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2018 (1) TMI 592 - AT - Income TaxDisallowance of depreciation on electrical equipments - Held that:- AO has erred in not granting depreciation at 15% by not considering the electrical installation as plant & machinery. - Decided in favour of assessee Disallowance of unapproved gratuity - Held that:- Disallowance u/s.40A(7) of the IT Act cannot be made on the ground of absence of approval of gratuity fund as the deduction was not claimed on account of any provision. Disallowance of interest expenses and finance charges - Held that:- Aappellant had demonstrated the utilization of borrowed funds by way of producing the relevant extract of Bank Statement and AO has failed to appreciate that disallowance of interest expenses cannot be made even though fund are utilized for business purposes. So far as utilization of reserve and surplus is concerned. The AO failed in calculating that appellant had utilized reserve and surplus and AO has failed to appreciate that it goes to prudence of the appellant company to utilize the reserve and surplus. AO has no right to suggest as to how the funds, reserves and surplus, share capital etc. should be utilized. It is the company who decides the time of utilization of reserve and surplus funds. During the year under consideration appellant has taken fresh loans from (i) Ranjit Sen, (ii) Aditya Sen, (iii) Supriya Sen, (iv) Suparna Sen, (v) R. R. Gopal. All other balances are opening balances. Thus without prejudice to the above and in the alternative, the appellant stated that the proposition that when advance have been made in the past for which no disallowance has been made in the year of advance, there could be no disallowance in the subsequent year and now it is settled by the decision in case of Shridev Enterprise [1991 (1) TMI 52 - KARNATAKA High Court] and CIT vs. Sushma Kapoor [2009 (10) TMI 56 - DELHI HIGH COURT]. Unexplained/unsecured loan - Held that:- The amount of ₹ 20,00,000/- is an opening balance which is being carried forward for F.Y.2007-08 and there is no new amount has been taken during the year under consideration and an addition u/s.68 is not legal and assessee cited a judgment CIT vs. Usha Stud Agricultural Famrs Ltd. (2008 (3) TMI 91 - DELHI HIGH COURT) in the appeal, it has been held that no addition u/s.68 with respect to opening balance. In our considered opinion, in such circumstances this ground of appeal cannot sustain. Addition toward the late payment of employees contribution to PF and ESIC - Held that:- The issue is squarely covered against the assessee by Hon’ble jurisdictional High Court’s judgment in the case of CIT vs. Gujarat State Road Transport Corporation (2014 (1) TMI 502 - GUJARAT HIGH COURT), wherein it is categorically held that in the case of delayed deposit of employees contribution to PF, the same will not be deductable in computing income under section 28 of the Act.The law so laid down by the Hon’ble jurisdictional High Court is binding on us. The mere fact that an appeal against the said decision is pending before the Hon’ble Supreme Court does not dilute binding nature of this judicial precedent. - Decided against assessee.
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