AI Drafter 
TaxTMI 
TaxTMI 
2020 (6) TMI 171
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.... that, the order of the forum below is arbitrary, illegal, unjustified and erroneous and has been passed on improper application of mind, being devoid of merit as such deserves to be quashed in limine. 2. For that the addition of Rs. 15,73,018/- added towards interest earned, assessed as income from other sources deserves to be deleted on the ground that, interest earned by the appellant is income from business and eligible for deduction U/s 80P(2) of the Act, as per Statutory provisions & Legislative intentions. 3. For that the addition of Rs. 15,73,018/- added towards interest earned, assessed as income from other sources deserves to be deleted on the ground that, interest earned by temporary exploitation of operational funds as mandated by the authorities by the appellant is income from business and eligible for deduction U/s 80P(2) of the Act, as per Statutory provisions & Legislative intentions. 4. For that, the disallowance of ESI & EPF contributions to the extent of Rs. 11,320/- and Rs. 56,400/- respectively totaling Rs. 67,720/-deserves to be deleted on the ground that, although the payment has been made beyond the due date as provided in EPF Act,....
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.... 2014-2015 on 18.09.2014 declaring total income at Rs. 3,84,660/-. Similarly the assessee filed its return of income electronically for the assessment year 2015-2016 on 24.09.2015 declaring total income at Rs. 47,20,800/-. The case of the assessee were selected for scrutiny under CASS and statutory notices were issued to the assessee. During the course of assessment proceedings, it was noticed by the AO the assessee has received interest income and he has claimed addition u/s.80P(2)(d) of the Act and he has also brought forwarded loss to the tune of Rs. 52,08,253/- which has been set off against the net profit of Rs. 55,92,908/-. There was a total interest of Rs. 18,48,769/-, which was to be treated as income from other sources instead of business income as claimed by the assessee. Therefore, the assessee cannot set off the eligible loss as per the provisions of Section 72(1) of the Act. In this regard, the assessee was asked to justify the claim of setting off of loss from the interest income, in response to which the assessee submitted as under :- "Wrong claim for adjustment of brought forward loss set off, as contended section 72(1) contemplates as stated in your notice....
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.... with Section 43B of the Act and relying on the case laws as noted at page 7 of the assessment order, disallowed the claim of Rs. 67,720/- and added the same to the total income of the assessee because these payments were not deposited in due date as per the respective Act. 8. Feeling aggrieved from the above order of AO, the assessee appealed before the CIT(A) and the CIT(A) has partly allowed the appeal of the assessee. 9. Feeling further aggrieved from the order of CIT(A), the assessee is in appeals before the Income Tax Appellate Tribunal. 10. The facts are same in both the appeals and additions were made by the AO are also under the similar heads, therefore, the statement of facts filed by the assessee before the CIT(A) for the assessment year 2015-2016 has been taken into consideration, which read as under :- The assessment for the Assessment Year 2015-16 of the assessee is completed Under Section 143(3) with a total addition of Rs. 20,31,710/- over returned income of Rs. 47,20,800/-. The Ld Assessing Officer has made addition of Rs. 18,02,122/- on account of interest accrued under miscellaneous receipt treating it as Income from other sources rather than bu....
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.... but makes deposits in banks which give some income. This also is, therefore, business income, and for the purpose of set-off has not to be treated as separate from business income. As a matter of fact the amounts kept in Fixed Deposit are mostly grant amounts which are meant for providing marketing assistance not immediately disposable in the form of marketing assistance to craftsmen and are also not available for otherwise use by the assessee. In order to secure/ensure the use of the grants in time these funds are kept in fixed deposit. In the usual course of business activities of the assessee, the assessee shall get grants and ensure its use and hence the Fixed Deposit is an inevitable part of the business. Therefore the receipts of the interest there from cannot be treated as income from other sources. In similar situation interest earned by co-operative credit societies are held to be business income. As in case of the Samarparn Co operative credit Society Ltd. vrs. ACIT by hon'ble Karnataka High Court. These deposits are rather short term call deposits which are held to be business income and is exempt U/s80P(2)(d) CIT v. Haryana Co-operative Sugar Mill....
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....al, Rs. 3,03,608/- as miscellaneous expenses, and Rs. 2,63,513 under printing and stationery. The ld Assessing Officer also had not verified the details given by the assessee and also she sought the information on the last week of October 2017 and completed the assessment on 10/11/2017 hurriedly, ft is difficult to provide the full particulars of expenses. It is also a fact that non business purposes, the expenditure can be ruled out in absence of third party evidence. However in absence of any material against the fact that the expenses incurred are not unreasonable the disallowance is unreasonable and liable to be deleted. DISALLOWANCE OF INCOME TAX EXPENSES Rs. 1,15,770/-: The assessing officer had made this addition on the basis of presumption that the said expenditure being not allowable U/S 37 and being debited to profit and loss account is claimed by the assessee as deduction, however the said expenses has been added back in the computation statement accordingly the same is offered to tax without claiming deduction therefrom. Therefore addition made on the basis of presumption is not tenable and liable to be deleted. 10. Ld. DR relied on the ord....
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....ee is also directed to cooperate with the AO for early disposal of the case. This ground of appeal of the assessee is allowed for statistical purposes. 13. With regard to disallowance of ESI & EPF contributions, we find that the ld. DR before us relied on the decision of Hon'ble Delhi High Court in the case of Bharat Hotel Ltd. (supra) and submitted that this issue should be restored to AO for verification. After hearing both the sides, perusing the entire materials available on record and the orders of authorities below, we noticed that the assessee has not deposited the contribution of EPF and ESI within the due date as specified in that particular Act. We found substance in the submissions of the ld. DR that Section 36(1)(va) of the Act deals with the deduction in respect of the sum received by the assessee from any of his employees to which the provisions of sub-section 2(24)(x) of the Act applies, provided such sum is credited by the assessee to the employee's account in relevant fund on or before the due date. The 'due date' is defined under the Explanation to section 36(1)(va) of the Act by stating that the due date referred under the relevant Act and certainly not the....
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....to produce the same in support of his claim of expenses debited into the profit and loss account under the aforesaid heads before the CIT(A) but the assessee could not do so. Therefore, the CIT(A) has rightly upheld the action of AO. Accordingly, we do not see any reason to interfere with the observations of the CIT(A) in this regard and we uphold the same. This ground of appeal of the assessee is dismissed. 18. With regard ground raised by the assessee against the addition made on account of presumptive basis, it was observed by the AO during the course of assessment proceedings that the assessee has claimed the expenses as allowable expenditure claimed u/s.37(1) of the Act, however, the AO disallowed the same stating that the expenditure claimed by the assessee does not relate to the business of the assessee towards earning of the income as per Section 37(1) of the Act. It is also not an incidental expenses to earn the income of the assessee which rightly been confirmed by the CIT(A). Accordingly, we do not see any reason to interfere with the observations of the CIT(A) in this regard and we uphold the same. This ground of appeal of the assessee is dismissed. 19. Thus, ITA ....
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....ax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the rules so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 21. We also find that the aforesaid issue has been answered by a coordinate Bench of the Tribunal viz; ITAT, Mumbai 'F' Bench in DCIT, Central Circle-3(2), Mumbai vs JSW Limited & ors (ITA No.6264/Mum/18 dated 14.5.2020, wherein, it was observed as under: " 9. Let us in this light revert to the prevailing situation in the country. On 24th March,2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra ....
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....t of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only inconsonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court it....