TMI Blog2011 (10) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... sposed off by way of this common order. 2. Facts in brief are that the assessee is engaged in the business of professional packing, moving and re-location services, information management and also is into software solutions. The issues that arise for our consideration in both these appeals are - (a) Whether PF and ESI paid within the grace period allowed under the respective enactment, are allowable as deduction; (b) Whether PF and ESI, being employees contribution, which is paid before the due date of filing of the return u/s 139 is allowable as a deduction; and (c) Disallowance u/s 14A read with rule 8D of the Act. 3. We have heard Shri Satish R.Mody, the learned Counsel for the assessee and Shri Sunil Kumar Singh, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Counsel for the assessee relied on several orders of the Mumbai Benches of the Tribunal in support of his contention that the employees contribution should be allowed under section 43B is deposited within the due date for filing the return for the assessment year in question. In the case of Simplex Engineering and Foundry Works P. Ltd. vs. JCIT in ITA No.5760/Mum/2006 dated 29th November 2007 (assessment year 2003-04) and connected appeals, it has been opined by the Tribunal in Para 16 that since the contribution of the employees is withheld by the employer by deducting the same from the wages and salaries, the dues of the employees merged with the funds of the employer and the employees contribution thus becomes similar to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a deduction. In the case of Radhakrishna Foodland Pvt. Ltd. vs. ACIT in ITA No.4211/Mum/20 (assessment year 2003-04), the Tribunal by order dated 11th February 2008, held following the view taken by the Supreme Court in the case of Vinay Cement Ltd. (2007) 213 CTR 268 (SC) that the employees contribution paid before the due date for filing the return of income is allowable as a deduction. There is thus a series of orders of the Mumbai Benches of the Tribunal on the issue and respectfully following them we delete the disallowance of ₹ 14,02,512/-, out of which ₹ 5,62,450/- was paid after the due date but before the grace period and ₹ 8,40,062/- was paid after the grace period but before the due date for filing the return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Godrej Boyce Ltd. Mfg. Co. VS. DCIT [(2010) 328 ITR 81 (Bom.)] has held that Rule 8D is not retrospective and would apply only from assessment year 2008-2009. Thus, we reverse the decision of the learned CIT(A) and direct the Assessing Officer to work out the disallowance on some reasonable basis and not under rule 8D. 7. Now we consider the argument of the assessee that no disallowance can be made sum out of interest expenses, for the reason that the assessee has made investment only out of surplus funds. For the assessment year 2006-2007, the Assessing Officer at page 5 para 4.2 observed as follows:- 4.2 The above submissions of the assessee company are carefully perused but found to be not acceptable. As per the Balance S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ministrative overheads to maintain the transactions and keeping the record thereof. It should be noted here that the assessee has also earned ₹ 55,48,759 as Long Term capital Gains (Tax Free) from trading in shares of listed companies. 9. Thus, the undisputed fact is that the assessee has made investments only out of surplus funds. The assessee filed copies of the annual accounts to demonstrate the investments in question are made only from interest free funds and income accrued during the year. For the financial year ending 31st March, 2006, the capital reserves and surplus of the assessee-company are ₹ 144.43 crore whereas the investment in subsidiaries are ₹ 6.43 crore and investment in others are ₹ 11.86 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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