TMI Blog2012 (11) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... owed - Decided in favor of revenue. Disallowance of Employees' contribution to Provident Fund – The same was paid as per the statutory obligation for this purpose of business and therefore, there is no justification for disallowing the same. Following the decision of court in case of [CIT Vs Alom Extrusions Ltd. 2009 (11) TMI 27 - SUPREME COURT] held that;-Payment of PF have been made before the due date of filing of return of income - no disallowance can be made regarding payment of employees’ contribution not PF – disallowance is deleted - Ground is allowed. Disallowance at 1% of the expenses out of diesel purchase, oil and grease, repairs and maintenance, octroi, freight and cartage expenses. - held that:- A.O. himself has considered the value of defective vouchers at 1.5% of the total expenses and on this basis, he confirmed the disallowance to the extent of 1%. We are of the considered opinion that if majority of vouchers are available and are proper and only 1.5% vouchers are defective, no disallowance should be made on ad-hoc basis without pointing out any specific item of inadmissible expenditure. Disallowance on account of vehicle running expenses and maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his circumstance that more amount had to be paid. This is the practice in all the years in past. It is therefore submitted that there is no basis for making addition of Rs.35,200/- u/s. 40A(2)(b) of-the I.T. Act and the same be deleted. 3. As per ground No.1, the assessee is disputing regarding disallowance of Rs.35,200/- u/s 40A(2)(b) in respect of payment made by the assessee to the partners for hiring the tractors. 4. It is submitted by the Ld. A.R. that the A.O. in para 4 of the assessment order, has stated that hire charges had been paid to the independent contractors also and there is difference between the payments made to outside contractors and the partners and on this basis, he has made disallowance without considering this explanation of the assessee that the rates of tractor per trip paid by the assessee to the partners and to outsiders are the same if it is calculated on per hour basis and because the tractors of the partners were used for more hours, the payment to them is higher. In this regard, our attention was drawn to page 85 of the paper book and it was pointed out that the tractors hired from related persons were used for 10/12/24 hours per day whereas t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the assessee as on 31.03.2003, it was submitted that it comprises of partners capital of Rs.29,37,803/- and creditors Rs.9,08,660/-. A querry was raised by the bench as to whether any interest was paid to the partners on the capital and in reply, it was submitted that interest was paid to the partners of Rs.2,48,336/-. Regarding various judgements cited by the Ld. A.R., we feel that none of these judgements is of any help to the assessee since the facts of the present case are different as the assessee could not bring any evidence that interest free funds were available with the assessee to give interest free advances and hence these judgments are not being discussed for the sake of brevity. 8. Ld. D.R. supported the orders of authorities below. 9. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this is the only argument before us that these advances were given out of interest free funds available with the assessee but as per the details given regarding interest free funds, one is partners capital account of Rs.29.37 lacs and the other is creditors of Rs.9.08 lacs. There is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. Merely presuming and making an ad-hoc disallowance at 10% is not justified and the addition may kindly be deleted. 13. It is submitted by the Ld. A.R. that disallowance is excessive but we are of the considered opinion that 10% disallowance out of vehicle running expenses and maintenance and telephone expenses is reasonable and hence, we do not interfere in the order of Ld. CIT(A) on this issue. Ground No.4 is rejected. 14. In the result, appeal of the assessee is partly allowed. 15. Now, we take up the appeal of the assessee for the assessment year 2004-05 in I.T.A.No. 3152/Ahd/2008. 16. Ground No.1 is as under: 1. The learned C.I.T.(Appeals) has erred in confirming the disallowance at 1% of the expenses out of diesel purchase, oil and grease, repairs and maintenance, octroi, freight and cartage expenses. The appellant submits that full details are maintained and are available in the account and therefore, there is no justification for making disallowance and the disallowance may be deleted. 17. It is submitted by the Ld. A.R. that the A.O. had made disallowance of 2% of total expenses incurred on diesel, oil, grease, repair maintenance, octr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indly be deleted. 21. It is admitted by both the sides that this issue is similar to ground No.4 in assessment year 2003-04 and the same can be decided on similar lines. In that year, we have confirmed this disallowance and hence, in this year also, this ground is rejected. 22. Ground No.3 is as under: 3. The learned C.I.T.