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TMI Blog2017 (7) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... the exempt income, the interest on debentures is fully taxable under the Act and as such provisions contained u/s 14A (2) of the Act are not applicable qua investment made in the optionally fully convertible debentures, it is tenable for the reason that when interest receivable on debentures does not fall in the category of exempt income, no addition on account of disallowance of interest as claimed u/s 36(1)(iii) of the Act can be made. So, again, we find no illegality or perversity in deleting the addition made by the AO on account of disallowance of interest claimed u/s 36(1)(iii) of the Act by the CIT (A) - Decided against revenue - ITA No.3985/Del./2013 And ITA No.3987/Del./2013 - - - Dated:- 9-3-2017 - SHRI KULDIP SINGH, JUDICIAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the CIT(A) has erred in deleting the addition of ₹ 2,36,825/- made by the Assessing Officer on account of expenditure in lieu of exempt income as per provisions of section 14A, of Income tax Act, 1961 r.w. Rule 80 of the Income tax Rules, 1962. 4. The order of the CIT(A) is erroneous and is not tenable on facts and in law. ASSESSMENT YEAR 2005-06 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 23,52,291/- made by the Assessing Officer on account of late deposit of employee's contribution towards provident fund in view of the provisions of section 2(24)(x) read with section 36(1)( va) of the Income tax Act, 1961. 2. On the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(24)(10) of the Act regarding payment of provident fund and Employees State Insurance (ESI) within specified date and there is a delay in the payment of contribution towards PF for many months. Since the assessee failed to deposit the PF within a stipulated period, the amount of ₹ 37,53,212/- for AY 2003-04 and ₹ 23,52,291/- for AY 2005-06 is treated as income of the assessee and as such, was not allowed deduction u/s 36(1)(v)(a) and thereby made addition thereof to the income of the assessee. 5. AO also noticed that delay in payment of ESIC and treated the same as income of the assessee to the tune of ₹ 1,81,159/- for AY 2003-04 and ₹ 6,13,143/- for AY 2005-06 u/s 36(1)(v)(a) of the Act and made addition thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of filing of the return of income u/s 139(1) of the Act. 10. In the backdrop of the aforesaid undisputed facts and orders passed by the lower authorities, the first question arises for determination in both the appeals is :- as to whether non-deposit of employees contribution towards provident fund and ESI on due date of deposit as provided under the law but deposited before filing the return is allowable expenditure? 11. Issue in controversy has already been set at rest by the Hon ble jurisdictional High Court in cases cited as CIT vs. AIMIL Limited 321 ITR 508 (Del.) and CIT vs. Pamwi Tissues Ltd. 313 ITR 137 (Bom.) by deciding in favour of the assessee. The ratio of the judgment in case of CIT vs. AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn. So, grounds no.1 2 are determined against the Revenue. GROUNDS NO.3 4 13. AO by invoking the provisions contained under Rule 8D of the Rules disallowed the proportionate interest u/s 14A (2) of the Act on the purchase of optionally fully convertible debentures of ₹ 100 each of M/s. Microwave Communications Ltd. for ₹ 4,73,56,000/- for AY 2003-04 and ₹ 4,73,56,000/- for AY 2005-06. But the ld. CIT (A) deleted the disallowance made by the AO u/s 14A(2) of the Act. 14. Ld. AR for the assessee contended that since the assessee has not incurred any expenditure to earn the exempt income, the interest on debentures is fully taxable under the Act and as such provisions contained u/s 14A (2) of the Act are no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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