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2021 (4) TMI 63 - AT - Income TaxDisallowance u/s 14A - contention of the assessee before the Assessing Officer that it has not received any exempt income for the year under consideration and hence, question of disallowance of expenditure incurred towards said exempt income does not arise - HELD THAT:- by following the decision of Hon'ble Jurisdictional High Court of Madras in the case of M/s. Redington India Ltd. [2017 (1) TMI 318 - MADRAS HIGH COURT] we are of the considered view that when there is no exempt income earned for the year, no disallowance can be made towards expenses relatable to said exempt income u/s.14A read with Rule 8D. Hence, we are inclined to uphold the findings of the learned CIT(A) and reject ground taken by the Revenue. Disallowance of contribution to PF and ESI u/s.36(1)(va) r.w.s 2(24)(x) - employees contribution to PF & ESI not remitted within due date specified under respective Acts - CIT(A) has deleted additions made by the Assessing Officer towards employees contribution to PF & ESI, which was paid belatedly to the credit of employees account, but remitted on or before due date for furnishing return of income u/s.139(1) - HELD THAT:- Hon’ble Supreme Court in the case of CIT V. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] where it was held that if employees contribution to PF & ESI is remitted on or before due date for furnishing return of income filed u/s.139(1) of the Act, then such payments need to be allowed as deduction, irrespective of the fact that such payment has been remitted beyond due date specified under the respective Acts. The Hon'ble Supreme Court has also considered Board’s Circular No.22/2015 dated 17.12.2015 to arrive at such conclusion. Therefore, we are of the considered view that we uphold the findings of the learned CIT(A) and reject the ground taken by the Revenue. Disallowance of loss on forward contracts - AO has disallowed loss claimed on forward contracts on the ground that assessee’s case does not fall under any of the exceptions provided under the proviso to section 43(5) of the Act, because the assessee has entered into forward contracts not for goods or merchandise, but for currency - HELD THAT:- CIT(A) has recorded a categorical finding in light of decision of CIT Vs. Friends & Friends Shipping Pvt Ltd [2013 (5) TMI 458 - GUJARAT HIGH COURT] that when forward contracts entered into with banks for the purpose of hedging loss due to fluctuation in foreign currency while implementing export of goods, then the same cannot be considered as speculative loss u/s.43(5) of the Act. The learned CIT(A) has further recorded that the assessee has furnished necessary evidences to prove that it has exported goods and hedge possible loss in fluctuation in foreign currency had entered into forward contract with its bankers and incurred loss. Therefore, we are of the considered view that once forward contracts are entered into with bankers for the purpose of hedging possible loss in fluctuation of foreign currency, then the same is in the nature of revenue expenditure, but not speculative loss u/s.43(5) of the Act. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards disallowance of loss on forward contracts. Hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the Revenue. Disallowance of stitching charges - addition only for the reason that party has not appeared before the Assessing Officer in response to notice u/s.133(6) - HELD THAT:- Except this, no other adverse comment has been made in respect of payment made to M/s.R Design Apparels for stitching charges. In fact, the Assessing Officer has not doubted genuineness of payment. The learned CIT(A), after considering relevant facts has rightly pointed out that payments have been made through banking channels after deducting applicable TDS as per law. Further, the assessee has filed necessary evidences, including bills issued by party for rendering services. Therefore, he opined that mere non-production of the party cannot be a basis to make disallowance, when all other supporting evidences have been filed to substantiate claim of expenditure. The said findings of the learned CIT(A) goes uncontroverted from the Revenue. The revenue has failed to file any evidence to counter the finding of facts recorded by the CIT(A) . Hence, we are inclined to uphold the findings of learned CIT(A) and reject ground taken by the revenue.
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