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TMI Blog2018 (5) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. AO during the course of assessment proceedings has not brought anything on record pointing out any defect in such documents. In this regard, DR has also not brought anything on record contrary to the finding of Ld. CIT(A). - Decided against revenue Addition under the provision of Section 14A r.w.r 8D - sufficiency of own funds - Held that:- There is no ambiguity with regard to own fund available with the assessee. In such facts and circumstances a presumption can be drawn that investment has been made out of own fund of assessee. Therefore no disallowance on account of interest expense should be made under Rule 8D(2)(ii) of IT Rules. See Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] - no disallowance of interest expense claimed by the assessee can be made under the provision of Section14A of the Act r.w.r. 8D - Decided in favour of assessee Addition on account of contribution to the employees P.F. - assessee failed to deposit the employee’s contribution within the due date specified under the Provident Fund Act - Held that:- From the assessment order we find that all the payment of employees contribution were made before the due date of fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 (hereinafter referred to as the Act ) vide his order dated 10.02.2016 for assessment year 2013-14. The Revenue has raised the following grounds:- i. That on the facts of the case Ld. CIT(A) has erred in deleting the addition of ₹ 2,50,938/- on a wrong appreciation of facts ignoring the provisions of section 37(1) overrule the judicial pronouncement of CIT vs. Calcutta Agency Limited (1951) (191) ITR (SC) ii. That on the facts and circumstances of the case Ld. CIT(A) has erred in deleting the addition of ₹ 13,91,404/- on a wrong appreciation of facts ignoring the provisions of section 37 of the IT Act, 1961. iii. That on the facts of the case Ld. CIT(A) has erred in deleting the addition of ₹ 20,25,329/- on wrong appreciation of facts ignoring the provision of section 14 read with rule 8D and overrule the judicial pronouncement of the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg Co. Ltd. vs. DCIT, Range 10(2), Mumbai (2010) 194 taxman 203 Bombay. iv. That on the facts of the case Ld. CIT(A) has erred in deleting the addition of ₹ 58,121/- on wrong appreciation of facts ignoring the provision of section 2(24) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense can be disallowed on the basis of estimation. Ld. CIT(A) after considering the submissions of assessee deleted the addition made by the AO by observing as under:- 4.2 I have considered the submission of the appellant in light of the assessment order by the AO to make the impugned disallowance. The accounts of the appellant are audited and subject to Tax Audit u/s. 44AB of the Act and there is no adverse remark by the AO in respect of the claim of the expenses. The turnover of the appellant during the year was ₹ 74,62,58,745/- trading in chemicals against which it has declared income of ₹ 1,99,28,630/- and paid tax of ₹ 86,17,933/-. The expenses on staff tea, water, snacks expenses cannot be expected to be supported with external vouchers. The genesis of such expenditure is mainly by cash through slips and internal vouchers. The quantum of the expenditure in comparison to the business is meager and an important ingredient of a business. Similar of expenses have been incurred in the previous year s and therefore the expenses were part and parcel of the business. In view of the overall facts and circumstances of the case the addition made by the AO was unca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. Ld. CIT(A) after considering the submissions of assessee deleted the addition made by AO by observing as under:- 5.2 I have considered the submissions of the appellant in light of the assessment order by the AO to make the impugned disallowance. The accounts of the appellant are audited and subject to Tax Audit u/s. 44AB of the Act and there is no adverse remark by the AO in respect of the claim of the foreign travel expenses. The turnover of the appellant during the year was ₹ 74,62,58,745/- trading in chemicals against which they have declare income of ₹ 1,99,28,630/- and paid tax of ₹ 86,17,933/-. The business of the appellant is trading in chemicals for which the majority of the materials purchased are imported. The appellant had furnished before the AO details of foreign travel along with breakup of the travel and purpose of visit and the persons who have visited. From the details it is seen that the total expenditure incurred by the appellant was of ₹ 13,91,404/- on foreign tour and travels visited by the Directors and Employees for Exhibitions, sales meetings with suppliers, trade related shows. The expenses in comparison to the previous yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for ₹ 20,25,329/- under the provision of Section 14A r.w.r 8D of the Income Tax Rule, 1962. 