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2018 (4) TMI 440 - AT - Income TaxAddition on account of employees’ contribution to Provident Fund and ESI fund beyond due date - Held that:- We note that the payments of PF and ESI had not beenpaid by the assessee within the grace period as specified in the relevant statute. However, we note that the payment of ESI and PF have been made by the assessee within the due date of filing return of income u/s. 139(1) of the Act. Therefore, it is a sufficient compliance made by the assessee and there is no breach of duty or default on the part of the assessee and for that we rely on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Alam Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT ) Addition u/s. 14A r.w.r. 8D - Held that:- Disallowance cannot be made u/s. 14A r.w.r. Rule 8D of the IT Rules, where the assessee has not earned / received any exempt income during the assessment year under consideration i.e. until and unless there is receipt of exempt income for the concerned assessment year, the disallowance u/s 14A r.w.r. Rule 8D of the IT Rules cannot be invoked. Since in the assessee case under consideration, as the assessee had not earned any exempt income during assessment year 2011-12, therefore, the invoking of the provision of Section 14A r.w.r. Rule 8D of the I.T. Rules by the Assessing Officer is not warranted. Disallowance as interest on loan to subsidiary company - Held that:- We note that money was advanced to the subsidiary company on account of commercial expediency and the ratio of the judgment of Hon'ble Supreme Court in the case of S.A. Builders Ltd. vs. CIT And Another (2006 (12) TMI 82 - SUPREME COURT) is applicable to the facts of the assessee’s case under consideration. We also note that assessee was having sufficient interest free fund and the Assessing Officer was unable to establish any nexus between borrowed fund and the loan fund to the subsidiary company. Therefore the disallowance for interest on loan to subsidiary u/s 36(1)(iii) by the Assessing Officer is not justified. Addition made on account of bogus purchases of raw materials - Held that:- Assessee has produced details, such as copy of vouchers of purchases of raw jute,invoices, delivery memo, ledger account, bank statement and deduction of TDS for payment made for purchases etc. There is physical movement of goods in the assessee`s case under consideration. We also note that once sales were accepted by the assessing officer then the corresponding purchases could not be disallowed, because without purchase there can not be sale. Further, we note that Assessing Officer has not found any patent defect in the method of accounting and has accepted the books result of the assessee.In view of the totality of factual matrix of the case, we note that the Assessing Officer has failed to bring any cogent evidence on record to show that purchases made by the assessee are bogus. Revenue appeal dismissed.
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