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TMI Blog2018 (1) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. "The C.I.T.(Appeals) erred in confirming the addition of Rs. 1,89,212/- u/s.36(1)(va) of I.T. Act, 1961 being the payment to employees' contribution to P.F. and ESIC though the said payment was made before the due date of filing of return. 2. The C.I.T.(Appeals) erred in confirming the addition of Rs. 36,934/- u/s.40(a)(ia) of the I.T. Act, 1961 being payment of consulting service made to BSI Management System (I) Pvt. Ltd. 3. The C.I.T.(Appeals) grossly erred in confirming the addition of Rs. 1,89,755/- out of total addition of Rs. 3,78,275/- by Assessing Officer U/s.14A of the Act being the alleged disallowance of interest as per rule 8D(2)(ii) u/s.14A of the Act. 4. The C.I.T.(Appeals) erred in confirming the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. In this regard, the assessee has submitted that it has paid the said amount till the due date of filing the return and therefore not liable as Income u/s.36(va) of the act. In the return of Income, the assessee company has not made addition of the said sum to returned Income relying upon the decision of CIT vs. AIMIL Limited (Delhi High Court) which is reported by the tax auditor of the at Annexure-E of the Tax audit report. However ignoring the submission made by the assessee, the Ld.AO has made addition of Rs. 1,89,212/- merely on the ground that the said sum was not deposited within the time limit allowed as per the provision of Provident fund and Misc. Provision Act,1952. 5.1 We have heard rival submission, this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 6. So far as Ground No.2 regarding disallowance u/s.40(a)(ia) of the Act, 1961 being payment of consulting service made to BSI management System (I) Pvt. Ltd. is concerned. During the assessment proceedings, the appellant was asked as to why TDS as per the provision of section 194J is not deducted on payment of Rs. 36,934/- to BSI Management System (I) Pvt Ltd. In this regard, the assessee submitted that from the copy of Invoice of BSI Management System (I) Pvt Ltd attached with the submission, it is seen that the payment of Rs. 36,934/- to BSI Management Systems Pvt Ltd includes re-imbursement towards travelling expenses of Rs. 6,934/- which separately shown in the invoice. Further, as the payment of professional fees to the said par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made by the assessee and interest free funds and disallowed Rs. 5,26,100/- u/s.14A r.w.s 8D of the act being expenses incurred in relation to income not forming part of total income. In appeal ld. CIT(A) reduced the addition of Rs. 1,89,755/-. 7.1 We can see the total interest free funds available with the company is Rs. 559.95 lacs i.e. share capital Rs. 6.00 lacs and Free reserve Rs. 553.95 lacs whereas investment made in shares and Mutual Funds put together is Rs. 524.32 lacs and therefore it is crystal clear that no interest bearing funds has been diverted in making investment in mutual fund and therefore no part of interest expenses be disallowed u/s.14A of the Act. Ld. AR cited a judgment in the case of reliance utilities and power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings was requested to show-cause as to why the provisions of section 14A read with rule 8D of Income Tax Rule, 1962 should not be applied in its case. In response to said notice, assessee's reply as under: "During the assessment proceedings with the reply of AIR on investment made with various mutual funds together with copy of the bank statement filed with reply dated 28th August, 2014, So far the source of such investment is concerned, it is to state that the assessee company has sufficient free reserve and capital to make investment in mutual funds which can be seen from the statement of source filed herewith. Further on the facts stated above, it is submitted that no part of Interest claimed as business expenditure is to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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