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Deputy Commissioner of Income Tax, Circle-2, Jaipur Versus M/s Genus Innovation Ltd. and M/s Genus Innovation Ltd. Versus Additional Commissioner of Income Tax, Range-2, Jaipur

2016 (8) TMI 602 - ITAT JAIPUR

Addition made for depositing the employees contribution to PF and ESI beyond the prescribed time limit - Held that:- It is undisputed fact that the assessee had paid both the amounts before due date of return. The Hon’ble Jurisdictional High Court decision in the case of CIT Vs SBBJ (2014 (5) TMI 222 - RAJASTHAN HIGH COURT ) is squarely applicable, therefore, we uphold the order of the ld. CIT(A) in deleting the addition. - Decided against revenue. - Disallowance U/s 14A of the Act read with .....

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any income out of investment. The ld Assessing Officer had not established any nexus between borrowed fund with investments made in shares on which dividend earned. The case laws relied by the ld. AR are squarely applicable, therefore, we uphold the order of the ld CIT(A)in deleting the addition. - Decided against revenue. - Addition made on account of foreign exchange gain - Held that:- It is undisputed fact that the debtors was in dispute since F.Y. 2007-08 and 2008-09, there was a remark .....

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he basis of hypothetical income not real income of the finance company. In this case also, the ld Assessing Officer has calculated this foreign exchange gain on notional basis, which was not real. The other case laws referred by the assessee are also squarely applicable on real income theory. Accordingly, we uphold the order of the ld CIT(A) in deleting the addition. - Decided against revenue. - Addition U/s 43B - advance payment of VAT - Held that:- There is no dispute about the fact of the .....

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n U/s 43B of the Act by the Legislature. This issue has been considered by the Coordinate Bench of Hyderabad in the case of DCIT Vs CWC Wines Pvt. Ltd. (2003 (11) TMI 302 - ITAT HYDERABAD-A ) and held that advance payment is not deductible. Section 43 may not be understood as authorizing payment which have not become due but all the sum paid in advance. Therefore, we are of the considered view that the ld CIT(A) had rightly disallowed the deduction claimed U/s 43B of the Act for advance payment .....

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ppeal:- 1. (i) Whether on the facts and in the circumstances of the case and in law the Id. CIT (A) has erred in deleting addition of ₹ 31,952/- made for depositing the employees contribution to PF and ESI beyond the prescribed time limit provided in the respective Acts. " (ii) Whether on the facts and in the circumstances of the case and in law the Id. CIT(A) has erred in holding that employees contribution under PF and ESI are governed by the provisions of section 43B and not by sec .....

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facts and in the circumstances of the case and in law the Id. CIT(A) has erred in not following the decisions of Hon ble Supreme Court in the case of CIT Vs. Woodward Governor India Ltd., (312 ITR 254) where it was held that the loss/gain on account of foreign exchange fluctuation on restatement of the liability on the balance sheet date is required to be taken into account in computation of income. Ground of assessee s appeal:- 1. On the facts and circumstances Ld. CIT(A) has grossly erred in .....

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serves to be deleted. 1.2 That the Ld. CIT(A) has further erred in ignoring the binding judgment of Hon ble Supreme Court delivered in the case of Allied Motors P Ltd. v. CIT reported in 139 CTR Page 364 and Hon ble Calcutta High Court delivered in the case of Paharpur Cooling Towers Ltd. v. CIT reported in 244 CTR 502, thus the consequent addition deserves to be deleted. 2. The assessee is engaged in manufacturing and job work of electronic energy meters, inverters, meter boxes, HUPS, modem, so .....

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audit report, the assessee has received employees contribution on account of ESI & PF, which has not been deposited before due date amounting to ₹ 31,952/-. After giving show cause notice, the ld Assessing Officer observed that the liability of this expenditure is governed by provisions of Section 36(1)(va) read with Section 2(24)(x) of the Act. This amount received from the employee is income U/s 2(24)(x) of the Act whereas the deduction on payment basis is allowed on the basis of pa .....

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that by following the decision of Hon'ble Supreme Court in the case of CIT Vs Vinay Cements 213 CTR 268 and Hon ble Jurisdictional High Court decision in the case of CIT Vs. SBBJ 363 ITR 70 (Raj). Deduction only on actual payment with regard to provident fund and ESI contributions made before filing return is allowable U/s 36(1)(va) r.w.s. 43B of the Act. Accordingly, he deleted the addition. 3.1 Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Asse .....

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e record. It is undisputed fact that the assessee had paid both the amounts before due date of return. The Hon ble Jurisdictional High Court decision in the case of CIT Vs SBBJ (supra) is squarely applicable, therefore, we uphold the order of the ld. CIT(A). This ground of revenue s appeal is dismissed. 4. Ground No. 2 of the revenue s appeal is against deleting the disallowance of ₹ 2,64,320/- U/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (in short the Rules). The ld .....