(A) has erred in confirming the disallowance of interest out of interest-bearing funds. The same has been done because the amounts were advanced to M/s Bhagyodaya Tiles Factory. The amount given earlier year and carried forward was of Rs.10,34,659/- and the closing balance was Rs.11,88,214/-. This shows that there is a usual practice to give such advances. In the case of another party Shri Mahalaxmi Quarry Works the amount of Rs.3,95,818/- was the opening debit balance given to the party and the amount has been given during the year. Under the circumstances the disallowance made at Rs. 2,25,247/- is not justified and should be deleted. 23. It was agreed by both the sides that this issue is identical to ground No.2 in assessment year 2003-04 and both the sides agreed that this can be decided on similar lines in this year also. In that year, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances were given for non business consideration. The Ld. A.R. could not controvert this specific finding of Ld. CIT(A) and hence, we decline to interfere in the order of Ld. CIT(A) on this issue also. This ground is also rejected. 29. Ground no.5 is as under: 5. The learned C.I.T.(Appeals) erred in confirming the disallowance of Rs.40,6427- being belated payment towards Employees' contribution to Provident Fund. The amount was paid as per statutory obligation for the purpose of business and therefore there is no justification for disallowing the same. 30. Both the side agreed that this issue is identical to ground NO.3 in assessment year 2003-04. In that year, this issue has been decided by us in favour of the assessee by following judgment of Hon ble Apex Court and on similar lines, in this year also, this issue is decided in favour of the assessee. This ground is allowed. 31. Ground No.6 is as under: 6. The learned C.I.T.(Appeals) erred in confirming the disallowance in respect of payment to persons specified u/s. 40A(2)(b) of Rs.27,75,559/-. The payments are given to parties, who have undertaken the works as mentioned therein. The payment is made on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of ld. CIT(A) on this issue. This ground is also rejected. 40. In the result, appeal of the revenue is dismissed. 41. Now, we take up the assessee s appeal for assessment year 2005-06 in I.T.A.No. 845/Ahd/2009. 42. Ground No.1 is as under: 1. The learned C.I.T. (Appeals) has erred both in law and on facts in confirming the disallowance of Rs. 65.500/- with regard to the expenses on Diesel, Oil and Grease, repairs and maintenance, Tractor carting charges and Transport carting expenses at the rate of "\% of the total of above expenses. On the facts and circumstances of the case there being no specific item of disallowable nature pointed by the Assessing Officer, addition/disallowance ought to have been deleted in toto. It be so held now and the addition of Rs. 65,500/- confirmed by C.I.T. (Appeals) be deleted. 43. It is agreed by both the sides that this issue is identical to ground No.1 in assessment year 2004-05 and the same can be decided on similar lines. In that year, this issue has been decided by us in favour of the assessee and hence on similar lines, in this year also, this ground of the assessee is allowed. 44. Ground No.2 is as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record and have gone through the orders of authorities below. We find that it is noted by the A.O. that the assessee has not made payment of TDS as per the requirement of Section 40(a)(ia) of the Act. As per the provisions of Section 40(a)(ia) in the relevant period, the assessee could have made payment of TDS till the due date of filing of return of income for those TDS, which were deductible and was also deducted during the last month of the previous year and for the remaining amount, the TDS was required to be paid before the last day of the previous year. Nothing has been brought on record before the authorities below or before us regarding this fact that TDS was paid before the due date of filing of return of income and such TDS was deductible and so deducted in last month of the financial year 2004-05. Under these facts, we find that this issue is covered against the assessee by the decision of Special bench of the Tribunal cited above and respectfully following the same, this ground of the assessee is rejected. 49. Ground No.4 is as under: 4. It is further submitted that the deduction ought to have been allowed in A.Y. 2006-07 inasmuch as the factum of the IDS hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in confirming the disallowance of Rs.79,325/- in respect of payment of Provident Funds inasmuch as payment is already made mostly within the previous year and also before due date of filing the return as narrated in Para 8.1 of the C.I.T.(Appeals)'s order. In view of the amendment to section 43B, the disallowance ought not to have been made. It be so held now and the disallowance be deleted. 56. Both the sides agreed that this issue is identical to ground no.5 in assessment year 2004-05 and the same can be decided on similar lines. In that year, this issue has been decided by us in favour of the assessee by following the judgment of Hon ble Apex Court cited by the Ld. A.R. On the same lines, in this year also, this issue is decided in favour of the assessee and this ground is allowed. 57. Ground No.8 is as under: 8. The Ld. CIT(A) has erred both in law and on facts in confirming the allowance of Rs.17,470/- u/s 40A(3) of the Income tax Act, 1961. On the facts of the case, disallowance of Rs.17,470/- is unjust and genuineness of expense having not been doubted the same be allowed. 58. This ground was not pressed by the Ld. A.R. and accordingly, this ground is r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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