TaxTMI 
TaxTMI 
2019 (6) TMI 1626
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....essee was given ample opportunity during assessment proceedings to prove the genuineness of loan creditors but it failed? 3. That on the facts and circumstances of the case the ld. CIT(A) erred in deleting the disallowances u/s 14A of I.T. Act, 1961 on ground that there is no exempt income contrary to CBDT Circular No.5/2014 dated 11/02/2014? 4. That on the facts and circumstances of the case the ld. CIT(A) erred in deleting the disallowance made u/s 36(1)(va) of the I.T. Act, 1961 on account of the assessee's failure to deposit Employees Contribution towards statutory ESI and PF within the due date as prescribed? 5. That the appellant craves to add, delete or modify any of the grounds of appeal before or at the time of hearing. 3. Ground No. 1 raised by the Revenue relates to addition of Rs. 97,75,000/- on account of credit to capital reserve by holding that profit arising on account of forfeiture of shares is capital receipt in nature. 4. Brief facts qua the issue are that during the F.Y. under consideration, it has been observed by AO that the Balance Sheet under the head Reserve & Surplus, an amount of' Rs. 3,29,01,250/- has been credited by the assessee-company tow....
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....amount which was paid by them (Rs. 97,75,000/-) was forfeited on April, 2012. After going through the reply of the assessee, the AO noted that assessee has not submitted any evidence in support of his version. The amount of Rs. 97,75,000/- added to the capital reserve on account forfeiture of shares is income of the assessee company and should have passed through profit and loss account. Similarly, the AO noted that the differential amount received on account of sale of business slump sale amounting to Rs. 2,31,26,250/- is income of the assessee and should have passed through Profit and Loss account. As such, the amount of Rs. 3,29,01,250/- (Rs. 2,31,26,250 +Rs. 97,75,000) in total, was considered by AO as income of the assessee-company during the year. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by AO observing the following: "Regarding Rs. 2,31,26,250/- credited to Capital Reserve account, it is seen that the said sum has been contemplated by the appellant company as differential amount received on business sale. To elaborate it, the AR submitted the audited accounts of F....
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....ne through the assessment order for assessment year for assessment year 2014-15, wherein Rs. 2,31,26,250/- which has been debited to Capital Reserve has not been claimed. At the assessment hearing stage, the appellant company has submitted that the nature of debit to capital reserve of Rs. 2,57,26,012/- in F.Y. 2013-14 is similar to the nature of credit to Capital Reserve of Rs. 2,31,26,250/- in the instant assessment year and uniformity should be there for allowance / disallowance of the same. Now for the sake of argument, even if it is presumed that same treatment should have been given two assessment years for same nature of item, but as far as present appeal is concerned, the amount of Rs. 2,31,26,250/- credited to Capital Reserve cannot be treated as Capital receipt and hence the addition of this account is sustained. Regarding treatment in A.Y. 2014-15, since the said appeal is not before me, hence I am not giving any directions with respect to its treatment in A.Y. 2014-15. In view of above, I am of the opinion that the A.O. has correctly treated Rs. 2,31,26,250/- as revenue receipt and added it back to the total income. Hence, the Assessing Officer is directed to delete....
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....othari Retail Pvt. Ltd. was not squared off and carried forward to subsequent year (Refer Page No. of Paper Book). The Ld. Assessing Officer, has disallowed such Interest on Unsecured loans and Interest on TDS & Sales Tax; as the same was not corroborated with any documentary evidence. In this connection; it is submitted that break-up of Interest on Unsecured loans as shown above was already provided at the assessment hearing stage (Refer Page No... of Paper Book). Further the Ld. Assessing Officer has not issued any show-cause notice before drawing any adverse inference regarding disallowance of Rs. 32,75,309/-." 9. Having gone through the reply of the assessee, the ld CIT(A) held as follows: "From the above, it is clear that the only issue that the AO had and which was the basis of addition made by the AO with respect to Interest on Unsecured Loan was that no supporting was given by the appellant company with respect to payments made against Unsecured Loans taken by the appellant company. The Assessing Officer has not given any adverse inference with respect to the genuineness of this transaction or any other findings. With respect to this, the AR of the assessee has submi....
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....nd. The issue of delay in thepayment of service tax is directly covered by the judgment of Hon'ble Apex Court in the case of Lachmandas Mathura Vs. CIT reported in 254 ITR 799 in favour of assessee. The relevant extract of the judgment is reproduced below : "The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench's decision in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 [All] The learned counsel appearing for the appellant-assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engg. Works Ltd. v. CIT [1983] 144 ITR 732 (All.) (FB), wherein it has been held that interest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2- 1996. In that view of the matter, the appeal is allowed and question Nos. 1 and 2 we answered in favour of the assessee ....
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....und No. 4 raised by the Revenue relates to disallowance made u/s 36(1)(va) of the Act on account of the assessee's failure to deposit employees' contribution towards statutory ESI and PF within the due date. 14. We have head both the parties and perused the material available on record. We note that issue involved in ground No. 4 raised by the Revenue is no longer reintegra. If the assessee pays PF and ESI contribution within the time of filing return of income under section 139(1) of the Act, it would be sufficient compliance and no disallowance is attracted. The ld CIT(A) has rightly deleted the addition observing the following: "In the instant case, the Learned Assessing Officer has failed to appreciate the submission made by the assessee company during the course of assessment hearing. Assubmitted during assessment hearing, though certain payments representing Employees contribution towards PF and ESIC was not made within the due dates prescribed under Employees Provident Fund &..Miscellaneous Provisions Act, 1952 and Employees State Insurance Act, 1948 respectively beyond the dates, prescribed by relevant statutes, however all such payments were duly made within the due dat....