M/S VEDIC BROADCASTING LIMITED,HARIDWAR vs. DCIT, CIRCLE 1(1)(1), DEHRADUN, DEHRADUN

Against the said order, the assessee preferred an appeal before ld. CIT(A) who in terms of its order dated 29.01.2026, has dismissed the appeal of the assessee.

Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.

Ground of appeal No. 1 is general in nature hence, not adjudicated.

Ground of appeal Nos. 2 to 2.2 are with respect to the disallowance of INR 12,93,937/- made u/s 37(1) of the Act, being the interest payment on delayed payment of GST.

Heard the contentions of both the parties at length and perused the material on record. The claim of the assessee was that the interest paid on the delayed payment of GST is compensatory in nature and not penal in nature therefore, the same is to be allowed as business expenditure u/s 37(1) of the Act. For this assessee has placed reliance on the judgment of Hon’ble Supreme Court in the case of Lachmandas Mathuradas vs CIT reported in [2002] 254 ITR 799 (SC) wherein it is held that “the interest of delayed payment of sales tax is not penal and compensatory and should be alleged as business expenditure” The ld.CIT(A) has observed that this judgment was delivered in respect to the sales 2

Ground of appeal Nos. 3 to 3.1 are with respect to the confirmation of addition towards corporate guarantee commission of INR 60,31,655/-.

Heard the contentions of both the parties at length and perused the material on record. The AO has made the addition by holding that the assessee has given Corporate Guarantee for the funds borrowed by M/s Patanjali Ayurved Ltd. in terms of Agreement dated 14.12.2019 placed at page 111 to 115 of the Paper Book. The AO accordingly, has worked out the amount of corporate guarantee commission income to the tune of INR 60,31,655/- as per the calculation given in para 4.5.2 of the assessment order. In first appeal, ld. CIT(A) confirmed the said addition. It was the claim of the assessee that though initially it was decided between the parties to pay the corporate guarantee commission to the assessee however, a supplementary agreement was later executed between the parties on 01.08.2022, placed at page 116 to 118 of the Paper Book, wherein it was decided between the parties that commission no would be paid on or after 01.04.2022 and accordingly, in compliance to the said supplementary agreement, assessee has not disclosed any income in the shape of Corporate Guarantee Commission on outstanding loans of Patanjali Ayurved Ltd. However, the lower authorities filed to appreciate this fact and made/confirmed the additions.

On careful consideration of the facts and circumstances of the case, it is observed that initially there was an agreement between the parties for payment of corporate guarantee commission to assessee on the funds borrowed by the Patanjali Ayurved Ltd. for which corporate guarantee was provided by the assessee. However, later it was decided between the parties that no commission would be charged on such corporate guarantee and an agreement was executed to this effect. All these facts have not been controverted by the revenue before us. Once the parties have agreed not to charge any corporate guarantee commission, AO cannot walk into shoe of the businessman to who has taken the conscious decision depending upon the facts and circumstances. Moreover, in absence of any accrual of income, by applying real income theory, hypothetical income cannot be brought to tax, has been held by Hon’ble Apex Court in the case of The Godhra Electricity Co. Ltd. Vs. CIT reported in (1997) 225 ITR 746 (SC).

In view of the above, we hereby hold that lower authorities have wrongly made the addition which is hereby, deleted. Accordingly, Grounds of appeal Nos. 3 to 3.1 raised by the assessee are allowed.

Grounds of appeal Nos. 4 to 4.1 raised by the assessee are with respect to the disallowance of the employee’s contribution towards ESI of INR 33,569/- and PF of INR 2,00,064/-.

Heard the contentions of both the parties at length and perused the material on record. The claim of the assessee was that Auditor in the Tax Audit Report has wrongly stated the date of deposit of employees contribution towards PF/ESI after the due date of the deposit under the respective Acts however, the same were paid on or before due date as prescribed under the relevant Acts.

In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 19.08.2026. Sd/- Sd/-