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TMI Blog2020 (6) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... osit has not been made from surplus funds or it has been made from the own funds which were kept for marketing assistance not immediately disposable in the form of marketing assistance to craftsmen and are also not available for otherwise use by the assessee, the AO is directed to give the benefit of deduction u/s.80P(2)(d) to the assessee. Needless to say, the assessee shall be given reasonable opportunity of hearing - Decided in favour of assessee for statistical purposes. Disallowance of ESI EPF contributions - assessee has not deposited the contribution of EPF and ESI within the due date - HELD THAT:- We found substance in the submissions of the ld. DR that Section 36(1)(va) of the Act deals with the deduction in respect of the sum received by the assessee from any of his employees to which the provisions of sub-section 2(24)(x) of the Act applies, provided such sum is credited by the assessee to the employee s account in relevant fund on or before the due date. The due date is defined under the Explanation to section 36(1)(va) of the Act by stating that the due date referred under the relevant Act and certainly not the due date for filing the return. This very similar issue ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - Shri C.M. Garg, JM And Shri L.P. Sahu, AM For the Assessee : None For the Revenue : Shri M.K.Goutam, CIT-DR ORDER PER L.P.SAHU, AM : These two appeals have been filed by the assessee against the order of CIT(A)-2, Bhubaneswar dated 18.09.2017 and 04.06.2018, for the assessment years 2014-2015 2015-2016, respectively. 2. Since the facts and issue involved in both the appeals are common, therefore, for the sake of convenience and brevity, both the appeals are heard together and decided by this consolidated order. 3. None appeared on behalf of the assessee even the case was called for second round of hearing. Therefore, we proceeded to dispose off the appeal of the assessee after considering the submissions of ld.DR and the material evidence available on record. 4. The grounds taken by the assessee for the assessment year 2014-2015 in ITA No.392/CTK/2018 are as under :- 1. For that, the order of the forum below is arbitrary, illegal, unjustified and erroneous and has been passed on improper application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve intentions. 4. For that, the addition of ₹ 1,13,818/- to the total income by 10% adhoc estimated disallowance of operative expenditures claimed, on pretext of on pretext of further verification non maintenance of proper bills vouchers deserves to be deleted on the ground that the expenditure having intrinsic and inseggregable nexus with the work undertaken being solely for the business has to be allowed. 5. For that, the addition of ₹ 1,15,770/- to the total deserves to be deleted on the ground that, not only it is unjustified on the facts and in the circumstances of the case as contrary to legislative intentions but also, unwarranted as per the statutory provisions. 6. For that, the appellant craves leave to add/alter/amend further grounds, if any, at the time of hearing of appeal. 6. Brief facts of the case are that the assessee is a cooperative society engaged in promotion of handicrafts and handloom of Odisha and filed its return of income for the assessment year 2014-2015 on 18.09.2014 declaring total income at ₹ 3,84,660/-. Similarly the assessee filed its return of income electronically for the assessment year 2015-2016 on 24.09.2015 declaring total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further it was noticed that the surplus funds were parked in the Odisha State Cooperative Bank Limited. He concluded that the Odisha State Cooperative Bank Limited is a urban commercial bank and does not fall under the purview of the cooperative society as referred in Section 80(P)(2)(d) of the Act. Therefore, the AO disallowed the deduction claimed u/s.80(P)(2)(d) of the Act of ₹ 24,73,866/- and added the same to the total income of the assessee after relying on the decisions of ITAT Mumbai Bench in the case of Bandra Shiv Samrudhi CHS Ltd. passed in ITA No.1073/M/2012 and the decision of Hon ble Supreme Court n the case of Totger s Co-operative sale Society Limited Vs. ITO 322 ITR 283(SC). 7. Further, it was noticed by the AO that the assessee had not deposited the amount of contribution towards ESI and EPF account, which was gathered from the audit report as per Annexure-IV. Therefore, he applying the provisions of Section 2(24)(x) and 36(1)(va) of the Act along with Section 43B of the Act and relying on the case laws as noted at page 7 of the assessment order, disallowed the claim of ₹ 67,720/- and added the same to the total income of the assessee because these p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the funds either by lending the same to others or by making various investments. Indeed, in the case of banks, it is compulsory to place some of the funds in securities. The question that would then arise would be whether the interest income is not also a part of the banking activity. If it is, then notwithstanding the fact that the charge of income-tax is under the