Disallowability of 2006-07 PF amount paid in 09-10

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nagaraja (Querist)
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24 September 2010 Dear All,

If PF for 2006-07 paid in 2009-10 amounting to Rs 2,00,000 after inspection from PF Department in 2009-10. Is it allowable while computing tax for a company or disallowable? If it is Disallowable under which section? Can anybody help me in this regard??????????

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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24 September 2010 Section 36 provides as follows:

(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28-
...
(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.

Section 43B provides as under:
Notwithstanding anything contained in any other provision of this Act*, a deduction which is otherwise allowable under this Act in respect of—

b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;
shall be allowed as deduction only in the previous year in which such sum is actually paid. This is irrespective of the previous year in which the liability to pay such sum was incurred by the assessee.

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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24 September 2010 Employee contribution will be disallowed if the same is not paid within the due date and Employer contribution is allowed in the previous year in which the payment was made.

In my opinion, so much of the amount as it relates to employee contribution shall not be allowed and the balance shall be allowed as a deduction.

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