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Section 36(1)(va) of the Income-tax Act, 1961 - Employee's contributions - Assessment year 2002-03 - Whether employees' contribution towards provident fund and ESI would qualify for deduction even if paid after due date prescribed under Provident Fund Act/ESI Act but before due date of filing of return - Held, yes FACTS During the assessment proceedings, the Assessing Officer found that the assessee had deposited employers' contribution as well as employees' contribution towards provident fund and ESI after the due date, as prescribed under the relevant Act/Rules and, accordingly, he made an addition of the amount of employees' contribution under section 36(1)(va) and the amount of employers' contribution under section 43B. On appeal, the Commissioner (Appeals) deleted the additions by holding that the assessee had made the payment before the due date of filing the return. The revenue's appeal was dismissed by the Tribunal. On appeal to the High Court : HELD Section 2(24) enumerates different components of income. It, inter alia, stipulates that income includes any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948, or any other fund for the welfare of such employees. It is clear from the above that as soon as employees' contribution towards provident fund or ESI is received by the assessee-employer by way of deduction or otherwise from the salary/wages of the employees, it will be treated as 'income' at the hands of the assessee. It clearly follows therefrom that if the assessee does not deposit this contribution with provident fund/ESI authorities, it will be taxed as income in the hands of the assessee. However, on making deposit with the concerned authorities, the assessee becomes entitled to deduction under the provisions of section 36(1)(va ). Section 43B(b), however, stipulates that such deduction would be permissible only on actual payment. This is the scheme of the Act for making an assessee entitled to get deduction from income insofar as employees' contribution is concerned. [Para 11] If the employees'…

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