TMI Blog2013 (8) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... rred before commencing of the business, it does not cover the ROC fees. Thus, we uphold the order of the learned CIT(A). Resultantly, this ground of appeal of the assessee is dismissed. Disallowance of business development expenses - Held that:- As education expenses of a son of the director was incurred for personal gain and not for the business purpose. Keeping in view of the factual position as well as legal position on this issue, we uphold the order of the learned CIT(A) and dismiss this ground of appeal of the assessee. - ITA No.3235/Ahd/2010 - - - Dated:- 23-8-2013 - SHRI D. K. TYAGI, JM AND SHRI T. R. MEENA, AM Appellant by Shri Gaurav Nahata Respondent by Shri P. L. Kureel, Sr. DR ORDER PER T. R. MEENA: The assessee s appeal is emanating from the order of the learned CIT(A)-VI, Ahmedabad dated 23-09-2010, for the assessment year 2006-07. The effective grounds raised by the assessee are as under: 1. The Ld. CIT(A) has erred in law and on facts in passing appellate order dated 23/09/2010 for A. Y. 2006-07 in the case of appellant by confirming the disallowance of ₹ 42013/- on account of late payment of P. F. E. S. I. 2. The Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to employee s contribution. It is not in dispute that for employee s welfare, both employee and employer contribute. Employer s contribution is allowable as deduction only if the same is paid before the due date of filling the return. However, employee s contribution is treated as income u/s 2 (24) (x) and the same is allowed as expense if it is paid within due date provided in PF. Act. If the payment is not made within due date then the expenses is not allowable u/s 36 (1) (va). Since, the employee s contribution is allowable only when the payment is made within the due date mentioned in PF. Act, the same becomes disallowable if payment is made after due date and accordingly, the sec. 43B cannot be applied. Therefore, mixing employee s contribution to PF along with employer s contribution is disregarding ht clear and unambiguous provisions of IT. Act. Even otherwise, if provisions of sec. 43B are applied to employee s contribution, it will make sec. 36(1)(v) redundant. For example u/s 36(1) (va) any payment made after 20 days from the end of the month is not allowable, which means payment of employee s contribution to PF after 20th April following the end of previous year wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to 20-05-2005 being 15 days plus 5 days of grace from the close of the month in which payment towards salary/wages was made. The assessee deposited the PF and ESI on 30-05-2005 which is within the stipulated time. Similarly, salary/wages for November,2005 was paid on 07-12-2005 and accordingly ESI paid on 22-12-2005 was within the stipulated time. The learned Counsel for the assessee relied on the decision in the case of Fluid Air (India) Ltd. vs. DCIT (1997) 63 ITD 182 (Mumbai). The assessee also filed copy of the challans and claimed that payment of ₹ 10,921/- of ESI was made on 22-12-2005 for the month of November,2005 and PF for the month of April, 2005 was paid on 30-05-2005. He further relied on various case laws before us at the time of argument and claimed that it is allowable deduction. 5. At the outset, the learned DR vehemently relied on the order of the learned CIT(A) and claimed that the assessee had not paid both the payments in stipulated time prescribed u/s 36 (1) (va) of the Act. 6. We have heard the rival contentions and perused the materials on record. It is evident that the assessee had not paid the employee s contribution within the due date under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee contended that it was fee paid to ROC for increasing authorized share capital. The authorized share capital was increased to issue bonus share. It was submitted that by issuing bonus share, no capital had been increased in the assessee company. The capital base remained the same even after issuing bonus share. The bonus shares mainly are allocated to accumulate profits of business. The assessee relied in the case of CIT Vs General Insurance Co. Ltd. (2006) 286 ITR 232 wherein the expenditure towards fees for increase of authorized share capital was held as allowable revenue expenditure. Alternatively, the assessee claimed that one fifth of the total expenses may be allowed u/s 35D of the Act. 9. At the outset, the learned DR vehemently relied on the order of the learned CIT(A). 10. We have heard the rival submissions and perused the materials on record. The payment made to ROC for increase of authorized share capital is a capital expenditure. It was incurred by the assessee company to expand the capital base of the company. The character of the expenses is capital expenses. The case laws cited by the assessee are not applicable as the expenses directly rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for children are the responsibility of parents. Director of the appellant company was supposed to spend for the education of his son. Since the said director controls the affairs of the company, he has claimed the study expenses of his son out of appellant s business income. By no stretch of imagination such personal expenses of the directors can become business development expense of the company. It is very farfetched to claim that the director s son will join company and render professional services without charging salary. It is not in dispute that the director s son is not an employee of the appellant company and there was no business purpose for spending such huge sum on the family member of a director. Since appellant could not establish any business purpose out of such personal expense of the director, claiming such expense in the garb of business development expenses is misrepresenting the facts before IT authorities. Since the said expense is not for any business purpose and therefore not allowable as business expenses, the addition made by the assessing officer is confirmed. 12. Now, the assessee is in appeal before us. It is argued that the books of account of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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