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2012 (11) TMI 539 - AT - Income TaxDisallowance of interest – Assessee has granted interest free loan to a company - AO disallow the proportionate interest on the said amount of loan - Assessee contended that the amount advanced to its sister concern is on account of business expediency - Held that:- After examine the fact whether the sister concern has been supplying raw material to the assessee and the advance was made at free of interest in the course of business transaction needs to be verify. Issue remand back to AO Disallowance u/s 43B – Delay in deposit of Employees' Provident Funds – Held that:- Following the decision in case of AIMIL Limited (2009 (12) TMI 38 - DELHI HIGH COURT) that the employees' contribution is not deposited by the due date prescribed under the relevant Acts and is deposited thereafter, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in those Acts. In so far as the Income-tax Act, 1961, is concerned, the assessee can get the benefit of deduction of the payment, if the actual payment is made before the return is filed. In favour of assessee Disallowance of provision for warranty charges - Provisions towards warranty expenses at 10% of the total sales turnover - The Department has the objection that the liability in respect of warranty is contingent in nature – Held that:- It is not disputed that the warranty clause is part of the sale document and imposes a liability upon the assessed to discharge its obligations under that clause for the period of warranty. Once an assessed is maintaining his accounts on the mercantile system, a liability is accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business. Therefore contention of revenue not accepted that the warranty provision is contingent liability. Appeal decides in favour of assessee
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