9911796707
TMI Blog2022 (1) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... filing return of income for ay:1998-99 to avoid duplication of claim of deduction. All this aspects were never looked into by ld. CIT(A) before granting relief to the assessee as there are no observations whatsoever on these critical issues and merely cryptic, unreasoned and non speaking order is passed by ld. CIT(A), and hence the appellate order passed by ld. CIT(A) on this issue cannot be sustained and we are inclined to set aside and restore this issue back to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law, and ld. CIT(A) is directed to pass reasoned and speaking order. Assessee has set up a claim of deduction of Rent in the year under consideration which was not provided in the books of accounts of the year under consideration viz. fy: 1996-97, and which was claimed to be debited in the books of accounts for subsequent year viz. fy:1997-98, and claimed as deduction for ay:1997-98 by filing revised return of income with Revenue on 29.12.1998. We have observed that there is no discussions whatsoever by ld. CIT(A) on this issue in its order and he has merely accepted the contentions of the assessee. There is no investigation of facts by ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. We order accordingly. Disallowance on account of interest payable on loans, by invoking provisions of Section 43B - unpaid liability towards interest payable on various loans - HELD THAT:- The provision of Section 43B stipulates that evidence of payment is to be enclosed with return of income in the first proviso to Section 43B. However, the assessee has not enclosed evidence of such payment along with return of income, but the factum of mention of interest paid to IIBI is found in tax audit report. In our view, to claim the extended period benefit u/s 43B, the mandatory requirement is the substantial compliance of making payment by assessee before the due date for filing of return of income u/s 139(1), while the second condition as stipulated under the first proviso to Section 43B of enclosing evidence of such payment along with return of income is directory in nature, and even if the said challan evidencing that payment is made before due date prescribed u/s 139(1) is produced at appellate stage, the assessee will be entitled for getting extended period benefit u/s 43B. The assessee is directed to produce evidence of payment of interest and working thereof in correlating wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses on these deposits/loans as revenue deduction while computing income chargeable to tax for those earlier years, and even before us it could not be shown that there is any claim made by any of these depositors/lenders for reviving their claim of debt/loan or assessee has acknowledged its debt towards these unclaimed deposits/loans, that the aforesaid amount as unclaimed deposit/loan and interest payable thereon on these unclaimed deposits/loans were rightly added by AO to the income of the assessee and we uphold the view of the AO and set aside the appellate order passed by ld. CIT(A) on this issue. Unpaid liabilities towards sale tax payable on molasses - assessee submitted that unpaid liability towards sales tax on molasses has been discharged by making actual payment on 17.04.1997 and the assessee claimed to have filed challan before ld. CIT(A) evidencing such payment - HELD THAT:- To claim the extended period benefit u/s 43B, the mandatory requirement is the substantial compliance of making payment by assessee before the due date for filing of return of income u/s 139(1), while the second condition as stipulated under the first proviso to Section 43B of enclosing eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll are authorized to use the facilities granted by Dinners Club and actual usage of facilities for business activities or business promotion. In the absence of any evidence on record, we are afraid these expenses cannot be allowed as business/revenue expenses. Even, before us no evidence is filed or brought to our notice to justify that these expenses are business expenses incurred wholly and exclusively for the purposes of business of the assessee. Thus, we reverse the appellate order passed by ld. CIT(A) and uphold the addition as was made by AO. Addition to the income of the assessee on account of short credit of income in the P L Account - HELD THAT:- Instead of giving reasons for acceptance or rejection of assessee s contention, ld.CIT(A) simply accepted the assessee s contentions without giving its own reasons or results of verification conducted by him. The powers of ld.CIT(A) are co-terminus with powers of the AO. The claim submitted by assessee that the differential amount was refund of insurance premium which was included in the sum of 9,30,576.28 already credited in other income under the head Sundry Receipts, requires verification and investigation into facts to unravel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Tribunal, Allahabad, U.P.