13. The assessee during the year has earned dividend income of ₹ 9,54,295/- and Long Term Capital Gains (LTCG) of ₹ 44,33,565/- which was claimed as exempted from the payment of tax. The assessee has also disallowed the expenses as per the Rule 8D of IT Rules, 1962 as detailed under:- Sl. No. Section Particulars Amount 1 Rule 8D(2)((i) Direct expense 17,076 2 Rule 8D(2)(ii) Interest expense Nil 3 Rule 8D(2)(iii) Administrative expense 2,91,508 However, AO was of the view that the assessee has claimed interest expenses in its profit and loss account but no disallowance on account of interest has been made under Rule 8D(2)(ii) of IT Rules. Accordingly, AO made the disallowance of ₹ 22,47,060/- under Rule 8D(2)(ii) of IT Rules, 1962 and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 3,47,64,653). The appellant in the computation of income has sum- moto added back an amount of ₹ 2,91,508/- which is more than the calculation made hereinabove and therefore the disallowance made by the appellant in the return shall be considered as the expenses in relation to earning of exempt income u/s 14A of the Act. In view of the foregone discussion the disallowance made by the AO u/s 14A at ₹ 22,64,136/- is deleted. The disallowance u/s. 14A in relation to the calculation of MAT u/s. 115JB shall be restricted to ₹ 2,91,508/-. This ground of the appellant is partly allowed. The Revenue, being aggrieved by this order of Ld. CIT(A) is in appeal before us. 15. Before us Ld. DR for the Revenue has relied on the order of AO whereas Ld. AR for the assessee before us submitted that none of the loan take by assessee has been used for the purpose of investment. Ld. AR for the assessee in support of assessee s claim drew our attention on pages 103 and 104 of the paper book wherein the details of loan and interest paid thereon were placed. As per the Ld. AR the interest have been paid on the car loan, term loan and interest on buyers credit and simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of ₹ 58,121/- and added to the total income of assessee. 19. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that amount of employees PF has been deposited within the financial year and before filing of Income Tax Return as specified u/s 139 of the Act. The Ld. CIT(A) after considering the submission of assessee deleted the addition made by the AO by observing as under:- 7.2 I have considered the submission of the appellant in light of the assessment order by the AO to make the impugned disallowance. The issue is covered in favour of the assessee by the decision of the jurisdictional Calcutta High Court in the case of CIT v. Shree Vijayshree Ltd. in ITA No.245 of 2011 wherein the Calcutta High Curt has allowed the contribution to be deposited before the d date of filing of return. Respectfully following the decision of the Hon'ble Calcutta High Court the disallowance made by the AO on account of contribution to employees provident fund for ₹ 58,181/- stands deleted. This ground of appeal is disposed off as allowed. The Revenue, being aggrieved by this order of Ld. CIT(A) is in appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India have been made without deducting TDS u/s 195 of the Act. The necessary details of the interest expense stands as under:- Nature of payment Amount TDS Currency Country Interest payment 85076.34 0 US dollar Singapore Interest payment 70123.37 0 US dollar Japan Interest payment 64508.51 0 US dollar Singapore Interest payment 114080.62 0 US dollar Hong Kong The AO also observed that the interest payments in respect of certain parties based in US, UK and Thailand and Singapore were made after deduction of TDS u/s 195 of the Act. However, assessee contended that there was no TDS liability on the part of the assessee on the payment of above interest expenses. However the AO disregard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form 15CA/15CB has certified that the impugned interest expenses are not subject to TDS. Ld. AR in support of assessee s claim filed copy of 15CA/15CB which are placed on pages 106 to 123 of the paper book and he relied on the order of Ld. CIT(A). 26. We have heard rival contentions of both the parties and perused the material available on record. In the present case, the AO has observed that assessee has not deducted TDS on payment of interest to the parties who are residing outside India. As per the Assessing Officer, assessee was liable for deduction of TDS as per certificate in Form 15CA/15CB issued by CA. However, LD. CIT reversed the order of AO by observing that assessee was not liable for deduction of TDS u/s 195 / 194A of the Act and this fact was certified by the CA in certificate issued in Form 15CA/15C. From the foregoing discussion, we observe that Assessing Officer misunderstood the certificate issued in Form 15CA. As per Form 15CA the assessee was not liable for the deduction of TDS on the expense of interest. The AO has not brought anything on record suggesting that assessee has incurred expenses without the deduction of TDS as per the provision of the Act. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l types of expense. There are many expenses on which no tax is required to be deducted. The nature of the expenses does not constitute commission or interest and as correctly pointed by the appellant s AR, these charges are for easing of the process of loan taking. Therefore, there is no liability for tax deduction at source on account of payment of processing fees and consequentially the expenses cannot be added back u/s. 40(a)(ia) of the Act. I find that the AO's action on the matter is based on a misplaced conception which ultimately does not warrant any sustenance at the appellate stage. Consequently, thus ground of appeal is disposed off as allowed. The Revenue, being aggrieved, is in appeal before us. 30. Before us both parties relied on the order of Authorities Below as favourable to them. 31. We have heard the rival contentions of both the parties and perused the material available on record. At this juncture, we find important to reproduce the Section 2(28A) of the Act. The relevant provision is reproduced below:- (28A) interest 52a means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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