PF - employers contribution

This query is : Resolved

RAJASEKHAR (Querist)
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14 September 2009 sir/madam,

One of my client contributed the PF to the employees and shown in P&L a/c as "PF-Employers contribution" under indirect expenditure but didnt pay to the govt till the end of FY 2008-09 but they have paid the amount on Aug 2009 with interest and penalty. Now my doubt is U/s-43B is it deductable or not as per Income tax act(I faced this problem in tax audit), If deductable what amounts are deductable.either contribution amount or interest on late payment or penalty or three or both or one. Please tell with explalnation of section......Thanks in advance sir............please kindly give solution to this.....my client is eating my head......

Sreedhar Atchutuni ACA,GradCWA

Sreedhar Atchutuni ACA,GradCWA (Expert)
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15 September 2009 If assessee maintains books of accounts on mercantile basis the expenditure is deductible on accrual basis in the year in which the liability is incurred provided the following conditions are satisfied:

1. payment is made on or before the due date of submitting the return of income and
2. the evidence of such payment is submitted along with return of income.

so, employers cont. to PF if paid before submitting return it is deductible but interest and penalty are not deductible.