The High Court of KARNATAKA on 4^th  Feb 2014 ruled in favor of the assessee and said that Even If PF / ESI deposited before filing of income tax return, deduction should be allowed . Where employer did not deposit PF/ESI contribution within due date as contemplated under PF/ESI Scheme Act. In the given case the assessee had claim the deduction of PF/ESI contribution, where the employer did not deposit PF/ESI contribution within due date. In the above case the AO disallowed the deduction of Provident Fund contributions, saying that employer did not deposit PF/ESI contribution within due date as contemplated under PF/ESI Scheme/Act, Facts of the case are as follows:

• The employer did not deposit contribution, within the stipulated time, as contemplated by paragraph 30 of the PF scheme or before due date under the provisions of the PF scheme/Act. However, he deposited the contribution to the PF/ESI Fund before the due date contemplated under section 139(1).
• The Assessing Officer completed the assessment determining the income wherein he made disallowance of Rs. 12.52 lakh under section 36(1)(va).
• On appeal, the Commissioner (Appeals) deleted such disallowance.
• The Tribunal allowed the revenue’s appeal and set aside the order passed by the Commissioner (Appeals).
• In the instant appeal, the revenue vehemently submitted that the employees’ contribution to provident fund is also an income of the employer till he deposits the said amount along with his contribution with the fund, as contemplated under the provisions of section 36(1)(va).

Observations The Karnataka High Court in deciding the issue in favour of the assessee in Essae Teraoka (P.) Ltd. case, clearly observed that if the employer’ contribution is not deposited PF/ESI contribution by the due date prescribed under the relevant Acts and is deposited late. The employee would be entitled to get deduction under sec 43b allowable if PF/ESI contribution deposited before due date of filing of return. Download full order