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estment in shares and movement of fund for day to day business of the assessee. The assessee has paid interest during the year under consideration at ₹ 28,26,009/-. After considering Section 14A and various decisions on this issue, he applied Rule 8D of the Rules and Clause (ii) and (iii) of Section 14A of the Act and disallowance under this Section had been calculated at ₹ 2,64,320/- and made the addition. 4.1 The ld CIT(A) allowed the appeal on this ground by observing that Section .....

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A). It is further submitted that the assessee had invested in equity share at ₹ 33.59 lacs of its group company M/s Genus Power Infrastructure Ltd. and ₹ 2.09 lacs in the share of bank of Baroda prior to F.Y. 2005-06 and for making such investments, for this assessee company has utilized its own interest free funds available in the shape of share capital of ₹ 3.14 crores. Thus there was no question of interest bearing funds were involved in such investment. He has drawn our att .....

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n 14A that the interest bearing funds were utilized for making investments. He has further relied on the decision of Hon ble Punjab & Haryana High Court in the case of CIT Vs./ Hero Cycles Ltd. 323 ITR 518 and various other cases of the Hon'ble High Courts as well as the Tribunal and prayed to confirm the order of the ld CIT(A). 4.3 We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the investments in share .....

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any nexus between borrowed fund with investments made in shares on which dividend earned. The case laws relied by the ld. AR are squarely applicable, therefore, we uphold the order of the ld CIT(A). Ground No. 2 of the revenue s appeal is dismissed. 5. Ground No. 3 of the revenue s appeal is against deleting the addition of ₹ 37,05,685/- made on account of foreign exchange gain. The ld Assessing Officer observed that on examination of the point No. 5 of schedule Q , notes of assessee to t .....

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to the rates of foreign currency on realization of assets. Similar note has also been given at point No. 4(f) of auditor s report as under:- (f) The company has not recognized the Exchange Fluctuation Gain (Net) amounting to ₹ 37.06 lacs on unrealized old export receivable/import payable. (Refer Note No. 5 of Notes of Account). Due to above, the profits of the company and net current asset of the company are understated to that extent. The ld Assessing Officer gave reasonable opportunity .....

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l year. If the assessee would not receive these payments, he can claim this amount as bad debt but till 31/3/2011, this debt has not been written off. Accordingly, he made addition of ₹ 37,05,685/-. 5.1 The ld CIT(A) had deleted the addition made by the Assessing Officer by observing that the notional income on account of foreign exchange gain cannot be treated as income because it is a hypothetical income, which was never received by the assessee. 5.2 Now the revenue is in appeal before u .....

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ence on the closing value of debtors was also not recognized. The assessee requested to the banker for granting permission for writing off the said amounts in the books of accounts and the necessary permission in respect of few bills was received and submitted before the ld Assessing Officer during the course of assessment proceedings. The ld AR has drawn our attention on page No. 15-17 of the paper book. Finally this amount had been written off in A.Y. 2014-15 in the books of account. The ld As .....

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Godhra Electricity Co. Ltd. Vs CIT 225 ITR 746 (SC). (iii) CIT Vs VTC Leasing & Finance Ltd. 39 TW 211. (iv) Brahmaputra Capital & Financial Services Ltd. Vs. ITO 119 ITD 266 (Delhi). 5.3 We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the debtors was in dispute since F.Y. 2007-08 and 2008-09, there was a remark by the Auditor on account of foreign exchange gain in the audit report and clarified that amo .....

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income on sticky loans, which has calculated on the basis of hypothetical income not real income of the finance company. In this case also, the ld Assessing Officer has calculated this foreign exchange gain on notional basis, which was not real. The other case laws referred by the assessee are also squarely applicable on real income theory. Accordingly, we uphold the order of the ld CIT(A) and the revenue s appeal on this ground is dismissed. Now we take assessee s appeal. 6. The sole ground of .....

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g heard to the assessee, which was availed by the assessee vide letter dated 14/3/2014. It is submitted before the Assessing Officer that this expense is allowable on the basis of payments made during the year under consideration U/s 43B of the Act. The ld Assessing Officer considered Section 43B of the Act which has been reproduced on page No. 11 of the assessment order. After considering the assessee s reply, the ld Assessing Officer held that this amount is not allowable U/s 43B, which has be .....

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d that during the year, this tax was not due but paid in advance. Thus, this advance tax is not covered within the meaning of definition of any sum payable . This view has been supported by the decision of Hon ble ITAT Hyderabad Bench in the case of DCIT Vs CWC Wines Pvt. Ltd. 268 ITR 23 (AT). The case laws relied upon by the assessee was with reference to excise duty payment where it has been incurred in the previous year whereas in the present case, no such liability was incurred in previous y .....

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d argued that advance VAT payment is allowable. He further relied on the decisions in the cases of Allied Motors (P) Ltd. Vs CIT and Paharpur Cooling Towers Ltd. Vs CIT (supra). He further made reference to the Hon ble Delhi High Court decision in the case of CIT Vs. Samtel Colour Ltd. (2009) 184 Taxman 120 and Hon ble ITAT (SB) Chandigarh in the case of DCIT Vs Glaxo Smithkline Consumer Healthcare Ltd. and prayed to allow the appeal. 6.2 At the outset, the ld DR has vehemently supported the ord .....

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