(hereinafter called "the tribunal"), in ITA no. 227/Alld/2016 for ay:1997-98, as under:- "1. That the Ld. CIT(A) has erred on facts and in the law in deleting the disallowance of ₹ 92,00,536/- on a/c of expenses relating to earlier years, without appreciating the Assessing officer's observation that the expenses will be allowable in the year when such liability has been quantified or paid. 2. That the Ld. CIT(A) has erred on facts and in law in deleting the disallowance of ₹ 94,93,016/- on a/c of interest accrued and due, without appreciating the Assessing officer's finding that the assessee did not file any proof of payment. 3. That the Ld. CIT(A) has erred in deleting the disallowance of ₹ 46,39,150/- on a/c of interest payable on loans, without properly appreciating the facts and law. 4. That the Ld. CIT(A) has erred in deleting the disallowance of ₹ 39,000/- on a/c of unclaimed deposits/loan and ₹ 1049/- on a/c of interest thereon, without properly appreciating the facts and law. 5. That the Ld. CIT(A) has erred in deleting the addition of ₹ 48,172/- without appreciating the Assessing Office's finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue in its appeal filed with tribunal is reproduced hereunder once again at the cost of repetition:- "10. That the ld. CIT(A) has erred in deleting the additions made by the Assessing Officer by simply relying upon the submissions of the assessee without examining and analyzing the facts of the case." We have carefully gone through the appellate order dated 05.07.2016 passed by ld. CIT(A) on all the issues adjudicated by ld. CIT(A) on merits of the issue, and found substance in the ground raised by Revenue. We have reproduced in the succeeding para's of this order, the operative part of decision of ld. CIT(A) on all the issues on merits and have observed that cryptic, un-reasoned and non-speaking order is passed by ld. CIT(A) without investigating into the facts of the case wherein merely submissions as were made by the assessee before ld. CIT(A) were accepted in to-to by ld. CIT(A), and the appeal of the assessee stood decided in favour of the assessee, without recording reasons based on facts and law which went into decision making process of ld. CIT(A). It is very important that in appellate order which is passed by ld. CIT(A), all the facts for and against the assessee mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n arriving at decision by ld. CIT(A). Moreover, if reasons are recorded and speaking order is passed by ld. CIT(A), then the aggrieved party will also come to know why the decision has gone against it and what weighed in the mind of ld. CIT(A) while adjudicating the issue against it, so that the aggrieved party can set up its defense at higher appellate forum. Recording of reasons and passing of speaking order is also of utmost importance for higher judicial forum viz. ITAT to know what weigh in the mind of ld. CIT(A) while adjudicating an issue. It will also enable the higher judicial forum to know what evidences were considered by ld. CIT(A) while adjudicating anissue whether relevant and material evidences were considered appropriately or not given due weight and whether irrelevant and extraneous material and evidences weigh in the mind of ld. CIT(A) while adjudicating an issue before it. Reference is drawn to decision of Hon'ble Apex Court in the case of Kranti Associates Private Limited v. Masood Ahmed Khan & Ors. - (2010) 9 SCC 496, wherein Hon'ble Supreme Court after considering number of judgments summarized at para 51 the law on the point, which is reproduced hereunder: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737). n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process"." Thus, on careful analysis of the appellate order dated 05.07.2016 passed by ld. CIT(A)(operating decision part of ld.CIT(A) appellate order reproduced in subsequent para's of this order), we have observed that ld. CIT(A) has passed a cryptic, nonspeaking and un-reasoned order wherein he has merely accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses relating to earlier years in the Tax Audit Report of 1997-98 relates to accounting year 1996-97 and the same were not accounted for in the accounts of the financial year 1996-97. The AO observed from the details furnished by the assessee that for such a huge payment of cost of cane @ ₹ 8/- per quintal on total cane of 11,35,201 quintals have been ignored by the company while accounting for purchases and other liabilities. The AO observed that decision of Hon'ble Apex Court in the case of