TMI Blog2019 (10) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... epairs and maintenance, travelling, conveyance and demonstration charges and carriage inward expenses - main reason of disallowance by the authorities below that no third party bills are available and all the vouchers are self made - HELD THAT:- A.R. could not furnish any external vouchers in support of the claim. On bare perusal of the assessment order, it was clearly discernible that the payments were made by other parties on behalf of the assessee and only credit notes are issued and, therefore, the genuineness of the expenses could not be verified and most of the vouchers are self made. However, the Assessing Officer has not pointed out any specific defects in the bills and vouchers. However, the CIT(A) after taking into consideration all these aspects and also considering that the disallowance is excessive, reduced to 10% of the total expenses claimed by the assessee. Therefore, the order of the CIT(A) in restricting the disallowance to 10% is fair and reasonable and need not be interfered with Addition under the head 'Electricity charges' - HELD THAT:- It is also not disputed that there is no agreement between the assessee and Protection Manufacturing Private Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 2015 clarifying that the issue is well settled in so far as employer s contribution if deposited on or before the due date of filing of return of income, is allowable. However, the CBDT was categorical in stating that the settled position does not apply to deduction relating to employee s contribution governed by section 36(1)(va). We find that the following decisions of the various High Courts are in favour of the assessee allowing deduction of employee s contribution paid beyond due date: (i) CIT vs. Hindustan Organic Chemicals Ltd. (2014) 366 ITR 1 (Bom) (ii) CIT vs. Ghatge Patil Transport Limited 368 ITR 749 (Bom.) (iii) CIT vs. Aimil Ltd. 321 ITR 508 (Del.) (iv) Spectrum Consultants India (P) Ltd vs CIT 215 Taxman 597 (Kar.) (v) CIT vs. Raj Agro Industries Ltd. 334 ITR 122 (P H) o (vi) CIT vs. Kichha Sugar Co. Ltd. 356 ITR 351 (Uttarakhand) o (vii) CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. 366 ITR 163 (Raj.) 6. In following decisions, the Hon ble High Courts strictly interpreted section 36(1) (va) in favour of the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts which were deducted by the employer/assessee from the salaries and wages payable to its employees, as part of their contributions. It is not in dispute that the employer‟s right to claim deductions under the main part of Section 43-B of the Act is not an issue. The question the AO had to then decide was whether the amounts deducted from the salaries of the employees which had to be deposited within the stipulated time (in terms of notification/circular dated 19.03.1964 which was modified on 24.10.1973), as far as the EPF contribution went and the period of three weeks as far as the ESI contributions went. The AO made a tabular analysis with respect to the contributions deducted and actually deposited. The cumulative effect of notifications under the Employees‟ Provident Funds Act, 1952 and the Employees State Insurance Act, 1948 was that in respect of the EPF Scheme contributions the deductions were to be deposited within 15 days of the succeeding wage period with a grace period of 5 days; for ESI contributions the deposit with the concerned statutory authority had to be made within three weeks of the succeeding wage month/period. The CIT in this case confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal. We find that the Assessing Officer made disallowance of the total expenses on account of repair Maintenance @ 30% and with regard to travelling, conveyance and demonstration charges and carriage inward @ 20%, inter alia, observing that payments have been made in cash on day to day basis, which was reduced to 10% by the CIT(A) in respect of the above claim of the assessee on the ground that the rate of disallowance is excessive. The main reason of disallowance by the authorities below that no third party bills are available and all the vouchers are self made. Before us also, ld A.R. could not furnish any external vouchers in support of the claim. On bare perusal of the assessment order, it was clearly discernible that the payments were made by other parties on behalf of the assessee and only credit notes are issued and, therefore, the genuineness of the expenses could not be verified and most of the vouchers are self made. However, the Assessing Officer has not pointed out any specific defects in the bills and vouchers. However, the CIT(A) after taking into consideration all these aspects and also considering that the disallowance is excessive, reduced to 10% of the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is also seen that there was no payment of rent to the above company in respect of leasing out of the premises. There was also no evidence on record that the assessee had incurred such huge expenses in respect of consumption of electricity during the Asst. Year 2013-14 and 2014-15. The assessee had not furnished the copy of the manufacturing account to show that the assessee had utilized so much of power supply to run the machineries for the purpose of manufacturing. Further, at column 28(b) of the audit report in form no.3CD, the auditor has certified that there was no manufacturing activity by the assessee and hence, there was no mention about the purchase and consumption of raw materials, yield of finished products, closing stock finished products etc. 15. The AO also found that the assessee has shown gross sales in the P L account without showing any manufacturing account from which it can be reasonably inferred that the assssee had incurred such huge expenses on account of consumption of electricity for manufacturing process. Further, in the audited accounts, the assessee has shown gross sales on account of moulded furniture to the tune of ₹ 17,40,87 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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