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Income Tax Appellate Tribunal, “A”, BENCH KOLKATA
Before: SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM
आदेश / O R D E R Per Dr. A.L. Saini, AM:
The captioned appeal filed by the revenue, pertaining to assessment year 2013-14, is directed against the order passed by the Commissioner of Income Tax (Appeal)-5, Kolkata, in appeal no. 174/CIT(A)-5/Cir-13(2)/16-17, which in turn arises out of an assessment order passed by the Assessing Officer u/s 144 / 143(3) of the Income Tax Act, 1961 (in short the “Act”) dated 31/03/2016.
The grounds of appeal raised by the revenue are as follows: 1. That on the facts and circumstances of the case, the Ld. CIT (A) was not justified and grossly erred in deleting the addition of Rs. 19,85,240/- as the claim of deduction is related to employee’s contribution to welfare funds and not to employer’s contribution.
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14 2. That on the facts and circumstances of the case, the Ld. CIT (A) was not justified and grossly erred in deleting the addition of Rs. 12,72,983/- as the Ld. CIT(A) failed to appreciate the proviso (i) of Section 36(2) of the Act as laid down by Board’s Circular No. 12/2016 dated 30.05.2016. 3. That on the facts and circumstances of the case, the Ld. CIT (A) was not justified and grossly erred in deleting the addition to the tune of Rs. 6,37,75,651/- as the assessee failed to comply with the provision of section 194C(7) thereby attracting the provision of section 40(a)(ia) of the Act. 4. That on the facts and circumstances of the case, the Ld. CIT (A) was not justified and grossly erred in deleting the addition of Rs. 56,57,052/- as during the course of assessment the assessee failed to furnish necessary documents/explanation regarding the nature and necessity of expenses that has been incurred by it on behalf of its agency in respect of which the reimbursement is made. 5. That on the facts and circumstances of the case, the Ld. CIT (A) was not justified and grossly erred in deleting the addition of Rs. 2,57,213/- as the assessee could not prove during the course of assessment the necessity of these expenses with regard to his business. 6. That on the facts and circumstances of the case, the ld. CIT(A) was not justified and grossly erred in deleting the addition of Rs. 76,977/- without considering the Board’s Circular No. 5/ 2014 dated 11.02.2014 that provision of Section 14A read with Rule 8D is to be invoked even if there were no exempt income. 7. That the appellant craves leave to add, alter, modify, amend and/ or delete all or any of the foregoing grounds of appeal on or during the hearing.
Ground no. 1 raised by the revenue relates to addition of Rs. 19,85,240/- made by the Assessing Officer on account of delayed payments in employee’s contribution to welfare fund.
Brief facts qua the issue are that from the tax audit report, it was noticed by AO that the assessee has made delayed payments in respect of the employee’s contributions towards Provident Fund and other staff welfare funds as detailed below-
M/s Shradha Agencies Pvt. Ltd. M/s Shradha Agencies Pvt. Ltd. ITA No. ITA No.1362/Kol/2018 Assessment Year: Assessment Year:2013-14
As per the provisions of Section 36(1)( As per the provisions of Section 36(1)(va) deduction on account of any sum va) deduction on account of any sum received by the assessee from the employees towards their contribution to received by the assessee from the employees towards their contribution to received by the assessee from the employees towards their contribution to Provident Fund. Superannuation Fund, funds set up under the E.S.I Act or any Provident Fund. Superannuation Fund, funds set up under the E.S.I Act or any Provident Fund. Superannuation Fund, funds set up under the E.S.I Act or any other employee welfare fund shall be allowed only if such sum is cred other employee welfare fund shall be allowed only if such sum is cred other employee welfare fund shall be allowed only if such sum is credited by the assessee to the employees’ account in the relevant fund on or before the due date assessee to the employees’ account in the relevant fund on or before the due date assessee to the employees’ account in the relevant fund on or before the due date as per the relevant laws regarding that fund. as per the relevant laws regarding that fund. The AO noted that assessee has failed assessee has failed to credit sums amounting to Rs. 19, to credit sums amounting to Rs. 19,85,240/- to the employees’ account on or to the employees’ account on or before the due date. Therefore, this amount efore the due date. Therefore, this amount was added to the total income of the added to the total income of the assessee.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition in appeal before the ld. CIT(A) who has deleted the addition in appeal before the ld. CIT(A) who has deleted the addition made by AO observing the following:
