TMI Blog2021 (9) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... y to fulfill its needs. Since there is a commercial understanding between the assessee and M/s. Indo Shell Mould Ltd., the assessee has paid certain expenses of M/s. Indo Shell Mould Ltd. on their behalf and debited same to the account of M/s. Indo Shell Mould Ltd. Further, said amount has been adjusted against receivables from them. From the above, it is very clear that transaction between the assessee and M/s. Indo Shell Mould Ltd. is a clear commercial transaction in the normal course of business of the assessee. Therefore, in our view, same is outside scope of provisions of section 2(22)(e) - Decided in favour of assessee. Additions towards belated payment of employees contribution of PF ESI u/s.36(1)(va) r.w.s 43B(b) - HELD THAT:- Hon'ble Supreme Court in the case of CIT vs. Rajasthan State Beverages Corporation Ltd.[ 2017 (7) TMI 1087 - SC ORDER] has considered an identical issue while dismissing SLP filed by the Revenue and held that amount claimed on payment of PF ESI having been deposited on or before due date of filing of returns, same could not be disallowed u/s.43B or u/s.36(1)(va) - Insofar as circular No.22/2015 dated 17.12.2015 issued by the CBDT, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) erred in law by allowing the assessee s appeal on the issue of disallowance of belated payment of employee s contribution of ESI and PF amount by merely relying on the decision rendered by the Hon ble Supreme Court in the case of Prl.CIT, Jaipur vs. Rajasthan State Beverages Corporation Ltd., cited in [2017] 250 Taxman 16. However, the Hon ble Supreme Court dismissed the SLP filed by the Department against the order of the Rajasthan High Court (citation: [2017] 84 taxmann.com 173). The Rajasthan High Court while deciding the case in favour of the assessee merely relied on its own decision rendered in the case of CIT v. State Bank of Bikaner Jaipur cited in [2014] 363 ITR 70/43 taxmann.com 411 and had no occasion to consider the Board s Circular No.22/2015 dated 17.12.2015. Hence these case laws are not applicable to the present set of facts of the assessee s case. 6) The learned CIT(A) failed to note that the jurisdictional High Court s decision in the case of CIT vs. Industrial Security and Intelligence Industries India (Pvt) Ltd that was relied upon by the learned CIT(A) was rendered on 24 July, 2015 which is prior to issue of circular No. 22/2015 dt. 17.12.2015 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liabilities paid by the assessee company on behalf of sister concern would tantamount to loans or advances, which attracts provisions of section 2(22)(e) of the Act. The DR further referring to the decision of Hon'ble Supreme Court in the case of Kantilal Manilal Vs.CIT (1961) 41 ITR 275 and the decision of Tarulata Shyam vs.CIT (1977) 108 ITR 345 submitted that amount taken as loan by shareholder from a controlled company to the extent it possesses accumulated profit comes under the provisions of section 2(22)(e) of the Act . 6. The learned AR for the assessee, on the other hand, strongly supporting order of the learned CIT(A) submitted that transactions between assessee and M/s. Indo Shell Mould Ltd. is normal commercial transaction between two related companies and further, the assessee being contract manufacturer for M/s. Indo Shell Mould Ltd. in terms of agreement between the parties dated 25.07.2011 has made payment of certain expenses on behalf of M/s. Indo Shell Mould Ltd. and debited to their account. Further, said advance has been subsequently adjusted against receivables from the company. Therefore, same cannot be treated as loans or advances to invoke provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has paid certain expenses of M/s. Indo Shell Mould Ltd. on their behalf and debited same to the account of M/s. Indo Shell Mould Ltd. Further, said amount has been adjusted against receivables from them. From the above, it is very clear that transaction between the assessee and M/s. Indo Shell Mould Ltd. is a clear commercial transaction in the normal course of business of the assessee. Therefore, in our view, same is outside scope of provisions of section 2(22)(e) of the Act. This view is supported by the decision of Hon ble Delhi High Court in the case of CIT vs. Creative Dyeing Printing Pvt.Ltd, 318 ITR 476, where it was clearly held that advances made by a company to a sister concern and adjusted against dues for job work done by sister company is outside scope of provisions of section 2(22)(e) of the Act. This legal position has been accepted by CBDT and issued circular No.19/2017 dated 12.06.2017 and clarified that trade advances which are in the nature of commercial transactions would not fall within the ambit of word advance u/s.2(22)(e) of the Act. Further, this issue is also covered in favour of the assessee by the decision of the Tribunal in assessee s own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the authorities below. The issue of deduction towards belated payment of employees contribution to PF ESI is no longer res integra . The various High Courts including the Hon'ble High Court of Madras in the case of CIT Vs. M/s. Industrial Security Intelligence India Pvt. Ltd., in TCA No.585 586 of 2015 dated 24.07.2015 had considered an identical issue and held that belated payment of employees contribution to PF ESI, after due date as prescribed in relevant Act, but before due date of filing return of income u/s.139(1) of the Income Tax Act, 1961 is allowable as deduction. This legal position has been reiterated by several High Courts including the Hon ble Karnataka High Court in the case of M/s.Essae Teraoka Pvt.Ltd. Vs. DCIT (246 CTR 286) and the Hon ble Rajasthan High Court in the case of CIT vs. State Bank of Bikaner Jaipur (2014) 363 ITR 70 and the Hon ble Bombay High Court in the case of CIT vs. Nipso Fabriks Ltd. (350 ITR 327). Further, the Hon'ble Supreme Court in the case of CIT vs. Rajasthan State Beverages Corporation Ltd. (2017) 250 Taxmann 16 has considered an identical issue while dismissing SLP filed by the Revenue and held that amount claim ..... 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