G Narayana and Brothers Vs ITO (ITAT Hyderabad)
PF Is Not Superannuation Fund – Rule 87’s 27% Ceiling Cannot Be Used to Disallow Provident Fund Contribution
The Hyderabad Bench of the ITAT has held that Rule 87 of the Income-tax Rules prescribes a ceiling for an approved superannuation fund and cannot be invoked to disallow contribution made to a recognised provident fund. The reference to provident fund in Rule 87 is only for computing the available ceiling for superannuation-fund contribution.
However, the Tribunal clarified that the employer’s contribution to provident fund would remain deductible only if the actual-payment condition u/s 43B was satisfied. The issue was therefore restored to the AO for this limited verification.
The assessee, G. Narayana and Brothers, was a partnership firm engaged in labour-supply contracts, principally involving housekeeping, cleaning, maintenance and other contractual work for the Indian Railways at Ramagundam Fertilizer City.
Its appeal for AY 2017-18 was filed before the Tribunal with a delay of 70 days. The assessee explained that its managing partner, who alone handled its taxation, financial and legal matters, was suffering from lumbar spondylosis and numbness arising from severe lower-back pain. He had been advised rest and was unable to coordinate with the tax consultant.