“I have considered the submission of the appellant and perused the relevant I have considered the submission of the appellant and perused the relevant I have considered the submission of the appellant and perused the relevant assessment records. The A/R of the appellant in his submission has held that if assessment records. The A/R of the appellant in his submission has held that if assessment records. The A/R of the appellant in his submission has held that if statutory liabilities like PF, ESI, EPF etc. statutory liabilities like PF, ESI, EPF etc. are paid belatedly but before due dat re paid belatedly but before due date of filing of return as stipulated u/s 139(1) of the Income of filing of return as stipulated u/s 139(1) of the Income-tax Act, the same is tax Act, the same is allowable. The A/R of the appellant had cited a number of case laws in his favour allowable. The A/R of the appellant had cited a number of case laws in his favour allowable. The A/R of the appellant had cited a number of case laws in his favour as follows: i) Alom Extrusion Ltd vs CIT 319 ITR 306 (Supreme Court). Alom Extrusion Ltd vs CIT 319 ITR 306 (Supreme Court). Alom Extrusion Ltd vs CIT 319 ITR 306 (Supreme Court). ii) CIT vs Vijay Shree Ltd CIT vs Vijay Shree Ltd iii) CIT vs Gujarat State Road Transport Corporation CIT vs Gujarat State Road Transport Corporation
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14 There is a cleavage of judicial opinion, on the taxation of employee’s contribution, deposited beyond the due dates specified under the PF laws, but before the due date of filing income-tax return. In Commissioner of Income Tax-II vs Gujarat State Road Transport Corporation [2014] reported in 41taxmann.com 100, the Hon’ble Gujarat High Court has held that if employee’s contribution received by the assessee is not credited to the employee’s account in the relevant fund on or before the due date mentioned in the Explanation to section 36(1)(va) [i.e., the due dates under PF Act, ESI Act/other law], the assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 of the Act even if contributions deposited on or before due date specified under section, the Calcutta High Court had in thecase of CTT Vs M/s Vijay Shree Limited (supra) held“The only issue involved in this appeal is as to whether the deletion of the addition by Assessing Officer on account of ‘Employees Contribution to ESI and PF’ by invoking the provision of Section 36(1 )(va) read with Section 2(24)(x) ofthe Act was correct or not. It appears that the Tribunal below, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306, held that the deletion was justified. Being dissatisfied, the Revenue has come up with the present appeal. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. Such being the position, the deletion of the amount paid by the Employees’ Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in his appeal and consequently, we dismiss this appeal”. Further, in the case of Commissioner of Income Tax vs George Williamson(Assam) Ltd [2006] reported in 284 ITR 619, the Hon’ble Gauhati High Court interpreted(iv) clause (b) of section 43B of the Act, read with the second proviso to the said section and clause (va) of sub-section (1) of section 36 of the said Act to hold that deposit of contributions made towards provident fund, etc., after the close of the accounting period but before the due date for filling of the return of income would be entitled to relief under section 43B(b) of the Act. The matter has, however, been finally decided by the Supreme Court in the case of PCIT. Jaipur vs Rajasthan State Beverages Corporation Ltd [2017) 84 taxman.com 185(SC) where the Apex Court had confirmed the decision of the Rajasthan High Court which held that amounts claimed on payment of PF and ESI having been deposited on or before due date of filing of return, same could not be disallowed u/s 43B or u/s 36(1)(va). The Apex Court had dismissed the SLP of the Revenue filed against the decision of the Rajasthan High Court. After a careful consideration of the decisions as foregoing, and in particular, the binding decisions of the Hon’ble Supreme Court/High Court as discussed, it has to be held that employee’s contribution deposited beyond the due dates specified under the relevant PF laws, but before the due date of filing income-tax return as specified in section 43B of the Act, cannot be treated as the deemed income of the appellant within the meaning of section 36(1)(va) read with section 2(24)(x) of the Page | 4
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14 Act. Consequently, the addition of Rs.19,85,240/- made by the Assessing Officer is to be deleted. The Assessing Officer is directed accordingly. This ground of appeal succeeds and is, therefore, allowed.”
Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us.
