9911796707
|
Home
Issues:
Appeal against disallowance of deduction for provident fund and employees state insurance. Analysis: The appeal was filed by the assessee against the order passed by the CIT(A) confirming the disallowance of a deduction claimed for payment towards provident fund and employees state insurance. The assessee, a private company engaged in manufacturing tiles and ridges, claimed a deduction of Rs. 1,46,702 for the assessment year 1992-93. The AO disallowed the claim on the basis that the payment was not a liability relating to that year. The CIT(A) upheld the disallowance stating that the payment should have been made before the due date for it to be allowed. The assessee contended that the deduction should be allowed on the basis of actual payment as per section 43B, irrespective of the year in which the liability was incurred. The Departmental Representative argued that the liability should only be allowed for the year in which it became due, especially in cases where accounts were maintained on a mercantile basis. The Tribunal considered the case law and held that deduction should be allowed on the basis of actual payment, regardless of the year to which the liability related. The Tribunal referred to a previous decision where it was held that the contribution to provident fund should be considered under section 43B(b) without the second proviso. It was also clarified that the due date as defined in the Explanation applied only to the employees' contribution, not the employer's contribution. Therefore, the Tribunal concluded that the assessee was entitled to deduct the contribution to provident fund and employees state insurance in the year of actual payment. Consequently, the order of the CIT(A) was reversed, and the appeal by the assessee was allowed.
|
