TMI Blog2018 (1) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... see shall not be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is not credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as per explanation to section 36(1)(va) of the Act - See COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION [2014 (1) TMI 502 - GUJARAT HIGH COURT] - Decided against assessee TDS u/s 194J - disallowance u/s.40(a)(ia) - non deduction of tds payment of consulting service made to BSI management System (I) Pvt. Ltd. - Held that:- We are of the opinion that the provision of section 194J of the Act will be applicable. Hence, 20% will be disallowed in the light of proviso sec. 194J and AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being payment of consulting service made to BSI Management System (I) Pvt. Ltd. 3. The C.I.T.(Appeals) grossly erred in confirming the addition of ₹ 1,89,755/- out of total addition of ₹ 3,78,275/- by Assessing Officer U/s.14A of the Act being the alleged disallowance of interest as per rule 8D(2)(ii) u/s.14A of the Act. 4. The C.I.T.(Appeals) erred in confirming the addition of ₹ 1,47,826/- on account of administrative exp. u/s.14A of the I.T. Act, 1961. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing. 3. Briefly stated facts as culled out from the records are that the appellant is engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of CIT vs. AIMIL Limited (Delhi High Court) which is reported by the tax auditor of the at Annexure-E of the Tax audit report. However ignoring the submission made by the assessee, the Ld.AO has made addition of ₹ 1,89,212/- merely on the ground that the said sum was not deposited within the time limit allowed as per the provision of Provident fund and Misc. Provision Act,1952. 5.1 We have heard rival submission, this issue is against the appellant and Gujarat High Court is very much clear on this point in the matter of CIT vs. Gujarat State Road Transport Corporation. Relevant part of the same is reproduced as under: Section 43B, read with section 36(1)(va) of the Income-tax Act, 1961 - Business disallowance - C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not deducted on payment of ₹ 36,934/- to BSI Management System (I) Pvt Ltd. In this regard, the assessee submitted that from the copy of Invoice of BSI Management System (I) Pvt Ltd attached with the submission, it is seen that the payment of ₹ 36,934/- to BSI Management Systems Pvt Ltd includes re-imbursement towards travelling expenses of ₹ 6,934/- which separately shown in the invoice. Further, as the payment of professional fees to the said party does not exceed ₹ 30,000/-, the provision of section 194J of the Act is not applicable. 6.1 We have heard both the parties, we are of the opinion that the provision of section 194J of the Act will be applicable. Hence, 20% will be disallowed in the light of proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 We can see the total interest free funds available with the company is ₹ 559.95 lacs i.e. share capital ₹ 6.00 lacs and Free reserve ₹ 553.95 lacs whereas investment made in shares and Mutual Funds put together is ₹ 524.32 lacs and therefore it is crystal clear that no interest bearing funds has been diverted in making investment in mutual fund and therefore no part of interest expenses be disallowed u/s.14A of the Act. Ld. AR cited a judgment in the case of reliance utilities and power limited in ITA No.1398 of 2008, wherein the issue before the high court was that whether the respondent had enough interest free funds at its disposal for making investment in sister concern and thereby no interest is disallowable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, assessee s reply as under: During the assessment proceedings with the reply of AIR on investment made with various mutual funds together with copy of the bank statement filed with reply dated 28th August, 2014, So far the source of such investment is concerned, it is to state that the assessee company has sufficient free reserve and capital to make investment in mutual funds which can be seen from the statement of source filed herewith. Further on the facts stated above, it is submitted that no part of Interest claimed as business expenditure is to be considered u/s.14A of the act, 8.2 We have gone through the relevant record and impugned order. In the interest of the justice addition of ₹ 50,000/- made on account of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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