ITAT upholds CIT(A) decisions on fees to ROC, provident fund, and interest on advances.

The ITAT dismissed both appeals, upholding the Ld. CIT(A)'s decisions on the disallowance of fees paid to ROC and the deduction of employee's contribution to provident fund for the assessment year 2005-06. Additionally, the ITAT affirmed the deletion of interest on advances to a related concern for the assessment year 2008-09. The court found the expenses for equity capital to be revenue in nature and allowed the deduction for the provident fund contribution despite not being claimed in the return.

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Issues:
1. Disallowance of fees paid to ROC for increase in authorized share capital for assessment year 2005-06.
2. Deduction of employee's contribution to provident fund for assessment year 2005-06.

Analysis:
1. Disallowance of Fees Paid to ROC:
The department filed an appeal against the order of Ld. CIT(A) for the assessment year 2005-06 regarding the disallowance of fees paid to ROC for the increase in authorized share capital. The assessing officer held the expenses as capital in nature, relying on Supreme Court decisions. The Ld. CIT(A) directed the AO to allow the deduction, considering the circumstances of the case. The department appealed, arguing that the expenses were incurred for the increase in authorized capital, unlike the bonus shares issue in the Supreme Court case. The Ld. CIT(A) analyzed the increase in authorized share capital post a court-approved scheme, distinguishing between equity and preference capital. He allowed the disallowance to the extent of Rs. 30,18,293 for the preference capital. The ITAT upheld the Ld. CIT(A)'s decision, stating that the expenses for the equity capital were revenue in nature due to no fresh fund inflow, as per the Supreme Court's decision.

2. Deduction of Employee's Contribution to Provident Fund:
The second issue involved the deduction of Rs. 3,17,016 being the employee's contribution to provident fund for the assessment year 2005-06. The contribution was deposited a day late due to a Sunday. The Ld. CIT(A) directed to allow the deduction, citing a Delhi High Court decision. The department contended that since the deduction was not claimed in the return, it was not allowable as per a Supreme Court decision. The ITAT dismissed the department's appeal, stating that the appellate authority can allow a legally admissible claim even if not claimed in the return, as per legal precedents.

3. Interest on Advances to Related Concern:
In the appeal for the assessment year 2008-09, the assessing officer made an addition towards interest on advances to a related concern. The Ld. CIT(A) deleted the addition based on the order for the previous year, where the Tribunal found no nexus between borrowings and the advances. The department failed to provide distinguishing features to alter the decision, leading to the dismissal of the appeal by the ITAT.

In conclusion, both appeals were dismissed by the ITAT, upholding the decisions of the Ld. CIT(A) on the disallowance of fees paid to ROC and the deduction of employee's contribution to provident fund, as well as the deletion of interest on advances to a related concern for the respective assessment years.

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