2001 (5) TMI 139 - AT - Income Tax

Summary

Issues involved: Interpretation of provisions u/s 43B and u/s 36(1)(va) regarding late payment to provident fund account of employees.

Summary:
The assessment order added an amount for late payment to the provident fund account, consisting of employees' and employer's contributions, upheld in the first appeal. The appeal focused on the employees' contribution portion, arguing payments were made within the due date as per interpretation of cl. 38 of Employees' Provident Fund Scheme, 1952. Various decisions supported a liberal interpretation of the provisions. The Departmental Representative cited judgments for disallowance despite payments within the previous year but beyond the due date.

The Tribunal opined that the "month" in cl. 38 should refer to the month of actual salary disbursement, not the month to which wages relate. Employers should make contributions within 15 days from the end of the month when salaries are disbursed, with a grace period. The Tribunal emphasized a liberal approach, reversing lower authorities' decision and directing the AO to reexamine the timeliness of contributions and adjust any disallowances accordingly.

Ultimately, the appeal by the assessee was partly allowed based on the above considerations.