2010 (9) TMI 1101

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.....w.s. 2(24)(x) of the Act is to be excluded from the profits eligible for deduction under section 10A of the Act." 2. The assessee is a company. It is engaged in business of manufacturing and export of studded gold and platinum jewellery. The assessee's income from the aforesaid business was entitled to a deduction under section 10A of the Act. The A.O noticed that the assessee had deposited the employees contribution to PF beyond the due date within which the same had to be deposited. The details in this regard were as follows:- Particulars Amount (Rs.) Due date  Date of payment April, 2005 195,181 155/2005 16/5/2005 August, 2005 192,224 15/09/2005 21/09/2005 October, 2005 ....

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....loyees Provident Fund Act ('PF Act') and to this extent no disallowance can be made. The Assessing Officer however held that the grace period of 5 days is allowed under the PF Act, is only for not invoking the penal provisions of the PF Act. According to the AO, as far as computation of income under the Act is concerned, provisions of section 36(1)(va) alone will apply. The Assessing Officer therefore, added a sum of Rs. 14,10,324/- to the assessee's income. The Assessing Officer also held that the aforesaid amount added to the total income, which will go to increase the income from business, will not be considered for allowing deduction under section 10A of the Act. According to the AO the said income can....

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....income. Further reliance was also placed on the decision of the Hon'ble Delhi High Court in the case CIT vs. AIMIL Ltd., wherein it was held that employees contribution paid on or before the due date of filing of the return of income has also to be allowed as a deduction. The ld. D.R relied on the order of the Assessing Officer. 6. We have considered the rival submissions. In CIT vs. AIMIL Limited The Hon'ble Delhi High Court in TA No. 163 of 2006 ITA No.755 of 2008 ITA No. 204 of 2009 ITA No. 1214/2008 with ITA No. 1246/2008 ITA No. 50/2009 ITA No. 78/2009 judgment dated December 23, 2009 had to deal with a case of disallowance u/s.36(1)(va) of the Act. The Hon'ble Court discussed the provisions o....

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.... law, the scheme of the Act is that employees' contribution is treated as income u/s 2 (24) (x) on receipt by the assessee and allowed as a deduction u/s 36 (1) (va) on making deposit with the concerned authorities. S. 43B (b) stipulates that such deduction would be permissible only on actual payment; (ii) The question as to when actual payment should be made is answered by Vinay Cements 213 CTR 268 where the deletion of the second Proviso to s. 43B w.e.f 1.4.2004 was held applicable to earlier years as well. As the deletion of the 2nd Proviso is retrospective, the case has to be governed by the first Proviso. Dharmendra Sharma 297 ITR 320 (Del) & P.M. Electronics 313 ITR 161 (Delhi) were followed; (iii) If the employees' contribution....