head Interest on securities , the income would be from banking and not from mere investment. In the present case, the assessee claimed that it has funds which it derived from business and which are used only in business and for no other purpose. If they are spare funds, then they are deposited in banks and, hence, it is clear that this income is also business income. To repeat what was said earlier, the company has not come from Italy to make bank deposits in India but has come to carry on business. If at any time it has spare funds it prefers not to keep the same idle but makes deposits in banks which give some income. This also is, therefore, business income, and for the purpose of set-off has not to be treated as separate from business income. As a matter of fact the amounts kept in Fixed Deposit are mostly grant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from other sources. Where a particular transaction is not in the ordinary course or line of business of the assessee, but is an isolated or single instance of a transaction, the onus to prove that the transaction is an adventures in the nature of trade is on the department- Saroj Kumar Mazumdar v. CIT (1959)37 ITR 242,248 (SC) Dalmia Cement Ltd v. CIT (1976)105 ITR 633, 640 (SC) Commrs. of Inl. Rev. v. Reinhold (1953)34 Tax Cas. 389,393 In the instant case Ld. A.O had failed to make out any case to prove the interest income considered by the assessee as business income to be not a business income. Therefore the treatment of interest income as income from other sources by Ld A.O is only out of presumption and not tenable. ADHOC DISALLOWANCE OF EXPENSES ₹ 1,13,818/-: THE ASSESSEE HAD INCURRED ₹ 5,71,059/- packing material, ₹ 3,03,608/- as miscellaneous expenses, and ₹ 2,63,513 under printing and stationery. The ld Assessing Officer also had not verified the details given by the assessee and also she sought the information on the last week of October 2017 and completed the assessment on 10/11/2017 hurriedly, ft is difficult to provide the full particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible recipients and which has not been distributed till the date and kept as fixed deposit out of loan funds. Therefore, this matter is sent back to the file of AO to determine as to whether the assessee had actual surplus funds which has been made as fixed deposit. The AO is also directed to examine the source of fixed deposit. If it is found that the fixed deposit has not been made from surplus funds or it has been made from the own funds which were kept for marketing assistance not immediately disposable in the form of marketing assistance to craftsmen and are also not available for otherwise use by the assessee, the AO is directed to give the benefit of deduction u/s.80P(2)(d) of the Act to the assessee. Needless to say, the assessee shall be given reasonable opportunity of hearing. The assessee is also directed to cooperate with the AO for early disposal of the case. This ground of appeal of the assessee is allowed for statistical purposes. 13. With regard to disallowance of ESI EPF contributions, we find that the ld. DR before us relied on the decision of Hon ble Delhi High Court in the case of Bharat Hotel Ltd. (supra) and submitted that this issue should be restored to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed for statistical purposes. 17. With regard addition made on adhoc basis, we find that during the course of assessment proceedings, the AO noticed that the assessee has incurred expenses under different heads i.e. packing materials, miscellaneous expenses and printing and statutory expenses but the assessee was failed to furnish the documentary evidence in support of his claim but these are the incidental expenses to be incurred by the assessee considering to the nature of business of the assessee but for want of production of desired evidence of expenses, the AO has rightly disallowed 10% of the total expenditure incurred which has been upheld by the CIT(A) also. We also observe that if the assessee was unable to produce the required document before the AO, he had an opportunity to produce the same in support of his claim of expenses debited into the profit and loss account under the aforesaid heads before the CIT(A) but the assessee could not do so. Therefore, the CIT(A) has rightly upheld the action of AO. Accordingly, we do not see any reason to interfere with the observations of the CIT(A) in this regard and we uphold the same. This ground of appeal of the assessee is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Shivsagar Veg Restaurant vs ACIT (2009) 319 ITR 433 (Bom), wherein, it was, inter alia, observed as under: We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now),all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the rules so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 21. We also find that the aforesaid issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand that, the corona virus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure... . The term force majeure has been defined in Black s Law Dictionary, as an event or effect that can be neither anticipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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