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2021 (12) TMI 1165 - AT - Income TaxBelated payment of employee's contribution to PF invoking provisions of sec. 36(1)(va) - HELD THAT - We find merits in the submissions of the assessee, that the payment within grace should be allowed. Therefore, total amount to be allowed within grace period comes to ₹ 31,615/- ( ₹ 15,919 ₹ 15,696) which are paid by the assessee within the grace period, therefore, addition to the extent of ₹ 31,615/- is hereby deleted and we direct the assessing officer to make the disallowance of the balance amount of ₹ 35,496/- (₹ 67,111- ₹ 31,615). Thus, ground no.1 raised by the assessee is partly allowed. TDS u/s 194C - non-deduction of TDS from payment of labour charges - assessee submitted before us that amendment in section 40(a)(ia) of the Act is retrospective in nature therefore disallowance under section 40(a) (ia) should be restricted to 30% of the impugned amount - HELD THAT - We note that in subsequent judgment of the Hon'ble Supreme Court in the case of Shree Chaudhury Transport Company 2020 (8) TMI 23 - SUPREME COURT held that amendment in section 40(a)(ia) of the Act is prospective in nature - Issue clearly in the affirmative i.e., against the assessee and in favour of the revenue that the payments in question have rightly been disallowed from deduction while computing the total income of the assessee-assessee. Disallowance of interest expenditure u/s 36(1)(iii) - HELD THAT - As considering all these facts it is crystal clear that assessee has given interest free loan to Mr. Ajay Shah of ₹ 3,00,000/-, out of its interest free funds, therefore addition should not be made. Accordingly, the addition made by A.O. to the tune of ₹ 36,000/- is deleted. Addition u/s 68 - HELD THAT - We note that assessee had furnished the details which would discharge the onus which lay on the assessee. It is not the case of the revenue that the partners of the assessee firm are fictitious. Therefore, addition sustained by ld CIT(A) is hereby deleted.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Disallowance of ?67,111/- for belated payment of employee’s contribution to PF under section 36(1)(va) of the Act. 3. Disallowance of ?7,93,836/- for non-deduction of TDS from labor charges under section 194C of the Act. 4. Disallowance of interest expenses of ?36,000/- under section 36(1)(iii) of the Act. 5. Partly confirming addition of ?12,01,595/- out of total addition of ?1,59,89,202/- as unexplained credit under section 68 of the Act. 6. Levy of interest under sections 234A, 234B, 234C, and 234D of the Act. 7. Initiation of penalty proceedings under section 271(1)(c) of the Act. Detailed Analysis: 1. Condonation of Delay: The appeal filed by the assessee for AY 2010-11 was barred by a delay of twenty-six days. The assessee moved a petition for condonation of delay, which was granted by the tribunal after considering the reasons provided. 2. Disallowance of ?67,111/- for Belated Payment of Employee’s Contribution to PF: The Assessing Officer (AO) disallowed ?67,111/- for the belated payment of employee’s contribution to PF, citing section 36(1)(va) of the Act. The CIT(A) confirmed this disallowance. Upon appeal, the tribunal noted that payments for August 2009 and March 2010, amounting to ?31,615/-, were made within the grace period and should be allowed. The tribunal directed the AO to disallow only the balance amount of ?35,496/-. Thus, this ground was partly allowed. 3. Disallowance of ?7,93,836/- for Non-Deduction of TDS from Labor Charges: The AO disallowed ?9,52,564/- for non-deduction of TDS under section 194C. The CIT(A) partly deleted the addition, confirming ?7,93,836/-. The assessee argued that only 30% of the payment should be disallowed as per the amended provisions of the Finance Act, 2014. However, the tribunal, following the Supreme Court’s decision in Shree Chaudhury Transport Company, held that the amendment is prospective and dismissed the ground, confirming the disallowance of ?7,93,836/-. 4. Disallowance of Interest Expenses of ?36,000/-: The AO disallowed ?36,000/- as interest expenses under section 36(1)(iii), based on the opening balance of ?3,00,000/- given as an interest-free loan to Mr. Ajay Shah. The tribunal found that the loan was given out of interest-free funds and deleted the addition, allowing the ground in favor of the assessee. 5. Addition of ?12,01,595/- as Unexplained Credit under Section 68: The AO made an addition of ?1,59,89,020/- as unexplained credit under section 68. The CIT(A) partly deleted the addition, confirming ?12,01,595/-. The tribunal noted that the assessee had established the genuineness and creditworthiness of the transactions with the partner and deleted the sustained addition of ?12,01,595/-, allowing the ground in favor of the assessee. 6. Levy of Interest under Sections 234A, 234B, 234C, and 234D: The tribunal did not provide a specific ruling on this ground in the judgment. 7. Initiation of Penalty Proceedings under Section 271(1)(c): The tribunal did not provide a specific ruling on this ground in the judgment. Conclusion: The appeal was partly allowed, with the tribunal granting partial relief on the disallowance of PF payments and deleting the addition under section 68, while confirming the disallowance for non-deduction of TDS and the interest expenses.
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