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of <h1>Tribunal rules in favor of assessee, excludes PF and ESI additions under IT Act.</h1> <h3>Vijai Electricals Ltd., Versus Dy. Commissioner of Income-tax, Circle – 17 (2), Hyderabad</h3> Vijai Electricals Ltd., Versus Dy. Commissioner of Income-tax, Circle – 17 (2), Hyderabad - TMI Issues:1. Addition towards PF and ESI2. Addition made under section 14A of the Income Tax Act, 1961Analysis:Issue 1: Addition towards PF and ESIThe assessee filed two appeals challenging the common order of CIT(A) - 5, Hyderabad, regarding proceedings under section 143(3) of the Income Tax Act, 1961. The primary grounds of appeal in both cases were related to additions towards PF and ESI, as well as under section 14A of the Act. The AO had made the addition concerning employees' contributions to PF and ESI, stating that although the deductions were made, they were not remitted within the prescribed due dates. The CIT(A) upheld the AO's decision after considering various case laws. However, the assessee argued for deletion of the addition based on a proposed amendment to section 36 of the Income-tax Act. The Tribunal referred to a similar case and held that the addition towards PF and ESI should be deleted for both years under consideration, following the precedent set in the referenced case.Issue 2: Addition under section 14A of the ActRegarding the addition made under section 14A of the Act, the AO disallowed an amount in relation to expenditure incurred for income not forming part of the total income. The CIT(A) affirmed this decision. However, the Tribunal noted that as no exempt income was earned from the investments made by the assessee, section 14A would not be applicable. Citing a judgment from the Hon'ble Delhi High Court, the Tribunal directed the AO to delete the addition made under section 14A of the Act. Consequently, both appeals were allowed in favor of the assessee.In conclusion, the Tribunal ruled in favor of the assessee by directing the deletion of additions towards PF and ESI and under section 14A of the Income Tax Act, 1961, based on the specific circumstances and legal precedents cited during the proceedings.
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