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2021 (8) TMI 873 - AT - Income TaxAddition of employees’ Provident Fund (PF) and ESI - delay in depositing employees’ contribution to PF and ESI - CIT-A deleted the addition - HELD THAT:- We note that the Ld. CIT(A) has taken note that the payments in respect of PF & ESI accounts (i.e. both the employees and employers’ contribution) has been made by the assessee within the due date of filing of return of income (ROI) u/s. 139(1) of the Income-tax Act (hereinafter referred to as the “Act”) i.e. before 30.09.2013. This fact has been taken note by the Ld. CIT(A) from perusal of Annexure 5A and 5B of the Tax Audit Report dated 26.09.2013. And since the assessee has deposited the PF & ESI deposits before the due date of filing of ROI, the assessee correctly relied upon the decision of CIT Vs. M/s. Vijayshree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] and held since both the contributions as per the PF & ESI Act has been made on or before the filing of return of income u/s. 139(1) of the Act, so no disallowance to be made u/s. 36(1)(va) - Decided in favour of assessee. Disallowance u/s.14A - HELD THAT:- As assessee brought our notice that the assessee has not received any exempt income. This fact has been confirmed by the Ld. CIT(A). The Ld. CIT(A) after taking note of this fact that the assessee has not received any exempt income during the year under consideration has given relief by relying on the decision of this Tribunal in assessee’s own case for AY 2011-12 [2018 (4) TMI 440 - ITAT KOLKATA]. We do not find any infirmity in the order of the Ld. CIT(A) on this issue and for that we rely on the ratio of the decision of the Hon’ble Delhi High Court in the case of Cheminvest Ltd [2015 (9) TMI 238 - DELHI HIGH COURT] and CIT Vs. Hero Cycles [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] Disallowance of interest on borrowed fund as advanced to the subsidiary company free of cost - HELD THAT:- From the facts discussed, the assessee company which is the holding company had advanced loan interest free due to business exigency to tide over the deficit (due to low tariff rate of electricity), so even if interest free advances are given to subsidiary/sister concern, interest expenditure could not have been disallowed and for such a proposition we rely on the ratio of the decision in the case of S A Builders Ltd. Vs. CIT [2006 (12) TMI 82 - SUPREME COURT] which is also applicable to the facts of this case. Therefore, we are of the opinion that the disallowance of interest on loan to subsidiary u/s. 36(1)(iii) of the Act by the AO has been rightly held to be unjustified. Further we note that the issue is squarely covered in favour of the assessee by order of the Coordinate bench of this Tribunal in assessee’s own case [2018 (4) TMI 440 - ITAT KOLKATA] ad [2014 (2) TMI 1366 - ITAT KOLKATA] and there is no change in facts and law and the Ld. DR was unable to controvert the same by producing any cogent material, therefore, we find no reason to interfere in the impugned order of the Ld. CIT(A) and the same is hereby upheld. Therefore, we uphold the action of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. Subsidy received from National Jute Board - revenue or capital receipt - AO added the said amount to the total income of the assessee on the ground that it is a revenue receipt - AO has made the addition mainly on the reason that assessee failed to deduct from the cost of plant and machinery the sum and has also claimed the depreciation on this amount of machinery - HELD THAT:- It is settled that revenue receipt are chargeable to tax on the other hand capital receipts are not unless specifically made taxable under the Act. If subsidies are given for various purpose like for promoting, construction of new industries, expansion of existing industries etc. then it is on capital account. On the other hand, the object of the subsidy scheme was to enable the assessee to run the business more profitably or to meet day to day business expenses, then the receipt shall be of revenue nature. So, if the object of this assistance/subsidy was to enable the assessee to set up a new unit or to expand the existing unit then the receipt shall be capital receipt not chargeable to tax. Therefore, the taxability of subsidies has to be determined by looking into the purpose for which it is given - Thus scheme for which this subsidy was given to the assessee Ld. CIT(A) has rightly decided in favour of the assessee. Ground of appeal of revenue is dismissed.
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