section 2(24)(x) of the Income-tax Act, remains deductible under section 36(1)(va) if actually deposited before filing the return. The Delhi HC followed the settled view in P.M. Electronics Ltd. and AIMIL Limited, holding that delayed deposit under the welfare statutes did not by itself justify disallowance for income-tax purposes. The Revenue's attempted distinction between employer's and employees' contributions was rejected, and the disallowance was held unsustainable.

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Issues: Whether employees' contribution to provident fund and ESI, if deposited before the due date for filing the return, is allowable as a deduction under the Income-tax Act despite delay under the relevant welfare statutes.

Analysis: Employees' contribution recovered from salaries is treated as income under Section 2(24)(x) of the Income-tax Act, 1961, and deduction is linked to Section 36(1)(va). The Court followed the settled view that, for the purpose of the Income-tax Act, the assessee is entitled to deduction where the contribution is actually paid before the return is filed. The decisions in P.M. Electronics Ltd. and AIMIL Limited were treated as correctly stating the law, and the distinction sought to be drawn by the Revenue between employer's contribution and employees' contribution was not accepted as a ground to deny relief in the present case.

Conclusion: The issue was decided in favour of the assessee, and the disallowance was not sustainable.

Final Conclusion: The Revenue's appeal failed because the Tribunal's order allowing deduction for employees' PF and ESI contributions paid before the return-filing date was upheld.

Ratio Decidendi: Employees' contribution to PF and ESI, though treated as income when deducted from wages, is deductible if actually deposited before filing the return, notwithstanding delayed deposit under the welfare statutes.

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