AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 84
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....d are as under. 4. Assessee is a company stated to be engaged in the business of manufacturing of engineering goods. Assessee filed its return of income for A.Y. 2005-06 on 29.10.2005 declaring total loss of Rs. 1,25,95,376/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 30.04.2007 and the total income, before adjustment of carry forward unabsorbed business loss, was determined at Rs. 2,93,00,155/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 17.03.2010 granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee & Revenue are now in appeal before us. The grounds raised by the Revenue in ITA No. 1921/AHD/2010 reads as under:- l(a). On the facts and in the circumstances of the case and in law, the Id.CIT(Appeals) erred in deleting the additions of Rs. 45,78,683/- made on account of disallowance employees' (staff) contribution to Provident Fund which were not paid on due dates. l(b). The Id.CIT(Appeals) erred in deleting the additions of Rs. 59,25,030/- made on account of disallowance employees' (workers) contributi....
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....rtial relief to the Assessee by holding as under:- 2.2. I have considered the matter. Appellant's contention is that the amounts in question did not come within the purview of provisions of section 36(l)(va) r.w.s. 2(24)(x) due to salary being paid late. As discussed in Order dated 2.3.2009 by the ITAT, Ahmedabad Bench in ITA No.2609/Ahd/2008 for A.Y.2004-05 in the case of Gujarat Containers Ltd., para 30 of Employees' Provident Fund Scheme imposes obligation on the employer to remit both the shares of contribution, i.e. employer's as well as employees' in the first instance. The ITAT noted that initial responsibility for making payment of contribution lies on the employer irrespective of the fact whether the wages are paid in time or not. Appellant's contention that provisions of section 2(24)(x) are not applicable due to salary payment being late is therefore not acceptable. However, in view of Supreme Court's decision in the case of Alom Extrusions Ltd. and also ITAT, Ahmedabad's aforesaid decision in ITA No.2609/Ahd/2008, in the case of Gujarat Containers Ltd., even employees' contribution if paid before due date of filing of return are allowabl....
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....he fact that the contribution of provident fund and ESIC not being paid before the due dates and in the absence of any contrary binding decision and respectfully following the decision of Hon'ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation (supra) we set aside the order of ld. CIT(A) on this issue and uphold the decision of A.O. Thus this ground of Revenue is allowed. Ground no. 2 is with respect to deletion of addition in respect of long outstanding debts. 10. A.O on perusing the details of creditors reflected in the Balance Sheet noticed that Assessee owed debts to certain creditors which were more than 3 years old and the aggregate of such debts was Rs. 5,39,217/-. A.O was of the view that since the law of limitation prescribes the period of 3 years as being the gestation period within which any claim for recovery of debt is required to be enforced, and since that period has elapsed, the liability shown by the Assessee being payable to those creditors has ceased to exist. He accordingly made addition of Rs. 5,39,217/- Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who after considering the submissions of the....
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....terfere with the order of ld. CIT(A) and thus this ground of Revenue is dismissed. Ground no. 3 is with respect to deleting the addition on account of welfare expenses. 14. On perusing the details of welfare expenses, A.O noticed that the expenses debited to welfare expenses included expenses in respect of grocery, pulses and other requirement to run the canteen. He also noticed that the canteen facility provided to the employees of the Assessee could have been used by other than employees also and therefore he was of the view that the outsiders enjoying the facility of canteen cannot be ruled out. He therefore considered 10% of such expense amounting to Rs. 3,19,015/- as being not wholly and exclusively for the purpose of business of the Assessee. He also noticed that from the other general expenses, the use for non business purpose could not be ruled out. He accordingly considered 10% of general expenses amounting to Rs. 1,64,365/- to be not for the purpose of business and accordingly made an aggregate disallowance of Rs. 4,83,380/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who deleted the addition by holding as under:- 8.2. I have consider....
