TaxTMI 
TaxTMI 
2002 (12) TMI 36
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....ount of ambiguity over the expression '15 days from the close of the month' as defined in section 38 of the Employees' Provident Funds Scheme, 1952, vis-à-vis month in which salary becomes due to the employees and the salary is paid to the employee? 2. Whether the Tribunal was right in law in reckoning the date of payment of salary (viz.) seventh of the succeeding month as the date from which the due date of payment to the Government of ESI and EPF dues and the delay thereon is to be considered? 3. Whether, the Tribunal was right in law in holding that section 36(1)(va) yields to section 43B when the second proviso to section 43B is to be reckoned as defined in Explanation to clause (va) of sub-section (1) of section 36 ?" The ass....
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....the basis of actual payment in the previous year in which it is so paid. The first and second provisos to section 43B were added by the Finance Act, 1987, with effect from April 1, 1988. The first proviso reduced the rigour of the main provision by enabling the assessee to get the benefit of deduction in respect of the duties, taxes, etc., even if they were paid after the end of the previous year but before the due date for furnishing the return under section 139(1) of the Income-tax Act. The second proviso provides that unless the payment in respect of contributions to provident fund has been actually made during the previous year on or before the due date as prescribed under the relevant Act or the Rules, no deduction shall be allowed in ....
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.... as all emoluments, which are earned by an employee, while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him. Para. 30 of the Scheme of the Provident Funds Act imposed an obligation on the employer to remit both the shares of contributions in the first instance and para. 32 empowered the employer to recover the employees' contributions from the wages of the employees. As per para. 38 of the Scheme, the employer is required to remit both the contributions together with the administrative charges thereon within 15 days before the close of every month. Thus as seen from the above provisions, it is clear that it is the respon....
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....ntributions in the first instance and para. 32 of the Scheme enables the employer to recover the employees' contributions from the wages of the employees. The initial responsibility for making payment of the contributions lies on the employer irrespective of the fact whether the wages are paid in time or not As such, the provident fund payments made after the due date will attract the penal damages under section 14B of the Act" The Tribunal committed serious error in coming to the contrary conclusion. Hence, the first two questions of law referred to us are answered in the negative, against the assessee and in favour of the Revenue. In respect of the other question, it is true that section 43B overrides section 36(1)(va) of the Income....
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.... 28 of the previous year only, in which such sum is actually paid by the assessee, irrespective of the fact that the said deduction is otherwise allowable under the Act and irrespective of the previous year in which the liability to pay such sum was incurred by the assessee, according to the method of accounting regularly employed by the assessee. The first proviso to section 43B relaxes the rigour of the section, if the sum referred to in clause (a) or clause (d) is actually paid by the assessee before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to any such sum was incurred and the evidence of such payment was furnished b....
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.... to avail of the benefit of deduction under section 43B. Though section 43B provided for allowability of deduction based on actual payment, the second proviso restricted the same that only when the amounts are paid within the due date as provided under the Act in order to have the allowability of deduction. Under section 43B read with the proviso thereto provided that there should be actual payment and further the actual payment should have been made within the due date as prescribed under the Act. If the payments are not made within the due date there is contravention of the provisions of the Provident Funds Act. Under the Income-tax Act, th~ defaulting asses sees are not entitled to the benefit of deduction, which are otherwise allowable ....