TMI Blog2020 (2) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... into double taxation as the similar addition was made in the preceding years. In AY 2010-11, AO has also recorded strange observation that, the assessee was to provide information called for along with proof of identity on the assessee s letter-head with cop of PAN and ITR to establish the genuineness of the transaction. We are constrained to record that information called for need not be furnished on the letter-head when it is otherwise supported with requisite documents. All these facts show that the addition has been made merely on the basis of conjectures and surmise and the issue is required to be remitted back to the AO to decided afresh after providing opportunity of being heard to the assessee, so as to reconcile the discrepancies arisen out of the reply of various parties given in response to notice u/s 133 (6). Disallowance u/s 36 (1)(iii) - Interest free loans - HELD THAT:- In the instant case, when the assessee has come up with specific defence that the advance has been made out of interest free funds and the same has been made for business expediency, the applicability of the judgment relied upon by the ld. DR for the Revenue is to be seen after marshalling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh the facts of the instant case with that of the preceding years. So, in the given circumstances, we are of the considered view that when it is rebate and discount and not commission, no TDS is required to be deducted. Consequently, we are of the considered view that CIT (A) has rightly deleted the addition, hence ground no.3 is determined against the Revenue. - ITA No.6639/Del./2014, 4121/Del./2016, 4456/Del./2016 (Assessment Year : 2010-11, 2011-12) - - - Dated:- 16-12-2019 - SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER Assessee By: Shri Mukesh Aggarwal, FCA Revenue By: Shri S.S. Rana, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Since common questions of facts and law have been raised in all the aforesaid appeals for Assessment Years 2010-11 and 2011-12 (cross appeals), the same are being disposed off by way of composite order to avoid repetition of discussion. 2. Appellant, M/s. VRV Foods Limited (hereinafter referred to as the assessee ) by filing the present appeals sought to set aside the impugned orders dated 15.10.2014 30.05.2016 passed by Commissioner of Income-tax (Appeals) 19, New Delhi Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that the evidences/ document/ details furnished during the course of assessment were plainly brushed aside without any cogent reason or confronting the appellant with the nature of discrepancy if those were found to be not tenable/ acceptable. 2. On the facts and circumstances of the case and in law, lower authorities have erred and were not justified in making an aggregate addition of ₹ 35,10,494/- on account of nonconfirmations from creditors without confronting the appellant about the discrepancies noticed and in total disregard to the documents and explanations submitted on record or without bringing any cogent material on record as to cessation of trading liability. 3. On the facts and circumstances of the case and in law, lower authorities have erred and were not justified in making an aggregate addition of ₹ 15,19,688/- (out of ₹ 35,10,494/-) on account of non-confirmations from creditors, which has resulted in double taxation due to similar addition in preceding years. 4. On the facts and circumstances of the case and in law, lower authorities have erred and were not justified in making a disallowance of ₹ 7,85,160/- u/s 36(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4121/DEL/2016 (ASSESSMENT YEAR 2011-12 ASSESSEE S APPEAL) 6. AO made addition of ₹ 35,10,494/- as unexplained credit on the ground that the assessee has failed to reconcile the balance and on the ground that the notices issued u/s 133 (6) either returned back or not complied with and balances are yet to be reconciled. AO further made aggregate addition of ₹ 15,19,688/- out of an amount of ₹ 35,10,494/- on account of non-confirmations from the creditors. AO further made addition of ₹ 7,85,160/- on account of disallowance made u/s 36(1)(iii) of the Act on account of diversion of interest bearing funds. BRIEF FACTS OF ITA NO.4456/DEL/2016 (ASSESSMENT YEAR 2011-12 REVENUE S APPEAL) 7. AO made addition of ₹ 98,688/- on account of non-deposit of employees share of provident fund on or before the due date u/s 36(1)(va) of the Act. AO further made addition of ₹ 1,96,79,942/- by way of disallowance claimed by the assessee on account of rebate or discounts and treated the same as commission being in the nature of incentives given on the basis of sale performance and disallowed for non-deduction of TDS on the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanically, so the disallowance is ordered to be restricted to ₹ 8,000/- equivalent to the exempt income earned by the assessee company. Ground No.2 of assessee s appeal for AY 2010-11 is partly allowed in favour of the assessee. 