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....ance of Rs. 1,98,164/- is cancelled. 19. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us. 20. Before us, ld. D.R. supported the order of A.O. On the other hand ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further placed reliance on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Torrent Pharmaceuticals Ltd. (2013) 263 CTR 683 (Guj). He thus supported the order of ld. CIT(A). 21. We have heard the rival submissions and perused the material on record. We find that the A.O has made an ad hoc disallowance of 10% of miscellaneous expenses. While disallowing the expenses, he has not pointed out any expenditure which is not for the purpose of business. At the same time, we find that ld. CIT(A) following the decision for A.Y. 2000-01 has also noted that no such disallowance were made in earlier years and ad hoc addition, in the absence of adverse report by the auditor, cannot be sustained. Before us, Revenue has not brought any material on record to any controvert the findings of ld. CIT(A) nor has pointed out any contrary binding decision. In view of the aforesaid facts, we find no reason to interfere with t....
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....ss purpose. 24. Before us, at the outset both the parties submitted that the facts and circumstances of the case in all the grounds raised in the present appeal are identical to the grounds raised by Revenue in its appeal A.Y. 05-06 except for the amounts and the submissions made by them while arguing the appeal for A.Y. 05-06 would be applicable to the present grounds. In view of the aforesaid submissions and for the reasons stated hereinabove while deciding the appeal of Revenue for A.Y. 2005-2006 in ITA No. 1921/AHD/2010 (supra) and for similar reasons decide the grounds of Revenue in the present appeal. 25. In the result, the appeal of Revenue is partly allowed for statistical purposes. We now proceed with Revenue's appeal for A.Y. 2007-08 in ITA No. 1923/A/2010. 26. The grounds raised by Revenue reads as under:- 1. On the facts and in the circumstances of the case and in law, the Id.CIT(Appeals) erred in deleting the addition of Rs. 1,24,821/- made on account of disallowance in respect of payment of ESI employees' contribution. The Id.CIT(Appeals) erred in not appreciating that under the provisions of section 36(l)(va) r.w.s.2(24)(x) of the Act disallowance of the pay....
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....ted its claim of the efforts made for the recovery of bad debts nor has furnished any documentary evidence to testing the claim of bad debts. He accordingly denied the claim of bad debts Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who deleted the addition by holding as under:- 6.2. Assessing Officer's reasons for making the disallowance are identical to A.Y.2006- 07. The bad debts are directed to be allowed after making verification as directed in appellate order for A.Y.2006-07 in appellant's case in CAB/IV-292/09-10 through my Order dated 17.3.2010. 29. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 30. Before us, ld. D.R. supported the order of A.O. On the other hand ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that ld. CIT(A), following the Hon'ble Supreme Court decision in the case of TRF Ltd. vs. CIT 323 ITR 397 has decided the issue and therefore no interference to the order of ld. CIT(A) is called for. He thus supported the order of ld. CIT(A). 31. We have heard the rival submissions and perused the material on record. The issue in the present case is with re....
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.... have allowed the entire expenses. 5. The Learned Commissioner of Income Tax (Appeals)-lV has erred in confirming the addition of Rs. 2,02,97,974/- being interest payment made by the appellant to the bank. On the fact and circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals)-IV ought to have allowed the same. 34. Ground no. 1 is with respect to disallowance of delayed payment of employee's P.F share of contribution. We find that the present ground raised by the Assessee is interconnected to the ground no. 1 of Revenue's appeal in ITA No. 1921/Ahd/2010 for A.Y. 05-06. We while deciding the Revenue's appeal and for the reasons stated hereinabove have decided the issue in favour of Revenue. We therefore for similar reasons dismiss the present ground of Assessee. Thus this ground of Assessee is dismissed. 2nd ground is with respect to addition on account of repairs to building. 35. On perusing the details of repairs to building, A.O noticed that a sum of Rs. 1,75,231/- was incurred in respect of labour charges for making and fixing partition with doors, renovation and extending the toilet area and for making storage unit. He also noticed that a sum of....
