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TMI Blog2021 (4) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee for the month of April to June has deposited employee contribution toward PF and ESI after due date as prescribed under the respective Act - HELD THAT:- As decided in GUJARAT STATE ROAD TRANSPORT CORPORATION [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees account in the relevant fund or funds on or before the 'due date' mentioned in Explanation to section 36(1)(va). Consequently, it is held that the Tribunal has erred in deleting respective disallowances being employees' contribution to PF Account/ESI Account made by the Assessing Officer as, as such, such sums were not credited by the respective assessee to the employees 'accounts in the relevant fund or funds on or before the due date as per the Explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prove wrong to the assessee based on the materials available on record. But to our mind, the revenue has not brought any tangible material to draw an inference that the expenses were not incurred for the purpose of the business AO has doubted on the reasonableness of expenses but as such he has not pointed out that these expenses were not incurred for the purpose of the business which was the precondition for invoking the provisions of section 37 of the Act. Accordingly, we are of the view that no disallowance of the expenses is warranted. Thus the ground of appeal of the assessee is allowed. - ITA No. 794/AHD/2018 - - - Dated:- 23-3-2021 - Waseem Ahmed , Member ( A ) And Madhumita Roy , Member ( J ) For the Appellant : Sunil Talati , A. R For the Respondents : L. P. Jain , Sr. DR ORDER PER WASEEM AHMED , ACCOUNTANT MEMBER The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-2, Vadodara, dated 16/01/2018 arising in the matter of assessment order passed under s. 143(3) the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences available on record be deleted. It may held so now. 4. The order passed by the learned CIT (Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that the same held so now. 5. Your Appellant craves its leave to add, alter and/or to amend all or any of the grounds before the final hearing. 3. The first issue raised by the assessee is that the learned CIT(A) erred in sustaining the part addition in respect of administrative expenses made under section 14A of the Act. 4. During the assessment proceeding it was observed that the assessee has claimed exempt income of ₹ 3,75,000/- being dividend on shares. However no corresponding disallowances of expenditure was made under the provision of section 14A r.w.r. 8D of Income Tax Rule. In this regard the assessee claimed that the investment in shares is very old and no borrowed fund was used for investment purpose. Therefore the provision of section 14A is not applicable in its case. 4.1. However the AO rejected the claim of the assessee and held that there were no specific submission made by the assessee that why disallowances should not be made. Accordingly the AO calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce towards the administrative expenses amounting to ₹ 60,000 only. The primary onus lies upon the assessee to justify, based on the documentary evidence, that it has not incurred any expense against the exempted income. But the assessee before us failed to discharge the onus imposed upon him except contending that it has not incurred any expenses. Thus, the AO, in the absence of any material brought on record by the assessee in support of his contention, had no alternate except to make the disallowance as per the method prescribed under rule 8D of income tax rule. Even at the time of hearing before us, the learned AR appearing on behalf of the assessee has not brought any material evidence except making bald statement that it has not incurred any expense. Accordingly, we do not find any infirmity in the order of the authorities below. Hence we uphold the same. Thus the ground of appeal of the assessee is dismissed. 11. The second issue raised by the assessee is that the learned CIT(A) erred in not considering its submission and confirming the addition of ₹ 51,711/- on account of late payment of PF and ESI. 12. The AO from the tax audit report i.e. form 3CD observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was required as an employer to credit employees' contribution to the employees account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act. 15.1. Therefore, respectfully following the above judgment of Hon'ble jurisdictional High Court we dismiss the ground of appeal of the assessee. 16. The last issue raised by the assessee is that the learned CIT(A) erred in confirming the ad-hoc disallowances of the expenses for ₹ 15,00,000/- being not incurred wholly and exclusively for business purpose. 17. The AO during the assessment proceedings found that there was increase in sales and corresponding GP ratio in comparison to the earlier assessment year but there was the negative net profit declared by the assessee. On verification, the AO found that the indirect expenses has increased many folds in comparison to the earlier assessment year. The necessary details of such expenses stand as under: Item/Particulars 2013-14 2012-13 Percentage increase Revenue from operations 251562563 20395735 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the reasoning that all the bills and vouchers were not verifiable. Thus, the sum of ₹ 15 lakhs was added to the total income of the assessee. 18. Aggrieved assessee preferred an appeal to the learned CIT(A). 19. The assessee before the learned CIT(A) besides reiterating contentions as made before the learned AO, submitted that it is being a body corporate, there cannot be any possibility of personal expenses. 19.1. The assessee further contended that 99% of such expenses were incurred through the banking channel and after deducting the taxes wherever the provisions of TDS were applicable. Furthermore, the self-made vouchers were supported based on the bills. 20. However, the learned CIT(A) confirmed the order of the AO by observing as under: 4.3 Ground No. 3 pertains to disallowance of ₹ 15,00,000/- out of various expenses. Undisputedly, the expenses claimed by the appellant have increased manifold as compared to immediately preceding assessment year. This is also reflected in the net profit rate. The net profit in this year is (-) 3.32% as compared to 2.27% in the immediately preceding assessment year. In Para 5.4 of the assessment order, the AO has v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no denial under the Act to incur the expenses in cash except as provided under section 40A(3) read with rule 6DD of income tax rule. But there was no invocation of such section. Thus, the expenses claimed for the purpose of the business cannot be disallowed merely on the reasoning that these expenses were incurred in cash and were supported on the self-made vouchers. There are many occasions/situations where the supporting details are not available for the expenses incurred by the assessee. Thus, in such a situation only self-made vouchers can be prepared in support of the expenses incurred by the assessee. 24.2. Furthermore, the assessee has contended that it has opened more branches, hired more employees and obtained more finances which will undoubtedly increase the expenditure. It is also a fact on record that the assessee has added some new items in its business line. In a scenario where there is cut throat competition, the assessee has certainly to incur more expenses by extending more discount, free distribution samples to the prospective customers. This contention of the assessee has not been doubted by the authorities below. Accordingly, the onus was shifted from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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