TMI Blog2019 (5) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... of business and therefore, the question of disallowance does not arise in term of the ratio laid down in the matter of Taparia Tools Ltd-vs-CIT [ 2015 (3) TMI 853 - SUPREME COURT]. In that view of the matter, we find no justification of the addition made by the authorities below. Hence, the same is deleted. This ground of appeal is thus allowed. ESI PF with regard to contribution by employee u/s 36(1)(va) - assessee has to pay the amount of employee s contribution towards PF/ESI to the Government account within the due date specified in the concerned Act - HELD THAT:- The assessee has failed to credit the same within the stipulated time and in that view of the matter considering the judgment passed in the matter of CIT-vs- South Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of ₹ 2,58,906/- u/s 36(1)(iii) of the Act on the ground that the assessee has not able to proved the nexus between interest free funds and interest free advances. 4. During the financial year under consideration, the assessee has advanced ₹ 25,89,060/- interest fee for land. A show-cause notice dated 21.10.2013 was issued as to why the amount of ₹ 2,58,906/- i.e. 10% of the above interest should not be added to the total income of the assessee u/s 36(1)(iii) r.w.s. 37 of the Income Tax Act whereupon the assessee submitted as follows: 1. In your letter point no.2-1 you have stated that why ₹ 2,58,906.00 should not be added U/s. 36(i)(iii) for advance given of ₹ 25,89,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of Interest frees Loans. During the year, we have not given any interest free loans and there is no direct nexus between loans taken and given during the year. Whatever loans we have given are out of our own fund which is interest free. Over and above, we have also taken ₹ 1,35,00,000/- as interest free loans along with opening Balance ₹ 5,99,85,074/-. Out of which we had re-paid ₹ 77,00,000/- lacs balance remaining at the year end ₹ 6,57,85,074/-. During the Fin. year 2011-12, we have not given any advance to the land lords, but in earlier years, we have made advance of ₹ 25,89,060/- i.e. out of total Interest free funds. So question of charging any notional interest thereon is not ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are exclusive for the purpose of Business only. Pl. Ref. Gauhati High Court in the case of Highways Construction Company Limited Vs. CIT reported in 199 ITR 702 has there is no compulsion that one must earn and if one has not earned income, notional income cannot be charged to tax. Ref -2 CIT Vs. Chelladurai reported at 204 Taxmann 258 (Mad). (Copy of Case Laws are attached). Hence disallowance of Inerest exp byAO have not direct nexus and is illegal. We have enough interest free funds inform of Unsecured Loans and we have received ₹ 2,70,72,093/- as advance for assets in preceding years. Out of which we have given advance on for ₹ 25,89,060/- Looking to above, we have not made any addition to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 25,89,060/- . It appears on record that the assessee has ₹ 2,70,72,093/- as advance for assets in the preceding years, out of which the advance of ₹ 25,89,060/- was given. Such fund was used for agriculture land in preceding financial years out of the balance of ₹ 2,70,72,093/- as advance received for assets and out of the balance interest free loan in interest free unsecured loan of ₹ 6,15,94,678/- in preceding years. The internal cash accrual of ₹ 87,84,446/- as profit and ₹ 7,62,94,157/- by way of depreciation during the year under consideration is also evident on record. During the assessment year 2011-12, the assessee has not given any advance to the land lords but in the earlier yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of GSRTC (supra), the revenue has disallowed the amount of Employees Contribution of ESI PF to the tune of ₹ 1,89,774/- and added back to the total income of the assessee. We find no infirmity in such order passed by the authorities below hence assessee s ground of appeal fails. 6. Hence, assessee s appeal is partly allowed. ITA No.567/Ahd/2016 for A.Y. 2012-13: Ground No.1 7. At the time of hearing of the instant appeal the Learned Advocate appearing for the assessee did not press this ground. Hence, the same is dismissed as not pressed. Ground No.2 3 8. Rest of the issue involved in this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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