TaxTMI 
TaxTMI 
2020 (2) TMI 557
X X X X Extracts X X X X
X X X X Extracts X X X X
....tive orders in haste and arbitrarily, in total disregard to the principles of Natural Justice on the ground that the evidences/ document/ details furnished during the course of assessment were plainly brushed aside without any cogent reason or confronting the appellant with the nature of discrepancy if those were found to be not tenable/ acceptable: 2. On that facts and circumstances of the case and in law, lower authorities have erred and were not justified in making an addition of Rs. 65,7311- u/s 14A of the Income Tax Act read with rule 80 as against the exempt income of Rs. 8,000/- in a mechanical manner and on hypothetical basis, when the rule should have been applied only in respect of those investments on which exempt income was earned. 3. On the facts and circumstances of the case and in law, lower authorities have erred and were not justified in making an aggregate addition of Rs. 189,55.126/- on account of variations in the confirmations from creditors without confronting the appellant about the discrepancies noticed and in total disregard to the documents and explanations submitted on record. 4. On the facts and circumstances of the case and in law, lower author....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to set aside the impugned order dated 30.05.2016 passed by Commissioner of Income-tax (Appeals)-9, New Delhi qua the Assessment Year 2011-12 on the grounds inter alia that:- "1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 66,578/- on account of disallowance u/s 14A r.w.r. 8D(iii). 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 98,688/- u/s 36(1)(va) on account of delay in Employee's Contribution to PF. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 1,96,79,942/- u/s 40(a)(ia) on disallowance for non-deduction of tax on commission expenses." BRIEF FACTS OF ITA NO.6639/DEL/2014 (ASSESSMENT YEAR 2010-11 - ASSESSEE'S APPEAL) 4. Assessee company is into the business of manufacturing, marketing of I.M.F.L. country liquor and marketing of vanaspati/edible oil. Assessing Officer (AO) by invoking the provisions contained under section 14A of the Income-tax Act, 1961 (for short 'the Act') read with Rule 8D of the Income-tax Rules, 1962 (for short 'the Rules'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....filing the present appeal in AY 2010-11 and in AY 2011-12, both the assessee as well as Revenue have come up before the Tribunal by way of filing the cross appeals. 9. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 OF ASSESSEE'S APPEAL FOR AYs 2010-11 & 2011-12 10. Ground No.1 of assessee's appeal for AYs 2010-11 & 2011- 12 is general in nature, hence needs no adjudication. GROUND NO.2 OF ASSESSEE'S APPEAL FOR AY 2010-11 GROUND NO.1 OF REVENUE'S APPEAL FOR AY 2011-12 11. The addition made by the AO by invoking the provisions contained u/s 14A of the Act r/w Rule 8D to the tune of Rs. 65,731/- & Rs. 66,578/- for AYs 2010-11 & 2011-12 respectively has been confirmed by the ld. CIT(A). It is undisputed fact that during the year under assessment, assessee company has received dividend income of Rs. 8,000/- on its old investment of Rs. 12,400/- in AY 2010-11 in Punjab & National Bank. Assessee has come up with categoric case that it has not incurred any direct expenses to earn the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,800/- as against disallowance of Rs. 66,578/- made by the AO but has not claimed the same as dividend income in the computation of income, in these circumstances, no disallowance can be made u/s 14A read with Rule 8D. So, we find no illegality or perversity in the findings returned by the ld. CIT (A). Ground No.1 of Revenue's appeal for AY 2011-12 is determined against the Revenue. GROUND NO.3 OF ASSESSEE'S APPEAL FOR AY 2010-11 GROUND NO.2 & 3 OF ASSESSEE'S APPEAL FOR AY 2011-12 15. Bare perusal of the assessment orders passed by the AO making addition of Rs. 1,89,55,126/- & Rs. 35,10,494/- in AYs 2010-11 & 2011-12 respectively go to prove that the addition has been made by the AO merely on the ground that information called for u/s 133 (6) of the Act from various parties to confirm the balance outstanding as on year end with assessee and the AO has found discrepancies on the reply by the parties and in some of the cases, replies were not given by the parties to the AO, an addition has been made. Assessee filed reply explaining the discrepancies pointed out by the AO vide reply dated 10.03.2014 but the same has been rejected by writing one sentence that "the same was du....
X X X X Extracts X X X X
X X X X Extracts X X X X
....12%. 19. Ld. AR for the assessee challenging the impugned disallowance contended inter alia that the said loan has been given out of own interest free loan from the assessee company; that assessment in the earlier years were completed u/s 143 (3) of the Act but no such disallowance has been made; from the order passed by the AO as well as ld. CIT (A) it has come on record that AO as well as ld. CIT (A) have not addressed the contentions raised by the assessee that the loan has been advanced out of its own interest free funds and the same were given for business expediency. 20. No doubt, Hon'ble Delhi High Court in case of Punjab Stainless Steel Industries vs. CIT-VII (2010) 324 ITR 396 (Delhi) relied upon by the ld. DR for the Revenue held that when advances have been made out of borrowed funds and not out of credit balance available with assessee company, interest has to be disallowed. 21. However, in the instant case, when the assessee has come up with specific defence that the advance has been made out of interest free funds and the same has been made for business expediency, the applicability of the judgment relied upon by the ld. DR for the Revenue is to be seen after ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee would be entitled for deductions qua the sum received from any office employee to which provisions under sub-section (x) of clause (24) of section 2 is applied only, if such sum is credited by the assessee to the employees account in the relevant fund or funds on or before the due date. Due date is further defined in the Explanation, which means, the date by which the assessee is required as an employer to credit employees contribution to the employees account in the relevant fund under any Act or rule or order or notification issued thereunder or any standing order or award or service or otherwise. Meaning thereby, in case, employer fails to deposit the entire amount towards employees contribution on account of PF & ESI with concerned department on or before the due date under PF & ESI, the assessee shall not be entitled for deduction to that extent. 10. Decision of the Hon'ble Supreme Court relied upon by the assessee cited as CIT vs. Alom Extrusions Ltd. (supra) is not applicable to the facts and circumstances of the case because Hon'ble Supreme Court has decided the issue in Alom Extrusions Ltd. case qua employers contribution as per section 43B(b) of the Act and not qua ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tire amounts that were disallowed. The ITAT however granted complete relief. 8. Having regard to the specific provisions of the Employees' Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT's decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace, period in terms of the extent notification). As far as the amounts constituting deductions from employees' salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. 9. In view of this discussion, the Revenue's appeal is partly allowed. The AO is directed to examine the contributions made with reference to the dates when they were actually made and grant relief to such of them which qualified for such relief in terms of the p....