Kedarnath Jute Manufacturing Company Limited(supra) has no applicability as this decision was rendered by Hon'ble Apex Court when tax-audit u/s 44AB was not introduced. The AO was of the view that if any such lapses had taken place, the auditors should have removed the defect before submitting the prescribed report/audited accounts. The AO further observed that despite assessee company aware of its liability towards purchase of 11,35,201 quintal of cane payable to the cane growers, and that there would be a liability to that effect, the assessee company even did not reported said liability in "Notes on Accounts" which are part of the Audited Annual Report. Hence, the AO rejected the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was made by the assessee in its books of accounts for the financial year 1996-97. It was also submitted by assessee before ld. CIT(A) that while finalizing the companies accounts for the financial year ended March, 1998, the auditors had classified these liabilities as expenses relating to earlier years, as could be verified from Annexure D-2 (page 86/paper book) which is part of the tax-audit report in form No. 3CD for the year ended 31.03.1998(Page 75 to 89/paper book). It was submitted by assessee before ld. CIT(A) that based on the auditors report, the aforesaid expenses were excluded in computing the taxable income of the assessee for ay:1998-98. It was submitted by assessee before ld. CIT(A) that the assessee is following mercantile system of accounting and the aforesaid liabilities were incurred for the previous year relevant to ay:1997-98 and hence the same were claimed as allowable deductions while computing taxable income for ay: 1997-98, by relying on the decision of Hon'ble Supreme Court in the case of Kedar NathJute Manufacturing Co. LTD.(supra),in the revised return of income filed by assessee with Revenue on 29.12.1998, albeit the same was not provided for in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cane was enhanced in the year under consideration. It was also submitted by ld. Sr. DR that books of accounts of the assessee were audited under Companies Act as well tax-audit was conducted for financial year 1996-97, but these expenses were not accounted for by assessee in its book of accounts nor these expenses were certified by tax auditors conducting taxaudit u/s 44AB of the 1961 Act, and hence the AO rightly disallowed these expenses. Our attention was drawn to the Assessment order passed by the AO. Our attention was also drawn to Page No. 74 of the paper book, wherein voucher dated 30.11.1997 for ₹ 90,81,606.80 is placed and it was submitted that the assessee is claiming that this representcane price difference @ ₹ 8/- per quintal, and it is reflected in the said voucher, that the said cane price difference is claimed for purchases made from 15.11.1996 to 23.02.1997. Our attention was drawn to page 86 of the paper book, which is part of tax-audit report for accounting year 1997-98(ay:1998-99), wherein the tax-auditor has certified the expenses relating to precious year, as under: "Expenses Relating to Previous year Voucher Reference Particulars Amounts JV- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent year. The ld. Counsel for the assessee prayed that order passed by ld. CIT(A) be upheld. 4.6 The Ld. Sr. DR submitted in rebuttal that there are expenses also on account of interest on loans as well rent expenses which were claimed in this year although they were booked in the books of accounts for the subsequent year. The ld. DR submitted that the assessee did not claimed these expenses in original return of income, but the same were claimed in revised return of income. The Ld. DR also submitted that the decision of Hon'ble Supreme Court in the case of Kedar Nath Jute MFG. Co. LTD.(supra)is not applicable to the facts of the instant case, as to said decision was rendered in context of the sale tax liability while presently, we are concerned with the trading liability. 4.7 We have considered rival contentions and perused the material on record. We have observed that the assessee is engaged in the business of running Sugar Mill. The assessee filed its return of income u/s 139(1) on 28.11.1997, wherein assessee claimed business loss of ₹ 1,62,09,439/-. The aforesaid return of income was revised by assessee on 29.12.1998, wherein business loss of ₹ 2,54,35,899/- wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as per AO the assessee is now quantifying on purchases of 11,35,201 quintals of sugarcane claimed to be purchased @₹ 8 per quintal. As per the AO said liability shall be allowable when quantified or paid. The assessee filed first appeal with ld. CIT(A) being aggrieved by the decision of the AO and the appeal stood allowed by ld. CIT(A), by holding as under: "2.2 Decision