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TMI Blog2021 (8) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... addition u/s 36(l)(iii) of the Act of Rs. 23, 13,140/- in respect of proportionate interest on capital advances. 4. The Ld. CIT (A) ought to have appreciated the nature and the commercial expediency of the capital advance made. 5. The Ld. CIT (A) erred in law and on facts in confirming addition u/s. 36(l)(va) r.w.s 2(24)(x) of the Act of Rs. 5,23,396/- in respect of employees contribution to PF and ESIC which has been remitted in the same financial year." 3. The brief fact of the case is that return of income declaring total income of Rs. Nil was filed on 30th Nov, 2015. The case was subject to scrutiny assessment and notice u/s. 143(2) of the act was issued on 12th April, 2016. Further facts of the case relating to issues contested in the instant appeal are discussed while adjudicating the grounds of appeal of the assessee as follow:- Ground Nos. 1 & 2 (confirming addition of Rs. 5,42,751/- in respect of commission expenses) 4. During the course of assessment, the Assessing Officer noticed that assessee has debited commission expenditure to the amount of Rs. 48,57,000/- in the profit and loss account. The Assessing Officer made disallowance of expenses on account of export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision for commission on the basis, of sales made during the year, but the payment has not been made in the current year. Appellant has contended that provision has been made as per the past experience as sales have been effected during the year and commission has been paid in subsequent years. Appellant in respect of commission of Rs.A,73,500/- from Sharhe Sadar, Rs. 49,774/- in respect of Egyptian Promotion and Rs. 4,06,445/- in respect of System Engineering has submitted the copy of debit note, 15CA & 15CB and no PE certificate for which payment has been made in subsequent year. As appellant has made the provision on the safe effected during the year and payment has been subsequently made and these parties have no PE in India and services have been rendered outside India, no disallowance is called for in respect of above parties. As regard to commission payment in respect of Rs.l,03,400/- from Anurag Khunteta appellant has submitted copy of Form I6A showing that the TDS has already been deducted. Therefore, no disallowance is called for in respect of above party. As regard to provision of sale commission of Rs. 2,00,000/- in respect of Sahare Sadar and Rs. 3,42,751/- in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs. 5,75,929.00 was confirmed by the learned CIT (A) on the reasoning that the assessee failed to furnish the details of the parties and the services rendered by such parties. 8.2 Nevertheless, the learned AR before us at the time of hearing requested to restore the matter to the file of the AO and assured to file the requisite details in support of the claim of the assessee. However we find that the matter before us pertains to the assessment year 2013-14 which was decided by the AO dated 29 December 2015 and subsequently the learned CIT (A) has passed the order dated 17th February 2016. The assessee before the authorities below failed to furnish the details of the parties despite having several opportunities. Even now before us the matter has been listed 16 times prior to the present date of hearing but the assessee has not brought anything on record about the details of such parties after filing the appeal on 4th April 2018. Thus it is transpired that it is very unlikely that the assessee shall be in a position to furnish the necessary details. Accordingly, we are not inclined to give fresh opportunity to the assessee by restoring the matter to the file of the AO as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income of the assessee. 10. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. The relevant part of the decision of the ld. CIT(A) is reproduced as under:- "4.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The AO has made disallowance of Rs. 23,13,140/- u/s. 36(l)(iii) on the interest free advance of Rs. 1,92,76,000/-of M/s. H. L Pharma Co., Korea. The appellant has submitted that the capital advance of Rs. 1,92,76,000/- was made to M/s. H. L. Pharma Co. against the purchase of technical know how for business purpose and out of own fund, therefore, provision ejection 36(l)(iii) is not applicable. The appellant 'has submitted that advance was given to H.L. Pharma for the purpose of acquiring technical know how in order to enable the applicant to manufacture machinery and sell them in domestic and international market. As these advances were provided exclusively for business purpose only and on commercial expediency, no disallowance u/s. 36(l)(iii) is to be made. 4.4. On perusal of balance sheet, it is seen that capital advance of Rs. 1.92 crore has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the authorities below, it is pertinent to note that the own fund (Rs. 3,91,81,000.00) of the assessee exceeds the amount of advances. This fact can verified from the audited financial statement which is available on pages 10 of the paper book. Besides the above, it is also significant to note that the assessee has shown receipt of interest free loans and advances amounting to Rs. 3,10,00,000.00 which can be verified from the financial statements placed on 15 of the paper book. Thus the own fund of the assessee along with the interest free loans received by it aggregates to a sum of Rs. 7,01,81,000.00 which is in excess of the advance given to the party for an amount of Rs. 1,92,76,148.00 only. Accordingly a presumption can be drawn that the own fund of the assessee has been used for advancing money to the party as discussed above for acquiring the technical know-how. In other words, the borrowed fund has not been used for advancing the sum of Rs. 1,92,76,148.00 to the party. 15.2 In holding so we draw support and guidance from the judgment of Hon'ble jurisdictional High court in the case of CIT vs. Torrent Power Ltd reported in 363 ITR 474 where the head note reads as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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