2003 (5) TMI 471 - AT - Income Tax

Summary

Issues:
1. Disallowance of employees' and employer's contribution to PF, FPF, etc. by Assessing Officer.
2. Appeal against disallowance by CIT(A) for employer's contribution.
3. Appeal against disallowance by the assessee for employees' contribution.

Analysis:
1. The Assessing Officer disallowed the employees' and employer's contribution to PF, FPF, etc. amounting to Rs. 1,71,969. The CIT(A) allowed the employer's contribution of Rs. 91,477, but did not allow the employees' contribution of Rs. 80,492. The disallowance was made on the ground of late payment only.

2. The Tribunal analyzed the provisions of Section 43B(b) of the Income-tax Act, 1961, which allows deductions for sums payable by the assessee as an employer to funds for the welfare of employees. The Tribunal noted that there is no mandate in the section regarding employees' contribution. Therefore, the Tribunal directed the Assessing Officer to delete the addition of Rs. 80,492 as the employees' contribution falls beyond the scope of Section 43B.

3. Regarding the Departmental appeal, the Tribunal referred to a previous decision where it was held that payments made within the accounting year should be allowed as deductions, even if made a few days later than the due date. The Tribunal emphasized that the sum actually paid during the previous year should be allowed as per the mandate of the section, and payments made after the previous year cannot be allowed. Consequently, the Tribunal directed the Assessing Officer to allow the sum actually paid during the previous year.

4. In conclusion, the appeal of the assessee was allowed, and the appeal of the revenue was partly allowed based on the Tribunal's analysis of the provisions of Section 43B and relevant precedents regarding deductions for contributions to funds for employees' welfare.