Since the assessee is maintaining its accounts on mercantile basis, the assessee was entitled to claim the expenditure incurred during the year even if paid in later years. In this case, the liability to pay Rs. 92,00,536/- had been incurred during the year, though was payable after the end of the financial year. It is not the case of the A.O. that such a claim of expenditure was totally untenable or was bogus or was contingent disability. In this view of the matter, the assessee company was entitled to the impugned deduction as it was maintained its books of account on mercantile basis. Addition so made is, therefore, deleted." Once the additions were made by the AO, it was incumbent on ld. CIT(A) to have investigated the facts by looking into books of accounts and other relevant material, before all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1996-97. No enquiry whatsoever was made by ld. CIT(A) to investigate facts and unravel truth, and simply on assertions made by assessee, the claim of the assessee for deduction of additional liability of ₹ 90,81,606.80 was allowed by ld. CIT(A) towards additional liability for purchase of sugar cane for season 196-97. Proceeding further, now coming to the audited books of accounts of the assessee for the financial year 1996-97, In the notes to accounts to audited financial statements for 1996-97, it is stipulated in Note No. 15 which is additional information as required under paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act,1956 (page 28/29 paper book), wherein details of Raw Material Consumed is given as under: 6. RAW MATERIAL CONSUMED: (a) Sugarcane Qtls. 17,37,103 (5,55,100) Value/₹ 12,46,84,200 (4,38,10,023) Under the same schedule, in the details of opening and closing stock, there is no mention of any stock of sugarcane held by the assessee, at the beginning as also at the close of the year. Further, in the details of quantities lost in process or found short, the loss on account of sugarcane is stated for the year under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et up a claim of deduction of Rent of ₹ 27,500/- in the year under consideration which was not provided in the books of accounts of the year under consideration viz. fy: 1996-97, and which was claimed to be debited in the books of accounts for subsequent year viz. fy:1997-98, and claimed as deduction for ay:1997-98 by filing revised return of income with Revenue on 29.12.1998. We have observed that there is no discussions whatsoever by ld. CIT(A) on this issue in its order and he has merely accepted the contentions of the assessee. There is no investigation of facts by ld. CIT(A) as to the premises in connection with which Rent was paid and whether the said premises was used wholly and exclusively for the purposes of business of the assessee. Further, there is no evidence whatsoever available on record on this issue to give any conclusive finding by us on this issue. The powers of ld. CIT(A) are co-terminus with powers of the AO. These aspects were never looked into by ld. CIT(A), and hence the appellate order passed by ld. CIT(A) on this issue cannot be sustained and we are inclined to set aside and restore this issue back to the file of ld. CIT(A) for fresh adjudication on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om State Government, thus by invoking the provisions of Section 43B, the AO disallowed the said amount of ₹ 94,93,016/- and added the same to income of the assessee, vide assessment order dated 31.01.2000 passed by AO u/s 143(3) of the 1961 Act. 5.2 Aggrieved by assessment framed by the AO wherein said amount of ₹ 94,93,016/- stood added to income of the assessee, the assesse filed first appeal with Ld. CIT(A). It was submitted by assessee before ld. CIT(A) that the assessee had been sanctioned term loan of ₹ 3 crore by State Government as Rehabilitation package under BIFR(page 95 to 98 of paper book). it was submitted that assessee follows mercantile system of accounting and the assessee was not able to pay interest due on the said loan, and a provision of ₹ 94,93,016/- was made in the books of accounts of the company for payment of interest on said term loan It was submitted by assessee before ld. CIT(A) that as the provision was made towards payment of interest to State Government, the same is outside the purview of Section 43B of the 1961 Act, as in the opinion of the assessee provisions of Section 43B as it stood for relevant assessment year in statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by ld. Counsel for the assessee that Delhi-tribunal followed the aforesaid decision in another appeal in ITA No. 6452/Del/2014, vide orders dated 11.03.2016 in the case of Ramala Sahkari Chini Mills Ltd. Meerut v. ACIT. 5.6 We have heard rival contentions and perused the material on