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2021 (9) TMI 539 - AT - Income TaxDeemed divided u/s 2(22)(e) - advances as made by a company to a sister concern and adjusted the dues for job work done by the sister concern - HELD THAT:- Assessee has paid certain expenses on behalf of M/s. Indo Shell Mould Ltd. and the same has been adjusted against receivables from them. If at all, transaction between assessee and M/s. Indo Shell Mould Ltd. is in the nature of loans or advances, then same needs to be considered in the hands of M/s. Indo Shell Mould Ltd. as deemed dividend u/s.2(22)(e) of the Act. In this case, the Assessing Officer has invoked provisions of section 2(22)(e) of the Act, in the hands of company, but not in the hands of shareholder. Therefore, on this count, additions made by the Assessing Officer cannot be sustained. assessee is having exclusive contract manufacturing agreement with M/s. Indo Shell Mould Ltd. As per agreement between the parties dated 25.07.2011 M/s. Indo Shell Mould Ltd. has paid a sum of ₹ 20 crores as interest free advance for utilizing entire capacity to fulfill its needs. Since there is a commercial understanding between the assessee and M/s. Indo Shell Mould Ltd., the assessee has paid certain expenses of M/s. Indo Shell Mould Ltd. on their behalf and debited same to the account of M/s. Indo Shell Mould Ltd. Further, said amount has been adjusted against receivables from them. From the above, it is very clear that transaction between the assessee and M/s. Indo Shell Mould Ltd. is a clear commercial transaction in the normal course of business of the assessee. Therefore, in our view, same is outside scope of provisions of section 2(22)(e) - Decided in favour of assessee. Additions towards belated payment of employees contribution of PF & ESI u/s.36(1)(va) r.w.s 43B(b) - HELD THAT:- Hon'ble Supreme Court in the case of CIT vs. Rajasthan State Beverages Corporation Ltd.[2017 (7) TMI 1087 - SC ORDER] has considered an identical issue while dismissing SLP filed by the Revenue and held that amount claimed on payment of PF & ESI having been deposited on or before due date of filing of returns, same could not be disallowed u/s.43B or u/s.36(1)(va) - Insofar as circular No.22/2015 dated 17.12.2015 issued by the CBDT, we find that it has clarified allowabiity of employer’s contribution to funds for welfare of the employees in terms of section 43B(b) of the Act and therefore, not relevant for considering employees contribution to the funds. AO has erred in disallowing belated payment of employees contribution to PF & ESI u/s.36(1)(va) - Decided against revenue.
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