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TMI Blog2019 (2) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the input out consumption ratio. In our view, the Assessing Officer and the Commissioner of Income-tax (Appeals) have gone on different directions. - Decided against revenue. Claim of deduction u/s 10B - HELD THAT:- There is no ambiguity about the eligibility of deduction claimed by the assessee u/s 10B . Thus, if any disallowance is made in respect of the unit eligible for deduction u/s 10B of the Act, then the assessee will be entitled todeduction on the amount of profit enhanced by such disallowance - Circular No.37 of 2016 issued by CBDT dated 02.11.2016 stated disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowance - Decided against revenue. Addition u/s 36(1)(va) r.w.s 2(24)(x) on account of alleged late payment of employees' contribution towards provident fund, ESI, etc. - HELD THAT:- AR before us has submitted that the due date for depositing the employee’s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the manufacturing business of Pharmaceuticals and Fine Chemicals. The AO during the assessment proceeding observed the certain difference between the actual consumption of raw material vis- vis standard consumption prescribed under the Exim Input-Output Norms (Duty Exemption Schemes) 2002-2008. On the question by the AO about the difference as discussed above, the assessee vide reply dated 28.12.2012 submitted as under: 1. Statement showing consumption of raw-materials as per our books of Accounts viz-a-viz as per the input output norms. As required by you, we have worked out the consumption of raw material for each item of our finished goods as per our books of accounts and that as per the input output norms of Ministry of Commerce. Govt. of India. Please note that during the year under review, we had produced and sold the following finished goods. a. Chlorexdine Acetate b. Ghlorexdine Base c. Chlorexdine Gluconate 20% Solution d. Chlorexdine Hydro Chloride e.Progunail HCL f. Flupirtine Maleate Out of the above products, the Ministry of Commerce has fixed norms in respect of first four products only. The two remaining products namely, Progunail H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption of raw material of ₹ 69,55,191/- which was treated as inflated purchases made by the assessee. Thus, the AO made the addition of ₹ 2,40,33,059/- to the total income of the assessee for undisclosed investment and inflated purchases. 5. Aggrieved, assessee preferred an appeal to Ld.CIT(A) who has deleted the addition made by the AO. Being aggrieved by the order of Ld. CIT(A) assessee is in appeal before us. 6. The Ld. AR before us submitted that in the identical facts and circumstances in the own case of the assessee in ITA No.954 1229/Ahd/2012 pertaining to the A.Y. 2007-08 deleted the addition made by the AO. 6.1 The Ld. AR also submitted that the order passed by the Hon ble ITAT was subsequently confirmed by the Hon ble Gujarat High Court pertaining to the A.Y. 2002-03 in Tax Appeal No.1182 of 2008 vide order dated 12.08.2016. 7. On the other hand Ld. DR vehemently supported the order of authorities below. 8. We have heard the rival contention and perused the materials available on record. At the outset, we note that the identical issue was decided by this tribunal in the case of the assessee in ITA 1229/AHD/2012 for the AY 2007-08 vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-06 and in para 9 in assessment year 2006-07. Basically, the Tribunal has followed order passed in the assessment year 2003-04 and 2005-06 on this issue and confirmed the order of the ld.CIT(A). Considering the similarity of the issue, we do not find any error in the order of the ld.CIT(A). This ground of appeal of the Revenue is rejected. 8.1 We further find that the Hon ble Gujarat High Court in the case of the assessee has also decided the issue in its favor in Tax Appeal No.1182 of 2008 pertaining to the A.Y. 2002-03 vide order dated 12.08.2016. The relevant extract of the order is reproduced below: 7. We have heard learned counsel for the parties. In view of the observations made by the Tribunal, we are of theopinion, that the assessee was manufacturing pharmaceutical, medicines, which are being exported. The assessee was maintaining the norms which are prescribed by the Government of India for a particular pharmaceutical medicine which is to be exported. Since there was a variation in the ratio, the Assessing Officer made addition based on the statement of the General Manager, in-charge production. In our view, the Assessing Officer has based his addition on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessing officer has objected to admission of this additional ground by citing decision of Supreme Court in CIT vs Goetz India Ltd 157 taxmann 1(SC). 1 am of the view that the additional ground can be admitted in appeal proceedings based on decision of Supreme Court in the case of NTPC Ltd 229 ITR 383 (SC), especially when all the relevant material is already available on record. This ground of appeal is therefore the admitted. From the working of section 10B, it is seen that out of the total Forex loss of ₹ 2850411, an amount of ₹ 2780464 was claimed against EOU and since this is disallowed the assessee is deduction under section 10 B will increase by amount of ₹ 2780464 and balance addition of ₹ 69947 is hereby confirmed. Thus this ground is partly allowed. Being aggrieved by the order ofthe Ld.CIT(A) both the Revenue and assessee are before us. 12. The Revenue is in appeal before us against enhancement of exemption allowed by the Ld. CIT(A) on account of losses in the foreign currency loan whereas the assessee is in appeal against the order of Ld.CIT(A) wherein the impugned loss was treated as capital in nature. First, we take up Revenue s grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal in his Cross Objection: 1. The learned CIT(A) has erred in law and on facts of the case in confirming the action of AO in disallowing ₹ 43,689/- u/s 36(1)(va) r.w.s 2(24)(x) on account of alleged late payment of employees' contribution towards provident fund, ESI, etc. Under the facts and circumstances of the case, no such disallowance is required to be made. 2. The learned CIT(A) has erred in law and on facts of the case in confirming the action of AO in making disallowance of ₹ 28,50,411/- in respect of forex loss by holding the same to be capital in nature. Under the facts and circumstances of the case, no such addition is required to be made. 3. Alternatively and without prejudice to above, ld. CIT(A) has erred in law and on facts of the case in not granting depreciation on enhanced cost of acquisition on account of adding foreign exchange fluctuation loss of ₹ 28,50,411/- to the cost of assets. 4. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s 234A/B/C of the Act. 5. The learned CIT(A) has erred in law and on facts of the case in confirming action of Id. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have paid above employees' PF/ESI contributions on 22.05.2009 and 28.05.2009 as against the due dates thereof following on 20.06.2009. The Revenue fails to dispute this factual position. We therefore quote this tribunal's co-ordinate bench decision in Kanoi paper Industries Ltd. vs. ACIT 75 TTJ 448 that the relevant date in such case is that of month of the actual payment of wages/salaries. We therefore rely on the above co-ordinate bench decision and direct the Assessing Officer to delete the impugned disallowance as well. 4. In effect thus while any delayed deposit of PF/ESI is to be disallowed, in terms of Hon'ble Gujarat High Court's judgment in the case of Gujarat State Road Transport Corporation (supra), the question as to whether there is a delay or not may be decided by the Assessing Officer in the light of above observations by the coordinate bench. The assessee will get relief, if found admissible, on that basis. 5. In the result, appeals of the assessee are allowed for statistical purposes. In view of the above, the Ld. AR of the assessee before us submitted that the matter should be restored to the file of AO for fresh adjudication in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his employees to which provisions of subclause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees' account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1)(va).Consequently, it is held that the learned tribunal has erred in deleting respective disallowances being employees' contribution to PF Account / ESI Account made by the AO as, as such, such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employees' account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act. However, the Ld. AR before us has submitted that the due date for depositing the employee s contribution towards PF/ESI should be seen from the date of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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