record. We have observed that in the audited financial statements for the financial year 1996-97, the assessee has shown outstanding loans payable to Government of Uttar Pradesh in its liability side of Balance Sheet under Schedule -3 Loans under sub-head 3 Loan from Others, being Secured Loans. Thereafter under sub column 3(ii), there is an interest accrued and due of ₹ 94,93,016/- as at 31.03.1997 which is stated to be payable by the assessee. The AO disallowed the said interest accrued and due to the tune of ₹ 94,93,016/- as there was no proof of payment of said interest which was accrued and due, by invoking provisions of Section 43B. The main contention of the assessee before ld.CIT(A) was that it was sanctioned term loan of ₹ 3 crores from U.P. State Government as rehabilitation package under BIFR (page 95-98/paper book). It was claimed by assessee before ld. CIT(A) that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loans and further amount of ₹ 2,60,64,684/- is shown as funded interest. Thereafter under sub column 3(ii), there is an interest accrued and due of ₹ 94,93,016/- as at 31.03.1997 which is stated to be payable by the assessee. There is no discussion by ld. CIT(A) as to the applicability of provisions of Section 43B to interest payable on loans raised from Government. The ld. CIT(A) never called for details/bifurcations of these loans etc. along with their sanction letter to find out the details of lender(whether the Government or State FI's are lenders) and terms and conditions of loan, before granting relief to the assessee. The ld. CIT(A) never investigated the details of lenders and whether these lenders were State Government or State Financial Institutions or any other State instrumentalities, as it will have bearing on applicability of Section 43B. The powers of ld. CIT(A) are co-terminus with powers of the AO (Section 251(1)(a) ). All these aspects were never looked into by ld. CIT(A) before granting relief to the assessee as there are no observations whatsoever on these critical issues and merely cryptic, unreasoned and non speaking order is passed by ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has not been looked into by ld. CIT(A), as discussed by us as above in this order and hence, we have already set aside the matter to ld. CIT(A), but so far as ratio of law is concerned, interest payable on loans raised from State Government/Central Government are not hit by provisions of Section 43B as it stood at relevant time. Needless to say that ld. CIT(A) shall give proper opportunity of being heard to the assessee in set aside remand proceedings and evidences/explanations submitted by the assessee in its defense shall be admitted by ld. CIT(A) and adjudicated on merits in accordance with law. We order accordingly. 6. The next ground agitated by Revenue in this appeal concerns itself with disallowance of ₹ 46,39,150/- by AO on account of interest payable on loans, by invoking provisions of Section 43B, which disallowance stood deleted by ld. CIT(A). The AO observed that the assessee showed total liability of ₹ 2,66,32,979/-towards other liabilities under Schedule 11 of the Balance Sheet. From the details of such liabilities as on 31.03.1997 amounting to ₹ 64,36,440/- in Head Office Account, it was observed by AO that following interest are payable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Is that these related to loan taken from Sugar Development Fund from U.P. Government. As U.P. Govt. is neither a Public Financial Institution as referred to sub section (d) of section 43 B of the Act nor a scheduled Bank referred to in sub-section (e) of Section 43B of the Act, the provision made for payment of interest to State Government, is outside the ambit of section 43B of the Income Tax Act 1961. The disallowance of liability of interest payable on loan taken from sugar Development Fund through Govt of U.P. should, therefore, be deleted. In any case and without prejudice to the above, the liability of interest amounting to ₹ 5,84,741/- as at SI. No. (b) above related to interest payable on 1st tranch of loan from sugar Development Fund as is evident from the copy of said account as appearing in the books of the company a copy of which is enclosed (page 99 of PB) as detailed hereunder:- (Rs.) Balance brought forward 7,98,000 Add: Provisions made for interest Payable during the year 2,43,260 10,41,260 Less: Amount paid during the year 4,56,519 Balance carried forward 5,84,741 The provisions of ₹ 2,43,260/- made for the year under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that interest due of ₹ 4.74lacs was paid before the due date as provided u/s 139(1) of the 1961 Act, and hence disallowance under Section 43B cannot be made. It was submitted that loans under Sugar Development Fund is a loan granted by