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TMI Blog2007 (9) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... s expenses. The assessee did not file any reply in this regard. The AO, therefore, treated the fees for placement of preference shares as capital expenses because the same had been done for procuring an enduring benefit. Accordingly, the AO added the same to the income of the assessee. 4. On appeal, the. learned CIT(A) has held that since the expenditure of Rs. 4,75,000 was spent for arranging the funds for share capital. it was to be treated as capital expenditure as the capital raised gave enduring benefit to the assessee company. 5. Before us, the learned counsel for the assessee has submitted that impugned expenses were made for raising the funds by way of preference shares capital of which was ultimately used for the purpose of the business of the assessee. Such expenses are nothing but only in the nature of legal and professional expenses payable to merchant bankers for arranging these funds which had ultimately been used for the purpose of business of the assessee. The nature of the impugned disallowance cannot be said to be capital nature. Therefore, he has urged that the impugned addition may be deleted. A reliance in this regard has been placed upon the decisions in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the facts and submissions made. I have also verified the assessment records. I have perused the order-sheet entries in the assessment record. Order-sheet entry dt. 29th Dec., 2003 at sl. No. (z) clearly shows the details of foreign travel expenses for the year, were asked for by the AO. The AO had also asked how these expenses related to the business of the company. Then again, on 22nd Feb., 2004, the AO had asked for the same details, since obviously, the assessee had not produced the details even till then or for that matter even thereafter. Therefore, the assessee's contention is not correct that such details were not asked for. 10.6 However, I am unable to accept the AO's contention that such fresh evidences filed during the appellate stage cannot be entertained. When a matter regarding an allowability of an expense has to be decided, it is always fair and reasonable to go through the evidences so that whatsoever allowable is due to assessee should not be denied to the assessee, merely because the details were not produced earlier. In fact, the AO could have examined those details at the stage when remand report was called for. 10.7 The details are available at pp. 25, 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance of Rs. 31,381 out of ESI contribution. 12. Briefly stated, facts are that AO disallowed Rs. 36,337 being the employer's contributions to PF and ESI as the same were not made within the due date prescribed by statutes. 13. On appeal, learned CTT(A) has held thus: "Thus, after perusing the provisions of s. 43B r/w s. 36(1)(va), it is seen that every month's contribution is to be paid by 20th of the following month (including grace period). However, after seeing the details of payments made of the Unit-I, it is seen that all were made late. The ESI contribution for the month of December should have been paid by 20th Jan., 2001 (including grace period). Similarly, the ESI contribution for January, 2001 should have been paid by 20th Feb, 2001, EST contribution for the month of February should have been paid by 20th March, 2001 and ESI contribution for the month of March should have been paid by 20th April, 2001.In view of the above, the disallowance of EST contribution to the extent of Rs. 31,381 is sustained." 14. Before us, the learned counsel for the assessee has submitted that this issue is covered in favour of the assessee by the decision of Hon'ble jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the close of accounting period but before the due date of filing of the return of income for the asst. yr. 1997-93 are entitled to relief under s. 43B(b) of the IT Act, 1961. Learned counsel for the assessee has however pointed out that only decision of the Madras High Court in the case of CIT vs. Synergy Financial Exchange Ltd. (2006) 205 CIT (Mad) 481 : (2007) 288 ITR 366 (Mad) is against the assessee. Therefore, he urged that since there are two views on the issue the decision which is in favour of the assessee may be followed and the relief may be allowed to the assessee. On the other hand, the learned Departmental Representative has argued in support of the impugned order and has placed reliance on the decision in the case of Synergy Financial Exchange Ltd. 17. We have heard the parties and perused the record of the case. In view of the decision of jurisdictional High Court of Punjab and Haryana in the case of Avery Cycle Industries (P) Ltd. given also in relation to the payment of provident fund [which fall under s. 43B(b)] for asst. yr. 1987-88, we hold that since the payments have been made towards ESI before the due date for filing the return under s. 139(1) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax exceeds a specified amount. Sec. 209 of the Act provides for the manner of computation of advance tax. Similarly, s. 211 provides for the manner of payment of instalments and the due dates for such payments. 