13. Ld. CIT (A) deleted the addition of ₹ 66,578/- made by the AO on account of disallowance made u/s 14A r/w Rule 8D(iii) which has been challenged by the Revenue. Perusal of the impugned order passed by the ld. CIT (A) in para 3 goes to prove that during the year under assessment, the assessee company received an amount of ₹ 8,800/- as dividend income. Ld. CIT (A) deleted the addition on the ground that assessee has never claimed dividend income in the computation of income by returning following findings :- 3.1 In this case the appellant has submitted that it has not claimed the dividend income / in the computation of income. The appellant has relied the decision of CIT vs. Corrtech Energy (P.) Ltd. (2014) 45 taxman.corn 116 (Gujarat) that the assessee did not make any claim for exemption in such a situation under section 14A could have no application The appellant has also relied the decision of CIT vs Shivam Motors judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the addition of ₹ 15,19,688/- out of amount of ₹ 35,10,494/- challenged vide ground no.3 on account of nonconfirmation from creditors which had resulted into double taxation as the similar addition was made in the preceding years. 17. In AY 2010-11, AO has also recorded strange observation that, the assessee was to provide information called for along with proof of identity on the assessee s letter-head with cop of PAN and ITR to establish the genuineness of the transaction. We are constrained to record that information called for need not be furnished on the letter-head when it is otherwise supported with requisite documents. All these facts show that the addition has been made merely on the basis of conjectures and surmise and the issue is required to be remitted back to the AO to decided afresh after providing opportunity of being heard to the assessee, so as to reconcile the discrepancies arisen out of the reply of various parties given in response to notice u/s 133 (6). So, ground no. 3 of assessee s appeal for AY 2010-11 grounds no.2 3 of assessee s appeal for AY 2011-12 are determined in favour of the assessee company for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputed tax demand of ₹ 4,45,550/- by not allowing the complete tax credit of TCS and TDS. We are of the considered view that this issue has been arisen out of some clerical error on the part of the AO who has not taken into consideration TCS and TDS credit for computing the tax liability. So, we direct the AO to verify the TCS and TDS credits claimed by the assessee and computed the tax liability accordingly, hence Ground No.5 of assessee s appeal for AY 2010-11 is determined in favour of the assessee for statistical purposes. GROUND NO.2 OF REVENUE S APPEAL FOR AY 2011-12 24. Ld. CIT (A) deleted the addition of ₹ 98,688/- made by the AO u/s 36(1)(va) on account of delay in filing the employees contribution to provident fund on the ground that the assessee has made payment before filing of the return of income. 25. However, by now, it is settled principle of law that as per provisions contained u/s 36(1)(va) explanation, assessee would be entitled for deduction qua the sum received from any of his employee to which provisions under sub-section (x) of clause 24 of section 2 is applicable only if such sum is credited in the employees account in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of PF ESI deposited beyond the stipulated period would not make the assessee company entitled to claim deduction from its return. For ready perusal, operative part of the judgment of CIT vs. Bharat Hotels Ltd. (supra) is extracted as under :- 7. The issue here concerns the interplay of Section 2(24)(x) of the Act read with Section 36(1)( va) of the Act alongside provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (especially Regulation 38 of the Employees' Provident Funds Scheme, 1952) and the provisions of the Employees' State Insurance Act, 1948. The AO had brought to tax 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution towards ESI PF as per provisions contained u/s 2(24)(x) read with section 36(1)(va) after due date which is evident from table extracted in preceding para no.5. So, the case laws relied upon by the ld. AR for the assessee is not applicable to the facts and circumstances of the case. Consequently, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), appeal filed by the assessee is hereby dismissed. 26. So, following the decision rendered by the coordinate Bench of the Tribunal, we are of the considered view that the ld. CIT (A) has erred in deleting the addition of ₹ 98,688/- made by the AO. So, the findings returned by the ld. CIT (A) are hereby set aside and order passed by the AO on this issue is hereby restored. Consequently, Ground No.2 is decided in favour of the Revenue. GROUND NO.3 OF REVENUE S APPEAL FOR AY 2011-12 27. Ld. CIT (A) deleted the addition of ₹ 1,96,79,942/- made u/s 40(a)(ia) of the Act on account of disallowance for nondeduction of tax on commission expenses which has been challenged by the Revenue. 28. AO noticed the fact that the assessee company has deducted a sum of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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