Government and hence provisions of Section 43B are not hit. It was further submitted that interest of ₹ 35.80 lacs payable was with respect to loans granted under Sugar Development Fund by Government and was capitalized and hence Section43B has no applicability. Our attention was drawn to page 100 of the paper book, wherein journal voucher dated 31.3.1997 passed by assessee is place wherein Neoli Sugar Factory (Project) A/c is debited and interest paid account is credited. Our attention was further drawn by ld. Counsel for the assessee to page 67 of paper book and it was submitted that ₹ 2,43,260/- is the interest payable on sugar development fund which was not paid and hence added back to the income of the assessee u/s 43B of the 1961 Act by assessee of its own in the revised return of income filed with the Revenue by the assessee. Our attention was also drawn to the appellate order passed by ld. CIT(A). On being asked by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um was incurred as aforesaid under clause (d) of Section 43B and evidence of such payment is furnished by the assessee along with return of income, the said sum shall be allowed in the year in which liability was incurred. Thus, clearly interest payable to IRBI( Industrial Reconstruction Bank of India later called as 'Industrial Investment Bank of India'(IIBI) after being converted into a company) which is a public financial institution are clearly hit by Section 43B(d) of the 1961 Act. Thus, the interest at S.No. 1 to 4 above in chart in para 6.6, aggregating to ₹ 4,74,013/- payable to IRBI is hit by provisions of Section 43B(d) of the 1961 Act. The assessee has claimed that it paid the said amount of interest payable of ₹ 4,74,013/- on 15.07.1997 and reference is drawn to tax-auditor report (page 56/pb). The provision of Section 43B stipulates that evidence of payment is to be enclosed with return of income in the first proviso to Section 43B. However, the assessee has not enclosed evidence of such payment along with return of income, but the factum of mention of interest paid to IIBI is found in tax audit report. In our view, to claim the extended period benefit u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book, wherein journal voucher dated 31.3.1997 passed by assessee is place wherein Neoli Sugar Factory (Project) A/c is debited and interest paid account is credited. On being asked by the Bench, that the amount capitalized in the Balance Sheet in Neoli Sugar Factory and Head Office is a meager sum of ₹ 2,60,590/- as per audited accounts for financial year 1996-97(paper book/page 34) in the Fixed Asset Schedule, the ld. Counsel for the assessee submitted that the sum of ₹ 35,80,396/- is capitalized by debiting to 'Capital Work in Progress', and an amount of ₹ 3,86,94,450/- is outstanding as at 31.03.1997 under the head 'Capital Work in Progress'. These contentions of the assessee will require verification which needs investigation and enquiries into the factual aspects to unravel the truth, as also adjudication of legal issue as to applicability of Section 43B in such a scenario as ultimately, the assessee will be claiming depreciation u/s 32 of the 1961 Act on the interest being capitalized, even though presently as claimed by assessee, the interest is capitalized by debiting to Capital Work in progress and not debited presently to P&L Account(which also requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance or deduction has been claimed in respect of any of the assessment years for any loss, expenditure or trading liabilities incurred by assessee, nor does any benefit obtained in case or in any other manner whatsoever, any amount in respect of such loss or expenditure or any benefit in respect of such trading liability by way of remission or cessation thereof, the same does not constitute its income. Thus, the assessee prayed before ld. CIT(A) that there is no justification for treating the deposits remaining unclaimed by the depositors as its income unless and until the same was appropriated by it in its books of accounts. The ld. CIT(A) was pleased to delete the disallowance, vide appellate order dated 05.07.2016, by holding as under: " 5.2 Decision Since these amounts have not been written back by the assessee in its books, the same cannot be treated as its income u/s 41(1) of the I.T.Act. Additions s made are therefore, deleted." 