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2016 (5) TMI 1139 - AT - Income TaxTreatment of grant-in-aid towards salary & PF as taxable - received for the payment of arrears of PF of the employees, salary and wages of employees - Held that:- AO made the addition of grant in aid for ₹ 48,22,698/- in the assessment year 2003-04 but the AO in the assessment year 2004-05 has allowed the relief of grant-in-aid for ₹ 44 Lacs. From the facts of the case we find that grant in aid for ₹ 48,22,698/- pertaining to the assessment year 2003-04 was allowed in the immediate subsequent assessment year 2004-05 for ₹ 44 Lacs. The learned AR has produced the copies of the assessment orders for the AYs 2003-04 and 2004- 05 in support of its claim and the same are placed on the record. Similarly, we also find that the grant-in-aid received by the assessee in the assessment year 2004-05 was not disallowed by the AO. The ld. DR failed to bring anything on record contrary to the argument of the ld. AR and he left the issue to the discretion of the Bench. In view of above and in the interest of justice, we are inclined to treat the grant-in-aid as capital in nature therefore it is not liable to tax. Accordingly we reverse the order of the lower authorities and ground raised by the assessee is allowed. Disallowance of employees contribution under the PF Act - Held that:- We find that the AO has made the addition of the amount of the employee contribution as there was a delay in payment to PF authorities. However, from the assessment order we find that all the payment of employees contribution were made before the due date of filing of Income Tax Return as specified u/s.139(1) of the Act. Now, this issue stands covered in favour of assessee and against the Revenue by the decision of Hon’ble jurisdictional High Court in the case of CIT v. M/s Vijay Shree Limited [2011 (9) TMI 30 - CALCUTTA HIGH COURT] Disallowance of interest paid for delayed deposit of PF - Held that:- Interest paid on the late deposit of PF is compensatory in nature therefore it should not be disallowed on the ground of treating the same as penal in nature, therefore, it is entitled for deduction while computing the profit under the business head. In this view of the matter, we reverse the action of Authorities below and ground raised by assessee in appeal is allowed.
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