By TIOL News Service

AHMEDABAD, MAY 11, 2018: THE ISSUE IS - Whether contributions made to provident fund should be claimed as deduction u/s 36(1)(va), only if deposited within stipulated date under P.F Act. YES IS THE ANSWER.

Facts of the case:

The Assessee company had filed its return claiming deduction u/s 36(1)(va) in respect of employees' PF contribution of Rs.1,99,521/-, on the basis that the PF contribution was deposited before due date of filing return. This contention of assessee was rejected by the AO on the ground that the said sum had to be deposited in the credit of employees within the 'due date' stipulated in relevant Act and not before due date of filing of return. Accordingly, he treated the same as income of assessee and added to its total income. This action of AO was confirmed by the FAA on appeal.

Tribunal held that,

+ the AO has disallowed deductions towards employee's PF contribution on the ground that the same was not deposited with the government account within the prescribed date as stipulated under the relevant Act. The CIT(A) has upheld the disallowance by following decision of Gujarat High Court in the case of CIT Vs. Gujarat State Road Transportation Corporation. The counsel for assessee did not dispute such proposition that the Gujarat High Court has decided this issue against the assessee. Considering the precedent, if payments are not deposited within time limit provided in the Act, then deduction will not be admissible to the assessee.

(See 2018-TIOL-689-ITAT-AHM)