7.3. Aggrieved by the decision of ld. CIT(A), now it was the turn of Revenue to file an appeal with tribunal. The Ld. Sr. DR relied upon the assessment order passed by the AO and prayed that the additions as were made by the AO be confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on provides for a period of 3 years and beyond that the debt become time barred, if no claim is made or debt is not acknowledged. No doubt law of limitation only bars legal suit for recovery of debt through Court of law, and creditor can always voluntarily come forward and acknowledge or pay debt even beyond limitation period of 3 years and Section 41(1) will not be applicable. But, in this instant case before us, on the touchstone of preponderance of probabilities, we are of the considered view that these unclaimed deposits/loans are 16-22 years old which is a considerable period of time-gap, these loans/deposits are admittedly shown as 'unclaimed deposits/loans' by assessee itself in its audited financial statements, the assessee has claimed albeit in earlier years benefit of deduction of interest expenses on these deposits/loans as revenue deduction while computing income chargeable to tax for those earlier years, and even before us it could not be shown that there is any claim made by any of these depositors/lenders for reviving their claim of debt/loan or assessee has acknowledged its debt towards these unclaimed deposits/loans, that the aforesaid amount of ₹ 39,000/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of return of income u/s 139(1), and thus, the same was hit by Section 43B and AO rightly made the disallowance. The ld. Sr. DR relied upon the assessment order passed by AO. The ld. Counsel for the assessee on the other hand argued that unpaid sales tax liability was paid on 17.4.1997 and thus was paid before the due date of filing of return of income u/s 139(1) and hence disallowance under Section 43B cannot be made. The ld. Counsel for the assessee relied upon the appellate order passed by ld. CIT(A). 8.4 We have heard both the rival parties and perused the material on record.We have observed that there was an unpaid liability of ₹ 48,172/- towards sale tax payable on molasses, as at 31.03.1997. The AO invoked provisions of Section 43B of the 1961 Act and added the same, as the assessee did not enclosed evidence of payment of such amount of sales tax payable on molasses along with return of income. The assessee has claimed to have filed challan for payment of aforesaid sales tax liability, before ld. CIT(A) stating that said liability towards sales tax was paid on 17.04.1997(page 101-103). We have perused the challans filed at page 101-103/pb, but it is observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date prescribed u/s 139(1) is produced by the tax-payer at appellate stage, the tax-payer will be entitled for getting extended period benefit u/s 43B. The assessee is directed to produce visible/legible copy of challan evidencing payment of unpaid liability of ₹ 48,172/- towards sales tax before ld. CIT(A) for verification by ld. CIT(A), as we are also remitting this issue to the file of ld. CIT(A) for verification of challans for remitting payment to Government by assessee towards unpaid sales tax liability on molasses to the tune of ₹ 48,172/- vis-à-vis liability as is appearing in its audited financial statements as at 31.03.2007. The ld. CIT(A) shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law, and evidences/explanations submitted by the assessee shall be admitted by ld. CIT(A) and adjudicated on merits in accordance with law. We order accordingly.. 9. The next issue concerns itself with the deletion of disallowance to the tune of ₹ 91,508/- on account of PF, EPF of the employees of the company vide appellate order dated 05.07.2016 passed by ld. CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by AO and prayers were made to confirm the additions. It was submitted by ld. Sr. DR that the ld. CIT(A) has just reproduced the assessee's submissions and without discussing the issues raised by the AO, and hence the appellate order is not also sustainable on this ground. The ld. Counsel for the assessee on the other hand relied upon the appellate order passed by Allahabad-tribunal in the case of JCIT(OSD), Allahabad v. Bharat Pumps and Compressors Limited, Allahabad, in ITA no. 147 and 148 /Alld/2016 for ay: 2005-06, vide orders dated 12.08.2021, in which both of us were part of the Division Bench who pronounced the said order, and prayers were made that since the said amount was paid before the due date as is prescribed u/s 139(1) of the 1961 Act and hence the appellate order passed by ld. CIT(A) be confirmed. It was also submitted that the impugned year under consideration before the Bench is ay: 1997-98 and amendments as were made by Finance Act, 2021 in Section 36(1)(va) and 43B shall not be applicable to impugned year under consideration before the Bench. 9.4 We have considered rival contentions and perused the material on record. The assessee has deposited em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several Benches of ITAT across India have already adjudicated this issue in favour of tax-payer, even after considering the recent amendments made by Finance Act, 2021 in Section 36(1)(va) and 43B. Presently, we are concerned with ay:1997-98. This issue is adjudicated in favour of the assessee. We order accordingly. 