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2017 (12) TMI 186 - AT - Income TaxDisallowance being belated remittances of employees contribution towards ESI and PF - Held that - Employees contribution to ESI & PF remitted prior to due date of filing of the return, had to be allowed. See CIT vs. M/s. Industrial Security & Intelligence India Pvt. Ltd 2015 (7) TMI 1063 - MADRAS HIGH COURT - Decided in favour of assessee. Addition u/s.14A r.w.r.8D - Held that - It is not disputed by the Revenue that assessee had not claimed any exempt income in the impugned assessment year. Accordingly, we are of the opinion that there could be no disallowance when there is no exempt income. As such disallowance stands dismissed - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Disallowance of belated remittances of employees' contribution towards ESI and PF. 3. Addition under Section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The assessee filed the appeal with a delay of forty-eight days. A condonation petition was submitted, and the reason for the delay was deemed justified. The Departmental Representative did not raise any serious objection. Consequently, the delay was condoned, and the appeal was admitted. 2. Disallowance of Belated Remittances of Employees' Contribution towards ESI and PF: The grievance raised by the assessee was the disallowance of ?2,43,182/- due to belated remittances of employees' contribution towards ESI and PF. The assessee's counsel cited the judgment of the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security & Intelligence India Pvt. Ltd., which held that employees' contributions to ESI and PF remitted before the due date of filing the return should be allowed. The Departmental Representative referred to Circular No.22/2015 by the Central Board of Direct Taxes. However, it was undisputed that the assessee had made the payment before the due date of filing the return. The tribunal relied on the precedent set by the High Court, which referenced the Supreme Court's decision in CIT V. Alom Extrusions Ltd. and the Delhi High Court's decision in CIT V. Amil Ltd., both supporting the allowance of such contributions if paid before the return filing due date. Consequently, the tribunal allowed the claim of the assessee, and Ground No.2 was allowed. 3. Addition under Section 14A read with Rule 8D: The assessee contested the addition of ?14,22,288/- made under Section 14A read with Rule 8D. The counsel for the assessee argued that no exempt income was claimed during the relevant previous year, citing the jurisdictional High Court's judgment in Redington India Ltd vs. Addl. CIT, which stated that no disallowance under Section 14A could be made when no exempt income was claimed. The Departmental Representative relied on Circular No.5/2014. The tribunal noted that it was undisputed that the assessee had not claimed any exempt income. The tribunal referred to the High Court's detailed analysis in Redington India Ltd, which concluded that Section 14A read with Rule 8D could not be applied in the absence of exempt income. The tribunal thus dismissed the disallowance, and Grounds 3 to 5 were allowed. Conclusion: In the result, the appeal of the assessee was allowed. The order was pronounced on Tuesday, the 28th day of November, 2017, at Chennai.
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