The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has relied on the order of theld CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that this issue is squarely covered by the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306. Therefore, employee’s contribution deposited beyond the due dates specified under the relevant PF laws, but before the due date of filing income-tax return as specified in section 43B of the Act, cannot be treated as the deemed income of the appellant within the meaning of section 36(1)(va) read with section 2(24)(x) of the Act. Therefore, the addition of Rs.19,85,240/- made by the Assessing Officer has been rightly deleted by ld CIT(A).That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
Ground No. 2 raised by the revenue relates to addition of Rs. 12,72,983/- u/s 36(2) proviso (i) of the Act, pertaining to bad debts.
Brief facts qua the issue are that the assessee has debited an amount of Rs. 12,72,983/- on account of ‘bad debts and others written off’. In course of assessment proceedings, the assessee was asked to furnish details of such debts /
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14 advance specifying their nature and years in which such debts / advance were taken into account in computing income, along with copy of ledger accounts of the relevant parties since the year they were first credited till the current year. In response to the said notice, the assessee had filed copy of ledger accounts of the above said bad debts, but no proof or other details were furnished regarding whether these debts were at all taken into account in computing income in any previous year. Thus, the condition laid down in Section 36(2) for write off of bad debt has not been satisfied by the assessee. Under the circumstances, the write off of the aforesaid bad debt and advances amounting to Rs. 12,72,983/- was not allowed by AO.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the following:
“I have considered the submission of the appellant and perused the relevant assessment records. The A.O. had disallowed bad debts amounting to Rs. 12,72,983/- on the grounds that the appellant could not furnish any documentary evidence in support of the bad debts. The A.O. in the assessment order has observed that the appellant company has debited written off an amount of Rs. 12,72,983/- on account of bad debts in their audited P&L a/c. As held by the Apex Court in the case of TRF Ltd vs CIT reported in (2010) 323 ITR 397 (SC) “This position in law is well- settled. After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee.” Therefore, as the appellant company has written off the bad debts in its account, the disallowance of Rs. 12,72,983/- on account of bad debts is deleted. This ground of appeal succeeds and is therefore allowed. The A.O. is directed accordingly.”
Aggrieved by the order of the ld. CIT(A) the revenue is in appeal before us.
The ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the ld. Counsel for the assessee has relied on the order of ld CIT(A).
M/s Shradha Agencies Pvt. Ltd. M/s Shradha Agencies Pvt. Ltd. ITA No. ITA No.1362/Kol/2018 Assessment Year: Assessment Year:2013-14 14. We have heard both the parties and carefully gone through the submission put 14. We have heard both the parties and carefully gone through the submission put 14. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case forth on behalf of the assessee along with the documents furnished and the case forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the laws relied upon, and perused the fact of the case including the findings of the ld findings of the ld CIT(A) and other materials available on record. CIT(A) and other materials available on record. We note that We note that the assessee company has debited written off an amount of Rs. 12,72,983/ company has debited written off an amount of Rs. 12,72,983/- on account of bad on account of bad debts in its audited Profit rofit &Loss account. The ld CIT(A) relied on the judgment The ld CIT(A) relied on the judgment of the Apex Court in the case of TRF Ltd vs CIT reported in (2010) 323 ITR 397 the Apex Court in the case of TRF Ltd vs CIT reported in (2010) 323 ITR 397 the Apex Court in the case of TRF Ltd vs CIT reported in (2010) 323 ITR 397 (SC), wherein it was held as follows: , wherein it was held as follows: “This position in law is well “This position in law is well- settled. After 1st April, 1989, it is not necessary for the settled. After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee bad debt is written off as irrecoverable in the accounts of the assessee.” .”
We note that there is no infirmity in the order of the ld. CIT(A). That being so, we We note that there is no infirmity in the order of the ld. CIT(A). That being so, we We note that there is no infirmity in the order of the ld. CIT(A). That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the ground no. 2 raised by the revenue is dismissed. upheld and the ground no. 2 raised by the revenue is dismissed. upheld and the ground no. 2 raised by the revenue is dismissed.
Ground no. 3 raised by the revenue relat round no. 3 raised by the revenue relates to addition of Rs. 6,37,75,651/ to addition of Rs. 6,37,75,651/- u/s 194C(7) read with section 40a(ia) of the Act. 194C(7) read with section 40a(ia) of the Act.
