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TMI Blog2021 (4) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... pt income. 2.3 The CIT(A) erred in relying on the decision of the Hon'ble Madras High Court in the case of Redington (India) Limited vs AddI.CIT in TCA No. No.520 of 2013 dated 23.12.2016, has not been accepted by the Department. 3.1 The CIT(A) erred in deleting the addition made on account of employees contribution on ESI & PF when the same were not paid by the assessee within the due date of relevant Acts. 3.2 The CIT(A) ought to have appreciated that the employees contribution of ESI & PF are governed by the section 36(1)(va) of the Act and not under section 43B of the Act 3.3 The recent Boards Circular No.22/2015, dt.17.12.2015 has accepted the decision of the Supreme Court in the case of Alom Extrusions only in respect of disallowance u/s 43B of the Act and has stated that this Circular does not apply to the claim of deduction relating to employees contribution to welfare funds which are governed by section 36(1)(va) of the Act. 4.1 The CIT(A) erred in deleting the disallowance made on account speculative loss amounting to Rs. 81,12,608/- by holding that transaction in foreign exchange were incidental to the assessee's regular course of business and thus the loss was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing disallowance of expenditure incurred in relation to exempt income u/s.14A r.w. Rule 8D of the Income Tax Rules, 1962, disallowance of employees contribution towards PF & ESI u/s.36(1)(va) r.w.s 2(24)(x), additions towards loss on forward contracts and disallowance of stitching charges for want of evidence. The assessee carried the matter in appeal before the first appellate authority and the learned CIT(A), for the detailed reasons recorded in his appellate order, deleted the additions made by the Assessing Officer towards disallowance of expenditure u/s.14A r.w. Rule 8D, disallowance of employees contribution towards PF & ESI u/s.36(1)(VA) r.w.s 2(24)(x), disallowance of loss on forward contracts and disallowance of stitching charges. Aggrieved by the CIT(A) order, the Revenue is in appeal before us. 4. The first issue that came up for our consideration from ground no.2 of revenue appeal is disallowance of expenditure u/s.14A r.w. Rule 8D of the Income Tax Rules, 1962. The Assessing Officer has disallowed a sum of Rs. 10,61,800/- towards interest expenses under Rule 8D(2)(ii) and other expenses under Rule 8D(2)(iii) on the ground that whether or not exempt income is received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of Revenue appeal is disallowance of contribution to PF and ESI u/s.36(1)(va) r.w.s 2(24)(x) of the Act. The Assessing Officer has disallowed a sum of Rs. 33,80,366/- owing to belated payments made towards employees contribution of ESI and PF u/s.36(1)(va) read with 2(24)(x) of the Act. According to the Assessing Officer, employees contribution to PF & ESI not remitted within due date specified under respective Acts is not allowable u/s.36(1)(va) of the Act. It was the claim of the assessee before the Assessing Officer that although, contribution to PF & ESI was not remitted before due date specified under respective Acts, but such contribution has been made on or before due date for furnishing return of income u/s.139(1) of the Act. Therefore, same cannot be disallowed u/s.36(1)(va) read with 2(24)(x) of the Act. 7. We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. The learned CIT(A) has deleted additions made by the Assessing Officer towards employees contribution to PF & ESI, which was paid belatedly to the credit of employees account, but remitted on or before due date for furnishing return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal finding in light of decision of Hon'ble Gujarat High Court in the case of CIT Vs. Friends & Friends Shipping Pvt Ltd in Tax Case Appeal No.251 of 2010 dated 23.08.2011 that when forward contracts entered into with banks for the purpose of hedging loss due to fluctuation in foreign currency while implementing export of goods, then the same cannot be considered as speculative loss u/s.43(5) of the Act. The learned CIT(A) has further recorded that the assessee has furnished necessary evidences to prove that it has exported goods and hedge possible loss in fluctuation in foreign currency had entered into forward contract with its bankers and incurred loss. Therefore, we are of the considered view that once forward contracts are entered into with bankers for the purpose of hedging possible loss in fluctuation of foreign currency, then the same is in the nature of revenue expenditure, but not speculative loss u/s.43(5) of the Act. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards disallowance of loss on forward contracts. Hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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