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of <h1>ITAT upholds CIT(A) decisions on interest expenses and PF, ESIC payments, dismissing Revenue's appeal. (A)</h1> <h3>The Income-tax Officer, Ward-1(2), Ahmedabad Versus Bajaj Processors Limited</h3> The Income-tax Officer, Ward-1(2), Ahmedabad Versus Bajaj Processors Limited - TMI Issues:1. Deletion of disallowance of interest expenses2. Deletion of disallowance of payment of PF and ESICIssue 1: Deletion of disallowance of interest expensesThe Revenue appealed against the order by the CIT(A) regarding the deletion of disallowance of interest expenses of Rs.4,89,750. The AO contended that the assessee provided interest-bearing funds to certain parties without charging any interest, leading to a diversion of business profits. The assessee argued that no interest was charged on trade advances and that the funds provided were from its substantial interest-free funds. The CIT(A) deleted the disallowance after considering the submissions made by the assessee. The Revenue challenged this decision, but the ITAT upheld the CIT(A)'s order. The ITAT noted that the AO failed to establish a nexus between interest-bearing funds and the funds provided at a lesser rate of interest. It was observed that the interest-free funds of the assessee covered the advances, and hence, the disallowance was not warranted. Therefore, the ITAT dismissed Ground no.1 in the Revenue's appeal.Issue 2: Deletion of disallowance of payment of PF and ESICThe second ground of the appeal related to the deletion of disallowance of Rs.7,84,393 for the payment of PF and ESIC, as they were not made within the due date specified by the relevant statute. The CIT(A) relied on the decision of the Ahmedabad Bench of ITAT in the case of Smartchem Technologies Ltd vs. ITO and deleted the addition since the amounts were paid before the due date of filing the return. The Revenue appealed against this decision, but the ITAT upheld the CIT(A)'s order, stating that the payment was made before the due date of filing the return. Therefore, the ITAT dismissed this ground raised by the Revenue.In conclusion, the ITAT upheld the CIT(A)'s decisions regarding both issues, leading to the dismissal of the Revenue's appeal.
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