Brief facts qua the issue are that in course of assessment proceedings, the 16. Brief facts qua the issue are that in course of assessment proceedings, the 16. Brief facts qua the issue are that in course of assessment proceedings, the assessee’s was asked to furnish details of tax (T assessee’s was asked to furnish details of tax (TDS) deducted by it from expenses/ DS) deducted by it from expenses/ payments made by it and also to furnish reasons for not deducting such tax, if any. payments made by it and also to furnish reasons for not deducting such tax, if any. payments made by it and also to furnish reasons for not deducting such tax, if any. In response, the assessee filed a detail of such TDS vis In response, the assessee filed a detail of such TDS vis-à-vis expense vis expenses. From the detail it was noticed by the AO was noticed by the AO that the assessee has failed to deduct tax (TDS) iled to deduct tax (TDS) from a number of expenses / payments and has not filed any reason for such non from a number of expenses / payments and has not filed any reason for such non from a number of expenses / payments and has not filed any reason for such non- deduction as detailed below: deduction as detailed below:
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14
The AO held that, the assessee has failed to deduct tax on expenses amounting to Rs. 6,37,75,651/- and thus the condition for allowance of such expense as laid down in section 40a(ia) was not satisfied. Therefore, expenses of Rs. 6,37,75,651/- were disallowed in terms of provisions of Sec. 40a(ia) of the Act.
Aggrieved by the order of the Assessing Officer the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the followings:
“I have considered the submission of the appellant and perused the relevant assessment records. The A/R of the appellant during appellate proceeding has stated that no TDS was deducted on the freight payments as PAN cards were obtained from the transporters in respect of these payments. On verification from the invoice issued by the transporter it was found that in most cases, the PAN was mentioned. In other cases, the PAN of the transporters had been obtained. As regards the other payments, it appears that no TDS is to be deducted as they have not crossed the threshold limit. As regards interest charges to Tata Capital amounting to Rs.4,93,785/- which has disallowed for non-deduction of TDS, it appears that it had double addition as the A.O. has already been disallowed this amount which was not contested by the appellant during appeal. In this regard, reference may be made to the decision of the Jurisdictional ITAT in the case of in the case of Rani Ghosh Vs. DCIT, I.T.A. No. 1420 /KOL/ 2015 has held- "i) in the context of Section 194C(1), person undertaking to do the work is the Contractor and the person so engaging the contractor is the contractee; ii) that by virtue of the Amendment introduced by Finance Act (No.2) 2009, the distinction between a contractor and a sub-contractor has been done away with and Cl. (iii) of Explanation under 194C(7) now clarifies that "contract" shall include sub-contract; iii) subject to compliance with the provisions of Section 194C(6), immunity from TDS under sec. 194C(1) in relation to payments to transporters, applies to transporter and non-transporter contractees alike; iv) under Sec. 194C(6), as it stood prior to the amendment in 2015, in order to get immunity from the obligation of TDS, filing of PAN of the Payee- Transporter alone is sufficient and no confirmation letter as required by the learned CIT is required;
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14 v) Sections 194C(6) and Section 194C(7) are independent of each other, and cannot be read together to attract disallowance u/s 40(a)(ia) read with Section 194C of the Act; and vi) If the assessee complies with the provisions of Section 194C(6), no disallowance u/s 40(a)(ia) of the Act is permissible, even there is violation of the provisions of Section 194C(7) of the Act." It is clear that sections 194C(6) and Section 194C(7) are independent of each other, and cannot be read together to attract disallowance u/s 40a(ia) read with Section 194C of the Act; and if the assessee complies with the provisions of Section 194C(6), no disallowance u/s 40a(ia) of the Act is permissible, even there is violation of the provisions of Section 194C(7) of the Act. After a careful consideration of the decisions of the jurisdictional ITAT the assessment records, and the submission of the appellant, disallowance of Rs. 6,37,75,651/- u/s 40a(ia) of the Act is to be deleted. The Assessing Officer is directed accordingly. This ground of appeal succeeds and is, therefore, allowed.”
Aggrieved, the Revenue is in appeal before us. The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the ld. Counsel for the assessee has relied on the order of theld CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We have gone through the order of ld CIT(A) and noted that ld CIT(A) has reached on a logical conclusion, hence we note that there is no infirmity in the order of the ld. CIT(A). That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the ground no. 3 raised by the revenue is dismissed.
