TMI Blog2018 (9) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace period in terms of the extent notification). As far as the amounts constituting deductions from employees’ salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. Revenue’s appeal is partly allowed. AO is directed to examine the contributions made with reference to the dates when they were actually made and grant relief to such of them which qualified for such relief in terms of the prevailing provisions and notifications. We also clarify that the assessee would be entitled to deduction in terms of Section 36(1)(va). Disallowance of revenue expenditure - expenditure incurred by the assessee for the construction of a hotel in Sri Nagar - Held that:- In appeal the CIT noticed that the assessee had conceded to a ratio of 75%:25%, as constituting the capital and Revenue streams and confirmed such treatment. The Revenue appealed against this decision to the ITAT which dismissed it, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer (hereafter AO ) brought to tax a total amount of ₹ 1.2 crores for the relevant Assessment Year (A.Y.) 2000-01 holding that these denoted amounts as deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961 (hereafter the Act ). The AO rejected the assessee s contention that these amounts were not covered by the exceptions stipulated by the statute i.e. proviso (ii) to Section 2(22)(e) of the Act. The CIT(A) confirmed the additions. Upon the assessee s appeal, the Income Tax Appellate Tribunal (hereafter ITAT ) re-apprised the records and found that the amounts were received from two companies M/s Deeksha Holdings Pvt. Ltd. and M/s Jyotsana Holdings Pvt. Ltd. The ITAT disagreed with the findings of facts rendered by the lower authorities to the effect that since the business of the said lender companies did not involve substantial money lending, the amounts did not fall within the proviso (ii) to Section 2(22)(e) of the Act but rather were taxable as deemed dividend. 3. Learned counsel for the Revenue contended that a bare look at the pattern of income and investments of the two lending companies would show that money lending constitutes a fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in Commissioner of Income Tax vs. Parle Plastics Ltd., 332 ITR 63 (Bom). The Court had then held as follows:- As rightly observed in Stroud's Judicial Dictionary, it is not possible to give any fixed definition of the word substantial in relation to a substantial business of a company . Any business of a company which the company does not regard as small, trivial, or inconsequential as compared to the whole of the business is substantial business. Various factors and circumstances would be required to be looked into while considering whether a part of the business of a company is its substantial business. Sometimes a portion which contributes a substantial part of the turnover, though it contributes a relatively small portion of the profit, would be a substantial part of the business. Similarly, a portion which relatively a small as compared to the total turnover, but generates a large, say more than 50 per cent, of the total profit of the company would also be a substantial part of its business. Percentage of turnover in relation to the whole as also the percentage of the profit in relation to the whole and sometimes even percentage of a manpower used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding wage month/period. The CIT in this case confirmed the additions made by the AO based on the entire amounts that were disallowed. The ITAT however granted complete relief. 8. Having regard to the specific provisions of the Employees Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT s decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace period in terms of the extent notification). As far as the amounts constituting deductions from employees salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. 9. In view of this discussion, the Revenue s appeal is partly allowed. The AO is directed to examine the contributions made with reference to the dates when they were actually ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
