vaibhav (student) (220 Points)
28 February 2014What is the tax treatment for Employees contribution for PF has been deducted but not deposited till due date of fiing of return?. As section 2 (24) specifically says 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".
So i want to know while computing taxable income under income from business how it should be presented?
CA Sourabh Jain
(Practicing Chartered Accountant)
(132 Points)
Replied 28 February 2014
In present case amount received from employee's will be treated as business income of assesse in the financial year in which such contribution is received if such amount is not deposited in relative fund.
but if the assesse deposit the same amount in the subsequent year then it will eligible for deduction as business expenditure in the year of deposit such amount.
SURESHAN K
(Auditor)
(189 Points)
Replied 28 February 2014
As far as employees contribution is conserned, it is deductible only if deposited in relevant account on or before "due date" specified - vide Section 36(1)(va). The section is extracted below-
36(1)(va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date.
Explanation.—For the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise;]
Section 43B is not applicable to employees contribution. It is introduced to restrict certain deductions on actual payment basis. Before applying 43B the sum have to be an allowable deduction. As the specific section not allows the sum paid after due date, 43B cannot be applied to nullify the restriction in the original section ie. 36(1)(va).
the section 43B begins as below-
43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of—
that means if the deduction otherwise not allowable under section 36(1)(va), 43B cannot be applied.
However lot of litigation is going on. there are decisions both favour and against revenue.
a legislative clarification is necessary in this regard.
SURESHAN K
(Auditor)
(189 Points)
Replied 28 February 2014
Two contradictory judgements attached
SURESHAN K
(Auditor)
(189 Points)
Replied 28 February 2014
see the attachment
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