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2019 (5) TMI 343

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..... f 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- Sout .....

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..... 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 ₹ 25,89,060.00 for purchase of Land. We are giving our reply as under: a. we are submitting herewith annexure I for details of advance of land ₹ 25,89,060.00. In said details. b. we .....

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..... 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 arise. (PL Ref. Gauhati High Court in the case of Highways Construction Company Limited Vs. CIT reported at 199 UK 702 has held that 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). j. So from above we state that there is no question for disallowance of ₹ 25,89,060.00 U/s- 36(1)(iii) arise at all." The assessee s submission was not found tenable and having no business interest or commercial expediency found in such advances given by the asse .....

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..... /- Looking to above, we have not made any addition to advance for land; hence we have not used any fund for advance for land during the year. We have made used funds for Adv. for agriculture land ₹ 25,89,060/- in preceding financial years out of balance of ₹ 2,70,72,093/- as advance received for assets and out of balance interest free loans in interest free unsecured loans of ₹ 6,15,94,678/-preceding years. a. Over and above there is no addition to the investment during the year and old investment 25,89,060/- We have generated cash inflow by way of internal cash accrual of ₹ 87,84,446/- Profit and ₹ 7,62,94,157/- by way of depreciation during the year. b. Over and above we have received ₹ 2,70,72,093/- as .....

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..... available with the assessee. Further the entire borrowing is term loan against capital assets, thus, the borrowing is used for the purpose of business and therefore, the question of disallowance does not arise in term of the ratio laid down by the Hon ble Apex Court in the matter of Taparia Tools Ltd-vs-CIT reported in 372 ITR 605. 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. Ground No.3 5. This ground relates to confirming the ESI & PF with regard to contribution by employee of ₹ 1,89,774/- u/s 36(1)(va) of the Act on the ground that the issue is covered by the Jurisdictional High Court in the judgment passed .....

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