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....tility for supply of power. He was of the view that the incurring of expenditure culminated in additional benefit and advantage of enduring nature. He therefore considered the expenditure to be of capital in nature and accordingly disallowed the amount of Rs. 1,85,508/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who upheld the order of A.O by holding as under:- 6.2. I have considered the matter. The amount in question is a refundable deposit, which cannot be claimed as an expense. Appellant's contention that the deposit is not likely to be returned at any point of time in future, unless business is closed down is not tenable. This deposit cannot be compared with deposit under OYT Scheme, which is under different terms and conditions and is of a much smaller almost insignificant amount. Disallowance of Rs. 1,85,508/- is confirmed. 40. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us. 41. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that the expenditure was in respect of old unit and no new asset has been acquired and the expenditure has been incurred f....
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....arly disallowable in the case of appellant company. In case of Shri Rahul Amin, considering the nature of expenses, part of the expenses are accepted to be for the business and out of disallowance of Rs. 1,48,584/-, 50% disallowance is sustained. To sum up, out of disallowance of Rs. 2,61,022/-, disallowance of Rs. 1,81,730/- is confirmed, being expenses not proven to be wholly and exclusively for appellant's business and the balance, i.e. Rs. 74,292/- is deleted. 44. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us. 45. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further relied on the decision of Gujarat High Court in the case of Sayaji Iron & Engineering Company vs. CIT 253 ITR 749. The ld. D.R. on the other hand supported the order of A.O and ld.CIT(A). 46. We have heard the rival submissions and perused the material on record. We find that the expenses incurred by the Directors of the Company through Credit Cards were considered to be personal in nature by the A.O. On the other hand, it is Assessee's submission that the expenses have been incurred on behalf of the Company and no personal element is....
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....d, i.e. cash credit account, working capital term loan account, term loan account for other purposes and FITL, In respect of all the accounts, Assessing Officer gave credit for interest serviced by the appellant through deposit of sale proceeds or otherwise and disallowed the remaining interest only, which was not paid till the last day of financial year, though it was debited to appellant's accounts by the bank. Assessing Officer referred to CBDT's Circular No.7 of 2006 only in respect of that portion of interest on cash credit account or other loan account, which was converted into FITL account. As per Board's Circular, the conversion of existing liability of interest in loan should not be considered as actual payment of interest and such conversion would still attract provisions of section 43B(e), unless interest is actually paid to the bank. Appellant's contention that it was sanctioned additional term loan titled Funded Interest Term Loan (FITL) and the additional loan sanctioned had nothing to do with interest payable by the appellant on various loans taken earlier, is not correct. Appellant has itself stated that the quantum of additional loan was decided by ....
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....e A.O be deleted. The ld. D.R. on the other hand supported the order of A.O and ld.CIT(A). 50. We have heard the rival submissions and perused the material on record. The issue in the present case with respect to disallowance u/s. 43B(e). The relevant portion of Section 43B along with the Explanation which is relevant for the present issue, reads as under:- 43B. Notwithstanding anything contained n any other provision of this Act, a deduction otherwise allowable under this Act in respect of - (a)................ (b)................ (c)................ (d)................ (e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advances. Shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him: Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assesse....
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....planation 3D which has been inserted with retrospective effect from 01.04.1997, and in the absence of any contrary binding decision in support of the Assessee, We find no reason to interfere with the order of ld. CIT(A) Thus this ground of Assessee is dismissed. 52. In the result, the appeal of Assessee is partly allowed for statistical purposes. We now proceed with Assessee's appeal for A.Y. 2006-07 in ITA No. 2011/A/2010. 53. The ground raised by Assessee reads as under:- 1. The Learned Commissioner of Income Tax (Appeals)-IV has erred in confirming partly the payment made by the company towards Credit Card expenses incurred by the director for and on behalf of the company. On the fact and circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals)-IV ought to have allowed the entire expenses. 54. Assessee vide letter dated 27.11.2013 has raised additional ground which reads as under:- "The amounts by way of Provident Fund and ESI paid after the due date of the return for Asst. Year 2005-06 and disallowed in that year be kindly directed to be allowed in Asst. Year 2006-07 being the year of payment." 55. Before us, both the parties submitted that t....