Ground no. 4 raised by the revenue relates to addition of Rs. 56,57,052/- which pertains to reimbursement of expenses.
M/s Shradha Agencies Pvt. Ltd. M/s Shradha Agencies Pvt. Ltd. ITA No. ITA No.1362/Kol/2018 Assessment Year: Assessment Year:2013-14 21. Brief facts qua the issue are that as per Form no. 26AS, the assessee has been 21. Brief facts qua the issue are that as per Form no. 26AS, the assessee has been 21. Brief facts qua the issue are that as per Form no. 26AS, the assessee has been in receipt of the following sums during the F.Y. 2012 following sums during the F.Y. 2012-13 from which the 13 from which the TDS deductors have made TDS: have made TDS:
Out of the above, the income on account of interest from State Bank of India and Out of the above, the income on account of interest from State Bank of India and Out of the above, the income on account of interest from State Bank of India and G.M Pens International Pvt. Ltd. as well as income on account of commission G.M Pens International Pvt. Ltd. as well as income on account of commission G.M Pens International Pvt. Ltd. as well as income on account of commission from Heinz India Pvt. Ltd. from Heinz India Pvt. Ltd. were found to have been taken into account by the found to have been taken into account by the assessee. However, the receipts on account of contract from Keventer receipts on account of contract from Keventer receipts on account of contract from Keventer Agro Ltd. and Heinz India Pvt. Ltd. amounting to Rs. and Heinz India Pvt. Ltd. amounting to Rs. 56,57,052/- ( Rs.28,73,795 + Rs. ( Rs.28,73,795 + Rs. 27,83,257) is not found to be credited by the assessee, which is evident from the 27,83,257) is not found to be credited by the assessee, which is evident from the 27,83,257) is not found to be credited by the assessee, which is evident from the detail of receipt from revenue operation detail of receipt from revenue operation (Sales) filed by A/R during assessment (Sales) filed by A/R during assessment proceedings. As such, this receipt from contract jobs amounting to Rs. 56,57,052/ proceedings. As such, this receipt from contract jobs amounting to Rs. 56,57,052/ proceedings. As such, this receipt from contract jobs amounting to Rs. 56,57,052/- was treated as unexplained income of the assessee and the amount treated as unexplained income of the assessee and the amount treated as unexplained income of the assessee and the amount was added to the total income of the assessee of the assessee.
Aggrieved by the order of the Assessing Officer the assessee carried the matter order of the Assessing Officer the assessee carried the matter order of the Assessing Officer the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the in appeal before the ld. CIT(A) who has deleted the addition made by the in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the followings: Assessing Officer observing the followings:
I have considered the submission of the appellant and perused the relevant I have considered the submission of the appellant and perused the relevant I have considered the submission of the appellant and perused the relevant assessment records. The A.O. has added back Rs.56,57,052/ assessment records. The A.O. has added back Rs.56,57,052/ assessment records. The A.O. has added back Rs.56,57,052/-as a difference between amount of receipts shown in the balance sheet and that reflected in form between amount of receipts shown in the balance sheet and that reflected in form between amount of receipts shown in the balance sheet and that reflected in form 26AS. It appears that the 26AS. It appears that the addition has been made without application of mind and addition has been made without application of mind and without reference to the books of accounts of the appellant. The appellant is without reference to the books of accounts of the appellant. The appellant is without reference to the books of accounts of the appellant. The appellant is mainly getting income from sales and also income from C mainly getting income from sales and also income from C & F Agencies besides F Agencies besides other sources. On perusal of the balance sheet other sources. On perusal of the balance sheet and the ledger account of the and the ledger account of the appellant, it appears that the appellant had received total payments amounting to appellant, it appears that the appellant had received total payments amounting to appellant, it appears that the appellant had received total payments amounting to Rs.66,66,117/- from Heinz India as against Rs.53,36,441/ from Heinz India as against Rs.53,36,441/- reflected in Form reflected in Form 26AS. Therefore, the receipts from Heinz India is much more than th 26AS. Therefore, the receipts from Heinz India is much more than th 26AS. Therefore, the receipts from Heinz India is much more than that reflected in Page | 10
