2020 (9) TMI 326

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.... an estimated basis in respect of amount alleged to be diverted as interest free advances to sister concern. 3. We have heard the rival submissions and perused the material on record. 4. We find that the assessee company is engaged in the business transportation, packing and moving of household goods of logistic business. We find that the ld. AO on verification of the balance sheet of the assessee company together with schedules and sub-schedules had observed that the assessee had given interest free advance to the following parties: 1. DRS Body Building Rs. 23,69,040 2. DRS Educational Society Rs. 12,00,000 3. DRS Labs(India) Pvt. Ltd. Rs. 59,03,070 4. DRS Logistics Pvt. Ltd. Rs. 4,36,20,845 5. MDN Edify Ed....

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.... under: 1. Interest on term loan (vehicles) Rs. 1,11,01,,643 2. Interest on overdraft Rs. 1,21,66,462 3. Bank charges Rs. 52,65,044 4. Bank Commission (CC) Rs. 20,000 5. Bank interest Rs. 65,399 6. Interest - Others Rs. 42,17,740 7. Interest on service tax Rs. 4,94,194 Total Rs. 3,33,30,483 From the above, it can be safely concluded that except interest on overdraft amounting to Rs. 1,21,66,462/-, bank interest of Rs. 65,399/- and interest - others of Rs. 42,17,740/-, the other interest and bank charges paid by the assessee could not have been utilized for the purpose of making interest free advances. Admittedly, overdraft account of the assessee is an account having common funds i.e. both ....

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....ed capital in the facts and circumstances of the case. Accordingly, grounds Nos. 1 & 2 raised by the assessee are allowed. 7. Ground Nos. 3, 4 & 5 relate to employees contribution to PF and ESI amounting to Rs. 18,04,793/- and Rs. 3,73,568/- respectively. 8. We have heard the rival submissions and perused the material on record. We find that employees contribution to PF & ESI amounting to Rs. 18,04,793/- and Rs. 3,73,568/- respectively had been remitted beyond the due date prescribed under the respective statutes, but, the same had been remitted before the due date of filing of return u/s 139(1) of the Act. 8.1 We find that the ld. AR has placed reliance on the coordinate bench decision of this Tribunal in the case of VBC Industrie....

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....e date as per section 36(1)(va), but, were paid before the due date of filing of return u/s 139(1), the same is allowable as expenditure u/s 43B of the Act. 14. The ld. DR submitted before us, the expenditure which is covered u/s 43B is employer's contribution and not employee's contribution. Ld. DR submitted, as far as employee's contribution is concerned, the employer is merely custodian, hence, there should not be any delay in remitting the same to the appropriate account. It was submitted, amendment made to section 43B would not apply to employees contribution as such amendment is not with reference to section 36(1)(va). In support of such contention, he relied upon a ITA No. 143/H/13 and others VBC Industries Ltd. decision of ....

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....e only issue to be decided whether such delayed payment of employee's contribution to PF & ESI is an allowable deduction u/s 43B. As can be seen, the Hon'ble Gujarat High Court in case of CIT Vs. Gujarat State Road Transport Corporation (supra) has decided the issue against assessee by holding that employee's contribution to PF & ESI is not covered under the provisions of section 43B. However, it is worth mentioning, in the very same decision, Hon'ble Gujarat High Court has referred to decisions of at least four other high courts expressing the view that employee's contribution to PF and ESI if deposited within the due ITA No. 143/H/13 and others VBC Industries Ltd. date of filing return u/s 139(1), same would be allowable as deduction. In ....