This appeal arises out of an impugned final judgment and order of September 2025 in an income tax appeal passed by the High Court of Delhi at New Delhi.

A 2-Judges Bench of the Supreme Court took note of the conflicting opinions after recording the findings of the High Court to the effect –

1.  Employer’s contributions under Section 36(1)(iv) and employees’ contributions covered under Section 36(1)(va) read with Section 2(24)(x) are fundamentally different in nature and must be treated separately.
2. Employees’ contribution deducted from their salaries are deemed to be income under Section 2(24)(x) and are held in trust by the employer. The employers can claim deduction only if they deposit these amounts on or before the statutory due date under Section 36(1)(va).\
3.  The non-obstante clause in Section 43B cannot be applied to employees’ contributions governed by Section 36(1)(va).
4. Alom Extrusions (supra) has been distinguished as the same has not considered Sections 2(24)(x) and 36(1)(va).
5. Explanation 5 to Section 43B was not considered at all while arriving at the decision that employees’ contribution must be deposited on or before the due dates under relevant statutes.”

For ease of reference, section 36(1)(va) is reproduced below –

“36. (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.

[Explanation 1].—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. [Explanation 2.—For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the “due date” under this clause;]”

The Bench recorded that there were two School of thoughts as regards the interpretation of the words “due date” – (1) due date specified under the relevant PF, ESI Act and (2) due date of filling of return under Section 139(1) of the Income Tax Act, 1961.

The Bench said that it “would like to look into this issue” and issued notice returnable in four weeks.