9911796707
TMI Blog2020 (6) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... al, unjustified and erroneous and has been passed on improper application of mind, being devoid of merit as such deserves to be quashed in limine. 2. For that the addition of Rs. 15,73,018/- added towards interest earned, assessed as income from other sources deserves to be deleted on the ground that, interest earned by the appellant is income from business and eligible for deduction U/s 80P(2) of the Act, as per Statutory provisions & Legislative intentions. 3. For that the addition of Rs. 15,73,018/- added towards interest earned, assessed as income from other sources deserves to be deleted on the ground that, interest earned by temporary exploitation of operational funds as mandated by the authorities by the appellant is income from business and eligible for deduction U/s 80P(2) of the Act, as per Statutory provisions & Legislative intentions. 4. For that, the disallowance of ESI & EPF contributions to the extent of Rs. 11,320/- and Rs. 56,400/- respectively totaling Rs. 67,720/-deserves to be deleted on the ground that, although the payment has been made beyond the due date as provided in EPF Act, but well within the time for filing of return income in due datE and thus s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for the assessment year 2015-2016 on 24.09.2015 declaring total income at Rs. 47,20,800/-. The case of the assessee were selected for scrutiny under CASS and statutory notices were issued to the assessee. During the course of assessment proceedings, it was noticed by the AO the assessee has received interest income and he has claimed addition u/s.80P(2)(d) of the Act and he has also brought forwarded loss to the tune of Rs. 52,08,253/- which has been set off against the net profit of Rs. 55,92,908/-. There was a total interest of Rs. 18,48,769/-, which was to be treated as income from other sources instead of business income as claimed by the assessee. Therefore, the assessee cannot set off the eligible loss as per the provisions of Section 72(1) of the Act. In this regard, the assessee was asked to justify the claim of setting off of loss from the interest income, in response to which the assessee submitted as under :- "Wrong claim for adjustment of brought forward loss set off, as contended section 72(1) contemplates as stated in your notice. However, the provision of set off Is dealt with by section 71. And section 71 does not contemplate any restriction on set off of busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same to the total income of the assessee because these payments were not deposited in due date as per the respective Act. 8. Feeling aggrieved from the above order of AO, the assessee appealed before the CIT(A) and the CIT(A) has partly allowed the appeal of the assessee. 9. Feeling further aggrieved from the order of CIT(A), the assessee is in appeals before the Income Tax Appellate Tribunal. 10. The facts are same in both the appeals and additions were made by the AO are also under the similar heads, therefore, the statement of facts filed by the assessee before the CIT(A) for the assessment year 2015-2016 has been taken into consideration, which read as under :- The assessment for the Assessment Year 2015-16 of the assessee is completed Under Section 143(3) with a total addition of Rs. 20,31,710/- over returned income of Rs. 47,20,800/-. The Ld Assessing Officer has made addition of Rs. 18,02,122/- on account of interest accrued under miscellaneous receipt treating it as Income from other sources rather than business and profession, Adhoc disallowance of expenses @10% to the tune of Rs. 1,13,818/- and Income tax paid debited to profit and loss account Rs. 1,15,770/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of fact the amounts kept in Fixed Deposit are mostly grant amounts which are meant for providing marketing assistance not immediately disposable in the form of marketing assistance to craftsmen and are also not available for otherwise use by the assessee. In order to secure/ensure the use of the grants in time these funds are kept in fixed deposit. In the usual course of business activities of the assessee, the assessee shall get grants and ensure its use and hence the Fixed Deposit is an inevitable part of the business. Therefore the receipts of the interest there from cannot be treated as income from other sources. In similar situation interest earned by co-operative credit societies are held to be business income. As in case of the Samarparn Co operative credit Society Ltd. vrs. ACIT by hon'ble Karnataka High Court. These deposits are rather short term call deposits which are held to be business income and is exempt U/s80P(2)(d) CIT v. Haryana Co-operative Sugar Mills Ltd. (1989) 180 ITR 631(Punj), SLP dismissed : (1991) 187ITR (St.)l52-53(SC). As regards interest earn from deposits with Nationalized banks, it is most humbly submitted that income from other sources is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/11/2017 hurriedly, ft is difficult to provide the full particulars of expenses. It is also a fact that non business purposes, the expenditure can be ruled out in absence of third party evidence. However in absence of any material against the fact that the expenses incurred are not unreasonable the disallowance is unreasonable and liable to be deleted. DISALLOWANCE OF INCOME TAX EXPENSES Rs. 1,15,770/-: The assessing officer had made this addition on the basis of presumption that the said expenditure being not allowable U/S 37 and being debited to profit and loss account is claimed by the assessee as deduction, however the said expenses has been added back in the computation statement accordingly the same is offered to tax without claiming deduction therefrom. Therefore addition made on the basis of presumption is not tenable and liable to be deleted. 10. Ld. DR relied on the order of authorities below and submitted that the assessee parked his surplus funds in OSCB Ltd, therefore, the interest warranted from the surplus funds in the form of FD is income from other sources, therefore, the deduction u/s.80P(2)(d) is not allowable and the set off of carry forward losses is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Bharat Hotel Ltd. (supra) and submitted that this issue should be restored to AO for verification. After hearing both the sides, perusing the entire materials available on record and the orders of authorities below, we noticed that the assessee has not deposited the contribution of EPF and ESI within the due date as specified in that particular Act. 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. We also found that this very similar issue has also been decided by this bench of the Tribunal in the case of Milind Gupta, ITA Nos.382&383/CTK/2017, order dated 27.09.2019, wherein the Tribunal has restored the issue to the file of AO to examine the contributions made with refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard and we uphold the same. This ground of appeal of the assessee is dismissed. 18. With regard ground raised by the assessee against the addition made on account of presumptive basis, it was observed by the AO during the course of assessment proceedings that the assessee has claimed the expenses as allowable expenditure claimed u/s.37(1) of the Act, however, the AO disallowed the same stating that the expenditure claimed by the assessee does not relate to the business of the assessee towards earning of the income as per Section 37(1) of the Act. It is also not an incidental expenses to earn the income of the assessee which rightly been confirmed by the CIT(A). 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 dismissed. 19. Thus, ITA No.393/CTK/2020 is partly allowed for statistical purposes. 20. Now, a procedural issue comes before us that though the hearing of the present appeals were concluded on 20.02.2020, however, this order is being pronounced much after the expiry of 90 days from the date of conclusion of hearing. We find that Rule 34(5) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y days, was necessitated by any "extraordinary" circumstances. 21. We also find that the aforesaid issue has been answered by a coordinate Bench of the Tribunal viz; ITAT, Mumbai 'F' Bench in DCIT, Central Circle-3(2), Mumbai vs JSW Limited & ors (ITA No.6264/Mum/18 dated 14.5.2020, wherein, it was observed as under: " 9. Let us in this light revert to the prevailing situation in the country. On 24th March,2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disrup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only inconsonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April2020, held that directed "while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