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14 Form 26AS and this fact was not appreciated by the A.O. Out of the above amount, the appellant has reflected Rs.28,09,952/- as income from C & F Agency received from Heinz India. The reimbursement of expenditure by Heinz India for expenditure incurred by the appellant on behalf of Heinz India amounts to Rs.25,26,459/-. The balance amount is on account of Service Tax payable. Therefore, as regards the account of Heinz India, there is no discrepancy as regard payments received. As regards, Keventer Agro Ltd, the total payment received amounts to Rs.51,50,068/- as against Rs.28,73,795/- reflected in 26AS. Therefore,similarly as in the case of Heinz India, the payments received were much more than reflected in Form 26AS. Out of the above amount, a sum of Rs.23,40,116/- has been reflected in the books as income from C & F Agency received from Keventer Agro Ltd and a sum of Rs.28,09,952/- relate to reimbursement of income which is reflected in ledger account. AS discussed all the entries are reflected in books of accounts which has been examined. The appellant had shown total income from C & F Agency amounting to Rs.52,30,474/- in his return. The A.O. has treated the reimbursement expenditure as income due to the facts that TDS was deducted. These reimbursements under no stretch of imagination can be considered to be income at the hands of the appellant. The deduction of TDS on expenditure reimbursed would not change the nature of these payments. There are number of judicial decisions which have held the reimbursement of expenditure does not constitute income assessable to tax. The decisions are as follows: (i) CIT vs Dunlop Rubber Company Ltd (1983) 142 ITR 493 (Cal) (ii) CIT vs Expeditors International (India) (P) Ltd (2012) 24 Taxmann.com 76 (Del) After careful consideration of the submission of the appellant, perusal of the relevant assessment records and the decisions of the Hon’ble High Court, the addition of Rs.56,57,052/- is therefore deleted.”
Aggrieved by the order of the ld. CIT(A) the revenue is in appeal before us.
The ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the ld. Counsel for the assessee has relied on the order of ld CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that there is no infirmity
M/s Shradha Agencies Pvt. Ltd. M/s Shradha Agencies Pvt. Ltd. ITA No. ITA No.1362/Kol/2018 Assessment Year: Assessment Year:2013-14 in the order of the ld. CIT(A) . That being so, we decline to interfere in the order in the order of the ld. CIT(A) . That being so, we decline to interfere in the order in the order of the ld. CIT(A) . That being so, we decline to interfere in the order passed by the ld. CIT(A), his ord passed by the ld. CIT(A), his order on this issue, is hereby upheld and the ground er on this issue, is hereby upheld and the ground no. 4 raised by the revenue is dismissed. no. 4 raised by the revenue is dismissed.
Ground no. 5 raised by the revenue relates to addition of Rs. 2,57,213/ 26. Ground no. 5 raised by the revenue relates to addition of Rs. 2,57,213/ 26. Ground no. 5 raised by the revenue relates to addition of Rs. 2,57,213/-, being Puja and subscription expenses disallowed by AO. Puja and subscription expenses disallowed by AO.
Brief facts qua the issu 27. Brief facts qua the issue are that during the scrutiny proceedings during the scrutiny proceedings the AO noticed that the following expenses following expenses were not incidental to assessee`s assessee`s business and therefore were disallowed: disallowed:
Aggrieved by the order of the Assessing Officer the assessee carried the matter 28. Aggrieved by the order of the Assessing Officer the assessee carried the matter 28. Aggrieved by the order of the Assessing Officer the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the al before the ld. CIT(A) who has deleted the addition made by the al before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the followings: Assessing Officer observing the followings:
“I have considered the submission of the appellant and perused the relevant “I have considered the submission of the appellant and perused the relevant “I have considered the submission of the appellant and perused the relevant assessment records. The Calcutta High Court in the case of CIT vs. Bata India assessment records. The Calcutta High Court in the case of CIT vs. Bata India assessment records. The Calcutta High Court in the case of CIT vs. Bata India Ltd. 201 ITR 884 has held “it is notorious fact that, in the festival months, the Ltd. 201 ITR 884 has held “it is notorious fact that, in the festival months, the Ltd. 201 ITR 884 has held “it is notorious fact that, in the festival months, the shops in this part of the country