22. Sec. 115J provides that where total income of the assessee being a company is less than 30 per cent of the book profit, the total income of the assessee is chargeable for tax for the relevant previous year shall be an amount equal to 30 per cent of such book profits. Sub-s. (2) of s. 115JA provides that every assessee being a company, shall, for the purpose of this section prepares its P L a/c in accordance with the provisions of Part II and Part III of Sch. VI to Companies Act, 1956. In the Explanation to s. 115JA(2) it is provided that for the purpose of this section book profit means the net profit as shown in the P L a/c for the relevant previous year prepared under sub-s. (2) as increased and reduced by the amounts given in this section. Thus, for the purpose of assessing tax under s. 115JA, firstly, the profit as computed under the IT Act has to be prepared. Thereafter, the book profits as contemplated by the provisions of s. 115JA are to be determined, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the balance sheet is prepared because till then even the assessee may not know whether the provisions of s. 115J would be applicable or not. The liability would be after the book profits are determined in accordance with the Companies Act, The words-'for the purposes of this section' in the Explanation to s. 115J(IA) are relevant and cannot be construed to extend beyond the computation of liability of tax. Hence, interest cannot be charged under ss. 234B and 234C." 23. It may be mentioned that the decision of Karnataka High Court in the case of Kwality Biscuits Ltd. has been affirmed by the Hon'ble Supreme Court in the case of CIT vs. Kwality Biscuits Ltd. (2006) 205 CTR (SC) 122 : (2006) 284 ITR 434 (SC). Thus, the question before us is whether the rationale enunciated by the Hon'ble Karnataka High Court as has been affirmed by the Hon'ble Supreme Court in the aforesaid case would also govern the provisions of s. 115JA read with relevant advance tax provisions under the IT Act. We have also discussed in the foregoing paras the scheme of s. 115JA. We do not find it different from the provisions of s. 115J inasmuch as both the sections referred to (A) the book profit under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of the provisions of s. 143(1)(a). The Tribunal also accepted the other contention that even on the merits interest under ss. 234B and 234C could not be levied in cases where the taxable income was computed under s. 115JA. On further appeal by the Revenue to the High Court: Held, that the Tribunal was required to resolve the issue solely on the merits and could not have granted the relief on the ground that the issue was debatable. If the explanation of the assessee that the profits under s. 115J could only be determined after the close of the year were to be accepted, then no assessee who maintains regular books of account, would be liable to pay advance tax as in those cases also, income could only be determined after the close of the books of account at the end of the year. The Tribunal had wrongly equated the AO's action in levying interest under ss. 234B and 234C with an adjustment referred to in s. 143(1)(a). Thus, the tests applicable to examine the validity of adjustments permissible under s. 143(1)(a) had been wrongly applied by the Tribunal for quashing the levy of interest under ss. 234B and 234C." 24. In the case of Lumax Industries Ltd., Tribunal, Delhi Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er s. 115JA should have been ascertained only after the closing of the year and not earlier. Therefore, the reasoning which weighed with the Karnataka High Court while dealing with the s. 115J still holds the field in respect of the s. 115JA inasmuch as the scheme of taxation in both these sections remain the same. The insertion of sub-s. (4) seeks to make the other provisions of the Act applicable even in cases governed by s. 115JA. However, it cannot be construed to hold that the provisions of the Act which cannot be made operational in view of the scheme of taxation envisaged under s. 115JA would also be liable to be complied with by the assessee. If it were to be held so it would be an unworkable proposition once it is held that the assessee cannot anticipate its income for the purpose of advance tax before the end of the previous year, it cannot be penalized for levy of interest under ss. 234B and 234C. Therefore, in our view, the reasoning for non-charging of interest as has been laid down by the Karnataka High Court and since approved by the Supreme Court equally attracts s. 115JA. 27. It may be mentioned that the Tribunal, Delhi ('E' Bench), New Delhi, in Dy. CIT vs. M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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