due date of payment

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CA Praveen Chopra (Querist)
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15 September 2008 When allowability under section 36(1)(va) is not permissible.i.e. when deduction of employees contribution is not permissible to be allowed.Is it if the payment is made after the due date under the relevant law.Is there any grace period allowed under the relevant law after 20 days of the following month and if allowed,is it considered under income tax law.

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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15 September 2008 The due date for PF and ESI is 15th and 21st of the coming month. The Employer contributions are allowable as per section 43B if the same is paid before the due date of filing of return u/s 139(1). However, the employees, share is allowable if paid by the due date of deposit of PF or ESI.

It has been held that dedctibility of Provident Fund contributions should not be denied forever just for few days delay in its payment backed by some reasonable cause. It has been held in following cases that for all payment of provident fund contributions made within the accounting year, deduction ought to be allowed despite few days delay:-
(i) Hunsur Plywood Works Ltd. Vs. D.C.I.T. (1995) 54
ITD 394 (Bang.)/(1996) 54 TTJ (Bang) 260.
(ii) Fluid Air (India) Ltd. Vs. D.C.I.T.
(1997) 63 ITD 182 (Mumbai)
(iii) Madras Radiators & Pressings Ltd. Vs. D.C.I.T.
(1996) 59 ITD 515 (Mad.)/(1996) 56 TTJ (Mad.) 662.
(iv) D.C.I.T. Vs. Udaipur distillery Co. Ltd. (2002) 74
TTJ (Jd) 193.

Also, five days of grace period has been allowed to employers for payment of Provident Fund contributions by clause (iii) of CPFC'S Circular No.E.128(1) 60-III dated 19-3-1964 as modified by circular No.E11/128 (section 14-B Amendment)/73 dated 24-10-1973.
Due date for payment of Provident Fund contributions is 15 days from the end of month in which wages are paid (plus grace period of 5 days

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