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TMI Blog2020 (9) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... orrowed funds. See case of Reliance Utilities Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and in HDFC Ltd. reported in [2014 (8) TMI 119 - BOMBAY HIGH COURT] . Respectfully following the ratio decidendi of the same decision, we hold that there cannot be any disallowance of interest on borrowed capital in the facts and circumstances of the case. Delayed Employees contribution to PF and ESI - contribution remitted beyond the due date prescribed under the respective statutes but, the same had been remitted before the due date of filing of return u/s 139(1) - HELD THAT:- Respectfully following the said decision in the case of VBC Industries [ 2015 (6) TMI 1 - ITAT HYDERABAD] we hold that there cannot be any addition towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bs(India) Pvt. Ltd. ₹ 59,03,070 4. DRS Logistics Pvt. Ltd. ₹ 4,36,20,845 5. MDN Edify Education Pvt. Ltd. ₹ 1,00,000 6. DN Welfare Trust (Credit balance) (8,440) Total ₹ 5,31,84,515 We find that the ld. AO had observed that the assessee on the one hand had paid interest on its borrowings totalling to ₹ 3,33,30,483/- and on the other hand had made certain interest free advances to its sister concerns. Accordingly, the assessee was show-caused as to why proportionate disallowance of interest be not made as bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Interest Others ₹ 42,17,740 7. Interest on service tax ₹ 4,94,194 Total ₹ 3,33,30,483 From the above, it can be safely concluded that except interest on overdraft amounting to ₹ 1,21,66,462/-, bank interest of ₹ 65,399/- and interest others of ₹ 42,17,740/-, the other interest and bank charges paid by the assessee could not have been utilized for the purpose of making interest free advances. Admittedly, overdraft account of the assessee is an account having common funds i.e. both borrowed as well as own funds from where interest free advances had been made to the sister c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same decision, we hold that there cannot be any disallowance of interest on borrowed capital in the facts and circumstances of the case. Accordingly, grounds Nos. 1 2 raised by the assessee are allowed. 7. Ground Nos. 3, 4 5 relate to employees contribution to PF and ESI amounting to ₹ 18,04,793/- and ₹ 3,73,568/- respectively. 8. We have heard the rival submissions and perused the material on record. We find that employees contribution to PF ESI amounting to ₹ 18,04,793/- and ₹ 3,73,568/- respectively had been remitted beyond the due date prescribed under the respective statutes, but, the same had been remitted before the due date of filing of return u/s 139(1) of the Act. 8.1 We find that the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Courts held that even where the employees contribution to ESI and PF were not paid within the due date as per section 36(1)(va), but, were paid before the due date of filing of return u/s 139(1), the same is allowable as expenditure u/s 43B of the Act. 14. The ld. DR submitted before us, the expenditure which is covered u/s 43B is employer s contribution and not employee s contribution. Ld. DR submitted, as far as employee s contribution is concerned, the employer is merely custodian, hence, there should not be any delay in remitting the same to the appropriate account. It was submitted, amendment made to section 43B would not apply to employees contribution as such amendment is not with reference to section 36(1)(va). In support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution to PF ESI before the due date of filing of return u/s 139(1) of the Act. Thus, the only issue to be decided whether such delayed payment of employee s contribution to PF ESI is an allowable deduction u/s 43B. As can be seen, the Hon ble Gujarat High Court in case of CIT Vs. Gujarat State Road Transport Corporation (supra) has decided the issue against assessee by holding that employee s contribution to PF ESI is not covered under the provisions of section 43B. However, it is worth mentioning, in the very same decision, Hon ble Gujarat High Court has referred to decisions of at least four other high courts expressing the view that employee s contribution to PF and ESI if deposited within the due ITA No. 143/H/13 and others VBC In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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