M/S JAIPUR STOCK SECURITIES LTD.,JAIPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR

In ground No. 1, the assessee has challenged the confirmation of addition of Rs. 51,618/- towards interest on bank fixed deposits. In this regard, the ld. AR submitted that during the year, there were premature withdrawals of fixed deposits maintained with banks. In this regard, the banks had initially credited interest on accrual basis and deducted TDS thereon, however, when the payment was made, the assessee had actually received lower interest on such deposits. The assessee has credited interest on FDRs as actual received after deduction of premature charges and therefore, it is not the case that assessee has earned higher income and has not offered the entire amount M/s Jaipur Stock Securities Ltd., Jaipur Vs. ACIT, Jaipur whereas claimed TDS on the same. It was submitted that whatever interest has been received by the assessee, the same has been offered to tax. It was further submitted that since TDS has already happened at the time of accrual by the bank, the assessee had no option but to claim the whole of the TDS.

Per contra, the ld. DR submitted that during the course of assessment as well as appellate proceedings, the assessee has failed to produce any evidence to prove that the FDRs were encashed prematurely, therefore, in absence of any evidence on record or confirmation from the bank, the contention of the assessee that due to premature encashment of FDRs, the assessee has received lower interest income as against the interest so reflected in Form No. 26AS cannot be accepted.

We have heard the rival contentions and perused the material available on record. In the instant case, it is so claimed by the assessee that the interest though initially accrued at the regular intervals by the bank and corresponding TDS has been done which got reflected in Form 26AS, however, given that there was premature withdrawals of fixed deposits, the assessee bank has actually received lower interest than what has been reflected in Form 26AS and therefore, the interest actually received was rightly offered to tax and the remaining interest so reflected in Form 26AS since not received at first place has not been offered to tax and thus, the action of the Assessing officer is not correct. Conceptually, we agree that mere reflection of certain transaction in Form 26AS is not determinative of holding such transaction as taxable transaction in the hands of the assessee. However, given that the transaction has been reflected in Form 26AS, the onus is on the assessee to demonstrate that such transaction doesn’t represent real income in its hands. In the instant case, we find that the assessee has failed to adduce any evidence in support of its contention that it has received lower interest income than what has been 2 M/s Jaipur Stock Securities Ltd., Jaipur Vs. ACIT, Jaipur reflected in Form 26AS. Further, nothing has been brought on record to suggest that the Form 26AS has been subsequently modified/amended to reflect the actual interest payment to the assessee. In the result, the ground so taken is dismissed.

In Ground No. 2, assessee has challenged the confirmation of disallowance of ESI/EPF contributions of Rs. 115,849/- u/s 36(1)(va) of the Act. In this regard, undisputed facts are that these contributions were deposited before the due date of filing of the return of income u/s 139(1) of the Act. Recently, we have dealt with the issue in case of M/s K.S.Automobiles Ltd. Vs. DCIT (ITA No. 1184/JP/18 and 1185/JP/18 dated 08.03.2019) and the relevant finding is as under:- “3. We have heard the ld. AR as well as ld. DR and considered the relevant material on record. At the outset, we note that this issue is covered in favour of the assessee by the various decisions of the Hon’ble jurisdictional High Court including the decision in case of CIT vs. State Bank of Bikaner & Jaipur 99 DTR 131 as well as decision in case of CIT vs. Jaipur Vidyut Vitran Nigam Ltd. 363 ITR 307 and in case of CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. 366 ITR 163. We further note that the ld. CIT(A) though has not disputed the various decisions of Hon’ble High Court however, disallowance made by the AO are sustained as he misunderstood the decision of Hon’ble Jurisdictional High Court in case of PCIT vs. M/s Rajasthan Renewable Energy Corporation Limited in DB & 12/2018 dated 13.03.2018. In the case of PCIT vs. M/s Rajasthan Renewable Energy Corporation Limited (supra) the Hon’ble High Court has considered this issue in para 4 to 6 as under:- “4. So far as question No. 1 is concerned, the same is now covered by the decisions of this Court in Principal Commissioner of Income-Tax V/s M/s Jaipur Stock Securities Ltd., Jaipur Vs. ACIT, Jaipur Rajasthan state seed Corporation Ltd. [2016] 386 ITR 267 (Raj) wherein it has been held as under:- “In so far as the expenditure incurred on State Renewal Fund is concerned, the said expenditure also goes to show that the renewal fund was set up by the State Government and was created with the object of providing a safety net for the workers likely to be effected by restricting in the State Public Enterprise and that a finding of fact has been recorded that the contribution made to the State Renewal fund is solely for the purposes of the welfare and benefit of the employees. In our view, it is for the assessee to decide whether any expenditure should be incurred in the course of business and expenditure of this nature being for business expediency is certainly allowable deduction under section 37(1) of the Act. In our view any normal expenditure for the welfare and benefit of the employees is allowable expenditure under section 37(1), the Tribunal has come to a finding of fact that it was a legal obligation of the respondent-assessee towards contribution of the said amount to the State Renewal Fund and there being a legal obligation as well in our view the Tribunal has come to a correct conclusion.”

Therefore, respectfully following the decisions of the Hon’ble Jurisdictional High Court, the matter is decided in favour of the assessee and against the Revenue. In the result, the ground of appeal is allowed.