10. The next issue concerns itself with the deletion by ld. CIT(A) of disallowance of ₹ 1042/-on account of payment to Dinners Club, which was earlier added by the AO to the income of the assessee vide assessment order dated 31.01.2000 passed by AO u/s 143(3) of the 1961 Act. The AO during the course of assessment proceedings observed that the assessee has made payment of ₹ 1,042/- to Dinners Club which is not related to business of the assessee and hence the additions to the tune of ₹ 1042/- was made by AO to the income of the assessee by disallowing the said amount being not related to the business of the assessee, vide assessment order dated 31.01.2000 passed by AO u/s 143(3) of the 1961 Act. 10.2 Aggrieved by assessment framed by AO., the assessee filed first appeal before ld. CIT(A), and submitted that ₹ 1,042/- was paid to Dinner Club for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the addition as was made by AO. We order accordingly. 11. The next issue concerns itself with the deletion by ld. CIT(A) of addition to the tune of ₹ 49,310/- made by AO to the income of the assessee on account of short credit of income in the P&L Account. It was observed by AO during the course of assessment proceedings from the tax-audit report at Column 9(b) that income of preceding year reported by auditor is ₹ 3,73,724/-, while the assessee has credited income of ₹ 3,24,414/- in its income account. Thus, the AO brought to tax difference income of ₹ 49,310/- by adding the same to income of the assessee, vide assessment order dated 31.01.2000 passed by AO. 11.2 Aggrieved by an assessment framed by AO adding ₹ 49,310/- to the income of the assessee vide assessment order dated 31.01.2000, the assessee filed first appeal before CIT(A) and submitted that the assessee company as per tax-audit report in para 9(b) as reported by tax-auditor has received income of earlier years aggregating to ₹ 3,73,724/-, whereas in schedule 13 of 'other income' as annexed to Balance Sheet s at 31.03.1997, the amount of income relating to earlier years credited s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by assessee that the differential amount of ₹ 49,310/- was refund of insurance premium which was included in the sum of ₹ 9,30,576.28 already credited in other income under the head Sundry Receipts, requires verification and investigation into facts to unravel truth, and hence we are inclined to set aside and restore this issue to file of ld.CIT(A) for fresh adjudication on merits in accordance with law, and ld. CIT(A) is directed to pass reasoned and speaking order, after considering our observations on this issue in this order. Needless to say that ld. CIT(A) shall give proper opportunity of being heard to the assessee in set aside remand proceedings and evidences/ explanations submitted by the assessee in its defense shall be admitted by ld. CIT(A) and adjudicated on merits in accordance with law. We order accordingly. 12. The next issue concerns itself with the deletion by ld. CIT(A) of disallowance of ₹ 18,333/- on account of entertainment expenses, which was earlier added by AO to the income of the assessee by invoking provisions of Section 37(2) of the 1961 Act. The AO observed during the course of assessment proceedings that the assessee has debite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by ld. CIT(A) granting relief to the assessee, who filed second appeal with tribunal. The ld. Sr. DR relied upon assessment order passed by the AO. The ld. Counsel for the assessee on the other hand relied upon the appellate order passed by ld. CIT(A). 12.4 We have considered rival contentions and perused the material on record.We have observed that the assessee has incurred expenditure of ₹ 46,666/- towards Entertainment Expenses. We have observed that the assessee has claimed that employees of the assessee company accompanied the customers of the assessee and 25% of the total expenses incurred under the head 'Entertainment Expenses' were attributable to employees of the assessee. The assessee has relied upon the decision of Hon'ble Delhi High Court in the case of CIT v. Expo Machinery Limited(supra) to justify its stand that it will be entitled for deduction on account of its employees accompanying customers @ 25% of the total Entertainment Expenses being attributable to said employees. We have observed that in aforesaid judgment passed by Hon'ble Delhi High Court in Expo Machinery(supra), there is a finding of fact recorded by ld. CIT(A) that employees accompanied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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