TaxTMI 
TaxTMI 
2017 (8) TMI 1753
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....orporate guarantee commission, without appreciating that fact that the assessee has not substantiated the payment of the guarantee commission by it. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs. 3,72,619/- u/s. 2(24)(x) r.w.s. 36(l)(va) of the Act, on account of employees contribution to PF which was not paid within the due date under relevant Rules." 2. Apropos ground No. 1; 2.1 In this case the Assessing Officer observed that the assessee has shown an amount of Rs. 48,219 as dividend income. However, he noted that the assessee has not shown any expenditure incurred for earning the dividend income. In response, the assessee submitted that it has not claimed the dividend income as exempt u/s 10(34) of the Income-tax Act and offered the same for taxation. However, the Assessing Officer did not accept the contention of the assessee. He proceeded to refer to the decision of ITAT Special Bench in the case of Cheminvest Ltd. v. ITO [317 ITR 86 (AT)]. He computed the disallowance u/s 14A r.w. Rule 8D and disallowed a sum of Rs. 20,56,602. 2.2 Against the above order, the assesse....
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.... income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income. The findings of facts recorded by both the Authorities do not give rise to any substantial question of law. Since no substantial question of law arises in this income tax appeal, the income tax appeal is dismissed with no order as to costs." 4. From the above it is clear that the Hon'ble jurisdictional High Court also has upheld the decision that when no dividend income is claimed, disallowance u/s 14A is not permissible. Hence, the authorities below's reliance upon the Special Bench decision in the case of Cheminvest Ltd. and the CBDT Circular are misplaced. Hence, we find that the appeal by the Revenue itself is misplaced. Furthermore, we note that the learned CIT (A) has held that since the assessee has adequate surplus funds, no disallowance of interest should be done. The learned CIT (A) has directed 0.5% disallowance of the investments. Since we have already held tha....
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....nsideration the rates of guarantee commission charged by various banks including the guarantee commission charged by the HSHC Bank in the range of 0.15% to 3%. Since the facts involved in the present case are 1 ITA 6816/M/20 & 7105/Mum/2011 materially similar to the facts involved in the case of Everest Kanto Cylinder Ltd. (supra), we prefer to follow the decision rendered by the co-ordinate Bench of this Tribunal in the said case over the decision of French Court in the case of Societe Carrefour (supra). We accordingly modify the impugned order of the ld. CIT(A) on this issue and direct the A.O. to re-compute the commission for guarantee given by the assessee to its Associated Enterprises @ 0.5% being the arm's length, price. Ground No. I of Revenue's appeal is thus partly allowed whereas ground no. 2 of assessee's appeal is dismissed." In the above case guarantee commission 0.75% is accepted as reasonable. Further in the case of M/s. Everest Kanto Cylinder Ltd. vs. DCIT (2013)34 Taxman 19 (Mum) in para 21 held as under: "We also find that in an independent transaction, the assessee has paid 0.6% guarantee commission to ICICI Bank India to its c....
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.... adequate. Hence, addition of notional income by the Assessing Officer has rightly been deleted by the learned CIT(A). Hence, we uphold the order of the learned CIT(A). 7. Apropos Ground No. 3; 7.1 On this issue, the Assessing Officer disallowed Rs. 3,72,619 received from employees as contribution to Provident Fund by holding that the payment is not made to the relevant fund before the due date as specified in the relevant Act. However, the assessee claimed that the payments were made before the due date of the filing of the return under the Income-tax Act. Hence, no disallowance should have been made. For this proposition, the assessee referred to several case laws as under:- (i) CIT v. AIMIL Ltd. (Delhi High Court) 312 ITR 508 (ii) Vinay Cements 213 CTR 268 (SC) (iii) Alom Extrusions Ltd. (2009) 309 ITR 306 (SC) (iv) Dharmendra Sharma 297 ITR 320 (Del.) (v) P.M. Electronics Ltd. 313 ITR 161 (Del.) (vi) CIT v. Hindustan Organics Chemicals Ltd. 366 ITR 1 (Bom.) (vii) CIT v. Bank of Rajasthan Ltd. 233 ITR 530 (Bom.) (viii) CIT v. Magus Customers Dialog Pvt. Ltd. 371 ITR 244 (Kar) 7.2 Consideri....