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TMI Blog2021 (2) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income. (ii) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the disallowance of Rs. 58,24,000/- made on account of belated bad debts. (iii) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the disallowance of Rs. 1,08,95,467/- made on account of commission expenses. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. ITA No.562/Ind/2018 Assessment Year 2014-15 (i) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in directing the disallowance of Rs. 1,03,81,727/- made on account of commission expenses. (ii) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the disallowance of Rs. 4,17,302/- made on account of belated payment of SCIC and EPF contribution of employees. (iii) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the disallowance of Rs. 25,95,609/- made on account of expenses u/s 40(a)(ia). (iv) Whether in the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to be wholly and exclusively for business purposes observing as follows:- 7. We have considered the facts and circumstances of the case and find that the assessee company is doing manufacturing of various kinds of industrial products such as FRP Axial Flow Fans, FRP Seal Disc, FRP Fan Stacks, FRE Fill Hangers which are being used in various power plants, steel plant, coal mines and other heavy industries. The company has started in the year 1991 however it has been incurring heavy loss during the earlier years. It is seen that the company entered into sale agreement on February, 9, 2008 with M/s B-3 Projects & Consultants, Nagpur with the condition that if the sales/turnover of the assessee company is achieved the minimum target of 5.50 crores, then the sole distributor shall be eligible for commission. Since, during the assessment year under consideration, sales have increased to Rs. 7.23 crores, therefore the assessee company had paid the commission of Rs. 64,16,013/- during the year to M/s B-3 Projects & Consultants, Nagpur. It is also noticed that Shri Sandeep Barjatya, Director of the distributor company M/s B-3 Projects & Consultants, Nagpur has appointed as Director fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire 10 of bill the appeal before Hon'ble High Court while dismissing the appeal that taking into consideration the long standing relationship and also taking into consideration the reputation of the assessee and the agent also in consideration there was no intention to evade the tax rightly allowed to taken of entire commission. Seeing to the facts of the present case, we are of the view that even though it was not a sister concern at the. time of entering in to the agreement, has paid commission for rendering services which has resulted in increase of turnover by 2.12 crores. Similarly in the case of Pure Pharma Pvt. Ltd V/s CIT (supra) Wherein the commission was paid to government and its agencies and all the payment were made to the various parties through cheques / demand draft and the expenditure was found incurred for business purposes it was held that Such expenditure were allowable and consequently the addition was deleted. Thus on the facts and circumstances and the tribunal pronouncements as cited by the assessee, we did not find any justification for disallowance of commission which was wholly and. exclusively for business purposes is allowed as deduction of Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has written off the amount in the books of accounts should be allowed. 14. We however on perusal of the judgment of Hon'ble Supreme Court in the case of T.R.F. Ltd v. CIT 190 Taxman 391(SC)(supra) find that the Hon'ble court has also made following observation:- " When bad debts occurs, the bad debt amount is debited and the customer's account is credited. In the case of companies, the provision is deducted from sundry debtors" 15. In the above observation of the Hon'ble Apex Court two important words are customers and sundry debtors. The bad debt which the assessee company wants to claim as an expenditure needs to be reduced from sundry debtors. As per the accounting principles when at the end of the financial year unrealised sales are shown under the head sundry debtors. In other words sales effected but consideration not received up to the end of financial year are shown as sundry debtors. From going through the finding of Ld. CIT(A) we find that no efforts have been made by Ld. CIT(A) to examine the fact that whether the alleged amount claimed to be bad debts by the assessee are in the nature of sales made in the preceding years, or "loans and advances". If the alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly and rightfully claimed the set off of unabsorbed business loss and unabsorbed depreciation loss and the return of income of the years in which such loss was shown have been filed on the due dates u/s 139(1) of the Act then the assessee deserves to get the benefit of set off. Ground No.1 of the revenue is thus allowed for statistical purposes. 19. Now we take up Ground No.2 of revenue's appeal for Assessment Year 2014-15 through which the revenue has challenged the finding of Ld. CIT(A) deleting the disallowance of Rs. 4,17,302/- made on account of belated payment of ESIC and EPF contribution. 20. We find that there occurred some delay on the part of the assessee in depositing the ESIC and EPF contribution of employees. However this is not in dispute that the total amount of employees contribution was deposited in Treasury before the due date of filing of return of income i.e. 30.11.2014. Under these given facts and circumstances Ld. CIT(A) deleted the disallowance observing as follows:- Ground No.5:- Through this ground of appeal the appellant has challenged the addition of Rs. 4,17,302/- on account or disallowance of EPF and ESIC late deposit. The appellant made the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rving as follows:- 1. Ground No,6: Through this ground of appeal the appellant has challenged the addition of Rs. 25,95,609/~ on account of disallowance of interest payment without TDS. The AO observed that during the year, the Company settled a loan received from TIF AC (Technology Information, Forecasting and Assessment council) along with interest of Rs. 25,95,609/~. The AO observed that TIFAC is a society registered under the Societies Registration Act of 1860. Therefore, any payment towards interest is subject to deduction of tax at source under section 194A of the Act. In absence of the same, the entire such expenditure is required to be disallowed in terms of provisions of section 40a(ia) of the IT Act Therefore, he added a sum of Rs. 25,95,609/~ under the total income of the appellant. The Company has not claimed any expenditure towards payment of interest under its profit and loss account to TIFAC. The appellant claimed following expenditure towards interest under its profit and loss account as detailed under the financial accounts: i. Bank commission and Charges Rs. 6,09,095 ii. Foreign Bank Charges on Realization Rs. 17,423 iii. Interest on Car Loan Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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