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TMI Blog2020 (9) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... g such appeal electronically within the prescribed time period and dismissal of the appeal by the Ld. CIT(A) in not considering the same is grossly irregular and arbitrary. Hence, the order of dismissal of the appeal on the ground of limitation by the Ld. CIT(A) as impugned before us is hereby quashed. Disallowance of interest u/s 36(1)(iii) - AO has disallowed the proportionate interest expenses assuming the interest bearing fund used for making interest free advances in other ways - HELD THAT:- We find no reason to disallow such interest under Section 36(1)(iii) of the Act. Thus, the addition is hereby deleted. Non-adjudication of relating disallowance of delayed payment of employees contribution to Provident Fund u/s 36(1)(va) - HELD THAT:- Admittedly the assessee has made delayed payment in Provident Fund account after the expiry of due date provided under the concern Provident Fund Act. Such expenses, therefore, is not allowable in view of the ratio laid down in the case of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] which, according to us was rightly taken into consideration while rejecting the case of the assessee by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 01.03.2016 and CBDT Circular No. 20/2016 dated 26.05.2016 which has claimed to be not followed by the assessee. It is the case of the Revenue that by and under this notification dated 01.03.2016 and the CBDT amended Rule 45 of the Income Tax Rules, 1962 whereby the appeal before the CIT(A) is required to be filed electronically in the new Form No. 35. Subsequently by and under a further Circular No. 20/2016 dated 26.05.2016 the time period was extended the window for filing e-appeals who has not been successful in filing their appeals through electronic media and therefore to file paper appeals upto 15.06.2016 but the assessee filed the appeal only on 30.08.2016 that too without any prayer for condonation of delay in filing such e-appeal. No reasonable or sufficient cause, which prevented the assessee to file such appeal within the stipulated time, has been shown by the appellant and therefore, the delay does not deserve to be condoned as of the opinion of the Ld. CIT(A). The appeal has been finally rejected on this preliminary ground of limitation. While doing so the Ld. CIT(A) relied upon the judgment passed in the matter of Prashant Projects Ltd. vs. DCIT (2013) 37 taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed the proportionate interest expenses assuming the interest bearing fund used for making interest free advances in other ways. The AO has calculated the interest on interest free advances on notional basis and disallowed the same from interest expenses without considering the actual basics of some availability of interest free funds, unsecured loans, capital and background of the advances given. The assessee has made some interest free advances to the tune of ₹ 2,37,02,673/- to various person for business purposes. The same was not accepted by the AO and treating the same as diversion of borrowed funds, proportionate interest was disallowed from interest expenditure. It is the case of the assessee that the company is having sufficient own interest free funds out of which some was utilized for such interest free advances and thus the question of diversion does not arise at all. Upon perusal of the records it appears that the net interest free funds available with the assessee company was of ₹ 11,60,08,021/- on 31.03.2004. It further appears that the net interest free fund and capital available was of ₹ 2,37,02,673/- which was advances to six parties. Thus, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee than notional interest on such fund cannot be disallowed by interest expenses. If that be so, disallowance of proportionate notional interest expenses of ₹ 20,78,380/- on the basis of interest free advances i.e. ₹ 353.34 lacs is not in terms of law and liable to be deleted. The Learned AR also contended that interest expenses has to be allowed as deduction where interest bearing fund are advanced without interest. It is necessary that advances given by the businessman at all times must be for earning interest. The reasonableness of the expenditure would be covered into only for the purpose of the determining whether, in fact, the amount was spent. Once it is established that the nexus between the expenditure and the purpose of business, the revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the board of directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case. In support of his contention he relied upon the judgment passed by the Hon ble Delhi High Court in the case of Dalmia Cement (B) Ltd. (2002) 254 ITR 377. On the other hand, Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 372357579 We have also gone through the other financial details of the assessee company. We find sufficient interest free fund was available with the assessee out of which interest free loan and advances were provided to parties. Whether the decision as to how much is a reasonable expenditure ought to have been decided by the assessee company; the revenue cannot question that once the nexus between the expenditure and the purpose of business has been established as already decided by the number of judgments pronounces by different legal forum including the judgment passed by the Hon ble Delhi High Court in the case of CIT-vs-Dalmia Cement (P.) Ltd. (2002) 254 ITR 377. In that view of the matter, we do not find any reason for disallowance u/s 36(1)(iii) of the Act as made by the authorities below. The addition is thus deleted. 5. In the result, assessee s appeal is allowed. Keeping in view the factual position of the matter on the basis of the details available before us and the decision made by the Co-ordinate Bench in assessee s own case on the identical issue as narrated above. We find no reason to deviate from the same having regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals was concluded on 8th January 2020, this order thereon is being pronounced today on the day of 14th May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners :- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15days after the lifting of lockdown . Hon ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating 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 , and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to re-fix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case. 16. On the basis of the observation made in the aforesaid judgment we exclude the period of lockdown while computing the limitation pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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