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TMI Blog2021 (4) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... t of employees account, but remitted on or before due date for furnishing return of income u/s.139(1) - HELD THAT:- Hon ble Supreme Court in the case of CIT V. Alom Extrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] where it was held that if employees contribution to PF ESI is remitted on or before due date for furnishing return of income filed u/s.139(1) of the Act, then such payments need to be allowed as deduction, irrespective of the fact that such payment has been remitted beyond due date specified under the respective Acts. The Hon'ble Supreme Court has also considered Board s Circular No.22/2015 dated 17.12.2015 to arrive at such conclusion. Therefore, we are of the considered view that we uphold the findings of the learned CIT(A) and reject the ground taken by the Revenue. Disallowance of loss on forward contracts - AO has disallowed loss claimed on forward contracts on the ground that assessee s case does not fall under any of the exceptions provided under the proviso to section 43(5) of the Act, because the assessee has entered into forward contracts not for goods or merchandise, but for currency - HELD THAT:- CIT(A) has recorded a categorical finding in ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Mr. Suresh Periasamy, JCIT For the Respondent : Mr.B.Ramakrishnan, FCA ORDER PER G.MANJUNATHA, AM: This appeal filed by the Revenue is directed against the order of the learned CIT(A)-6, Chennai dated 31.01.2018 and pertains to assessment year 2014-15. 2. The Revenue has raised the following grounds of appeal:- 1. The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case. 2.1 The CIT(A) erred in directing the AO to delete the disallowance made u/s.14A as the assessee has not earned any exempt income when there is no such exception provided in Rule 8D of IT Rules. 2.2 The CIT(A) ought to have appreciated the fact that the CBDT circular No.5/2014 wherein it is clarified that disallowance u/s. 14A r.w.r. 8D has to be made even (the taxpayer in a particular year not earned any exempt income. 2.3 The CIT(A) erred in relying on the decision of the Hon ble Madras High Court in the case of Redington (India) Limited vs AddI.CIT in TCA No. No.520 of 2013 dated 23.12.2016, has not been accepted by the Department. 3.1 The CIT(A) erred in deleting the addition made on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned party. 5.3 The CIT(A) omitted to call for remand report ulr 46A when the assessee furnished any details/fresh evidence in support of its claim during the appellate proceedings, on which the CIT(A) relied on the same and allowed the ground of the assessee. 6. For these and other grounds that may be adduced at the time of hearing, it is prayed that the Order of the learned Commissioner of Income Tax (Appeals) be set aside and that of the Assessing Officer be restored. 3. Brief facts of the case are that the assessee company is engaged in the business of manufacturing textiles and export of readymade garments filed its return of income for the assessment year 2014-15 on 28.11.2014 declaring total income of ₹ 1,01,61,620/-. The case was taken up for scrutiny and assessment has been completed u/s. 143(3) of the Act on 23.12.2016 and determined total income at ₹ 3,59,50,810/- by making various additions including disallowance of expenditure incurred in relation to exempt income u/s.14A r.w. Rule 8D of the Income Tax Rules, 1962, disallowance of employees contribution towards PF ESI u/s.36(1)(va) r.w.s 2(24)(x), additions towards loss on forward contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions of the assessee and also by following decisions of Hon'ble Jurisdictional High Court of Madras in the cases discussed hereinabove, deleted additions made by the Assessing Officer towards disallowance of expenditure including interest expenditure u/s.14A read with Rule 8D of the Rules. The findings recorded by the learned CIT(A) are uncontroverted . The Revenue has failed to bring on record any contrary decision to support its arguments. Therefore, by following the decision of Hon'ble Jurisdictional High Court of Madras in the case of M/s. Redington India Ltd. (supra), we are of the considered view that when there is no exempt income earned for the year, no disallowance can be made towards expenses relatable to said exempt income u/s.14A read with Rule 8D. Hence, we are inclined to uphold the findings of the learned CIT(A) and reject ground taken by the Revenue. 6. The next issue that came up for our consideration from ground no.3 of Revenue appeal is disallowance of contribution to PF and ESI u/s.36(1)(va) r.w.s 2(24)(x) of the Act. The Assessing Officer has disallowed a sum of ₹ 33,80,366/- owing to belated payments made towards employees contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to impugned dispute are that the assesse is into export of garments and in the process, it has entered into forward contracts for hedging loss on fluctuation in foreign currency. The said loss has been treated as revenue expenditure. The Assessing Officer has disallowed loss claimed on forward contracts on the ground that assessee s case does not fall under any of the exceptions provided under the proviso to section 43(5) of the Act, because the assessee has entered into forward contracts not for goods or merchandise, but for currency. The claim of the assessee before the Assessing Officer was that it has entered into forward contracts to hedge possible loss on account of fluctuation in foreign currency, therefore, same cannot be considered as speculative loss covered u/s.43(5) of the Act. 9. We have heard both the parties and perused the materials available on record along with the order of the learned CIT(A) . The learned CIT(A) has recorded a categorical finding in light of decision of Hon ble Gujarat High Court in the case of CIT Vs. Friends Friends Shipping Pvt Ltd in Tax Case Appeal No.251 of 2010 dated 23.08.2011 that when forward contracts entered into with banks ..... X X X X Extracts X X X X X X X X Extracts X X X X
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