have to pay contributions towards community of the country have to pay contributions towards community of the country have to pay contributions towards community celebrations to keep the youths in the neighbourhood of the shop happy to ensure celebrations to keep the youths in the neighbourhood of the shop happy to ensure celebrations to keep the youths in the neighbourhood of the shop happy to ensure smooth conduct of the business. The expenditure can be said to be an expenditure smooth conduct of the business. The expenditure can be said to be an expenditure smooth conduct of the business. The expenditure can be said to be an expenditure required to maintain the business. required to maintain the business. Following decision of the Calcutta High Court, Following decision of the Calcutta High Court, the jurisdictional Tribunal in the case of Das Majumder Construction vs. ITO in the jurisdictional Tribunal in the case of Das Majumder Construction vs. ITO in the jurisdictional Tribunal in the case of Das Majumder Construction vs. ITO in ITA No. 1441/Kol/2009 and ITO vs. Asit Mukherjee in ITA No. 2209/Kol/2010 ITA No. 1441/Kol/2009 and ITO vs. Asit Mukherjee in ITA No. 2209/Kol/2010 ITA No. 1441/Kol/2009 and ITO vs. Asit Mukherjee in ITA No. 2209/Kol/2010 have held and allowed such types of expenditure being and allowed such types of expenditure being related to the business. related to the business. After a careful consideration of the decisions as foregoing including the binding After a careful consideration of the decisions as foregoing including the binding After a careful consideration of the decisions as foregoing including the binding decisions of the jurisdictional High Court, and ITAT, the assessment records and decisions of the jurisdictional High Court, and ITAT, the assessment records and decisions of the jurisdictional High Court, and ITAT, the assessment records and the submission of the appellant, addition on account of donation a the submission of the appellant, addition on account of donation a the submission of the appellant, addition on account of donation and subscription is deleted. The Assessing Officer is directed accordingly.” is deleted. The Assessing Officer is directed accordingly.”
Aggrieved the order of the ld. CIT(A) the revenue is in appeal before us. 29. Aggrieved the order of the ld. CIT(A) the revenue is in appeal before us. 29. Aggrieved the order of the ld. CIT(A) the revenue is in appeal before us. Page | 12
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14
The ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the ld. Counsel for the assessee has relied on the order of theld CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that Puja and subscription expenses are incidental to the assessee`s business therefore should be allowed We note that there is no infirmity in the order of the ld. CIT(A) . That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the ground no. 5 raised by the revenue is dismissed.
Ground no. 6 raised by the revenue relates to addition of Rs. 76,977/- on account of disallowance u/s 14A read with Rule 8D of the Rules.
At the outset itself, the ld. Counsel for the assessee submitted that the issue raised by the revenue in ground no. 6 is no longer res integra. Since the assessee does not have any exempt income therefore no disallowance is warranted as held by the Hon’ble Delhi High Court in the case of Chem Investment vs CIT reported in 317 ITD 33 (Del) wherein it was held that if there is no exempt income earned or received by the assessee, no disallowance is warranted u/s 14A read with Rule 8D of the Rules. Since this issue is squarely covered by the Hon’ble Delhi High Court in the case of Chem Investment (supra) therefore, we dismiss the ground no. 6 raised by the revenue and upheld the order of ld CIT(A).
Before parting, it is noted that the order is being pronounced after 90 days of hearing. However, taking note of the extraordinary situation in the light of the Covid-19 pandemic and lockdown, the period of lockdown days need to be Page | 13
M/s Shradha Agencies Pvt. Ltd. ITA No.1362/Kol/2018 Assessment Year:2013-14 excluded. For coming to such a conclusion, we rely upon the decision of the Co- ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JCB Limited in ITA No. 6264/Mum/2018 and ITA No. 6103/Mum/2018 for A.Y. 2013-14 order dated 14.05.2020.
35.In the result, the appeal of the revenue is dismissed.
Order pronounced in the Court on 12.06.2020
Sd/- Sd/- (S.S.GODARA) (A.L.SAINI) �या�यकसद�य / JUDICIAL MEMBER लेखासद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक/ Date: 12/06/2020 (SB, Sr.PS)
Copy of the order forwarded to: 1. DCIT, Circle-13(2), Kolkata 2. M/s Shradha Agencies Pvt. Ltd. 3. C.I.T(A)- 4. C.I.T.- Kolkata. 5. CIT(DR), KolkataBenches, Kolkata. 6. Guard File.