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TMI Blog2022 (4) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... od for 15.3.2020 till 14.3.2021 shall stand excluded. Considering the same, we condone the delay in filing the departmental appeal and admit the same for hearing. 3. Brief facts of the case as culled out from the records are that the assessee is an individual engaged in the business of transportation contractor, handling of steel materials. Return of income for A.Y. 2013-14 filed on 30.09.2013 declaring income of Rs. 1,30,94,980/-. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. Ld. Assessing Officer (in short Ld. AO) called for various informations including explanation for unsecured loans taken during the year. Detailed submissions were filed. Ld. AO also examined the issue of disallowance u/s 14A of the Act, delay in deposit of PF and ESIC and others expenses. After considering the submissions, Ld. AO assessed the income at Rs. 6,50,37,768/- after making following additions of Rs. 51942788/-: 1. Unexplained cash credit u/s 68 of the Act and interest thereon Rs. 4,74,82,575/- 2. Disallowance u/s 14A of the Act Rs. 3,57,623/- 3. Ad hoc disallowance @ 5% of the expenses Rs. 21,33,556/- 4. Unexplained agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 6,80,640/- made by the Assessing officer on account of disallowance of agriculture income. 5. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law in deleting the addition of Rs. 9,93,337/- made by the Assessing officer on account of disallowance of depreciation claimed on car. 6. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law in deleting the addition of Rs. 14,414/- made by the Assessing officer on account of disallowance of depreciation claimed on camera. 7. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law in deleting the addition of Rs. 280643/- made by the Assessing officer on account of disallowance of late payment of contribution of provident fund u/s 36(1)(va)of the Income Tax Act, 1961. 6. We will first take up assessee's appeal wherein sole issue relates to addition for unexplained cash credit of Rs. 83 lac received from M/s KCL Infra Projects Private Limited and disallowance of interest of Rs. 5,59,357/- paid on said loans. 6.1 Ld. counsel for the assessee submitted that the alleged loan was taken from M/s KCL Infra Projects Private Limited which is a limited c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its bank. This is the only reason mentioned by the Ld. AO for doubting the genuineness of unsecured loans. We are surprised to note that Ld. AO on one hand is stating that M/s KCL Infra Projects Private Limited is a listed company at Bombay Stock Exchange and Delhi Stock Exchange and it has taken loan from bank and used that fund to give loan to assessee but on the other hand only for the reason of interest rate, made the addition u/s 68 of the Act and even Ld. CIT(A) has also confirmed this view. 9. However, we on going through the papers filed by Ld. counsel for the assessee in the paper book containing 66 pages notice that identity of the assessee company is not in dispute as it is a listed company. Creditworthiness is also not in dispute as Ld. AO has himself observed that the source of loan given to assessee is loan taken from the bank by M/s KCL Infra Projects Private Limited. Even on going through audited balance sheet of M/s KCL Infra Projects Private Limited placed at pages 8 to 14 of the paper book, we find that as on 31.03.2013 share capital of the company is Rs. 5,26,62,000/-, accumulated reserves and surplus of Rs. 12,45,26,849/- and cash and cash equivalents as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for business purpose and there remains no scope for the Ld. AO to make any addition u/s 68 of the Act for the alleged cash credit, as well as disallowance of interest paid thereon. We thus reverse the finding of the Ld. CIT(A) and delete the addition made u/s 68 of the Act at Rs. 83 lakhs and also delete disallowance of interest paid on such unsecured loan of Rs. 5,59,357/-. Ground no.1 & 2 raised by the assessee are allowed. 11. Ground no.3 raised by the assessee is general in nature which needs no adjudication. Now we take up the Revenue's appeal: 12. Ground no.1 relates to addition u/s 68 of the Act for unexplained unsecured loans and interest paid thereon at Rs. 3,86,23,218/- which has been deleted by Ld. CIT(A). 12.1 Ld. DR vehemently argued supporting the order of Ld. AO. 12.2. Per contra, Ld. counsel for the assessee referred the submissions filed before Ld. CIT(A) and also supported the finding of Ld. CIT(A). 12.3 We have heard rival contentions, perused the records placed before us. Through ground No.1 revenue has challenged the finding of Ld. CIT(A) deleting the addition of Rs. 3,86,23,218/- made for unexplained unsecured loan and interest paid thereon taken fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 8,79,041/-. 12.6. As regards the cash creditor namely M/s Jay Jyoti India Pvt. Ltd. Mumbai we find that this company was incorporated in 1999. As on 31.03.2013 it had share capital of Rs. 6,33,50,500/- and net reserves and surplus of Rs. 1,08,62,25,646/-. Bank statement, confirmation of account, ledger statement, audited financial statement, Memorandum of Association and tax deducted at source certificate are placed on record which in totality are sufficient to prove identity of this company, genuineness of the transaction and creditworthiness of this company It is further proved with the fact that it had merely advanced 0.75% of the funds which it was capable of i.e. it had financial capacity of advancing 133 times more than the loan given to the assessee company. Thus, Ld. CIT(A) has rightly appreciated these facts for deleting addition for made u/s 68 of the Act as well as the interest disallowance. 12.7. As regards unsecured loan of Rs. 50 lakhs taken from Manas Realtors Pvt. Ltd. and Rs. 50 lakhs Shri Sushil Kumar Ratanlal Khowal from perusal of the documentary evidences filed by the assessee, we notice that Manas Realtors Pvt. Ltd. is stated to be a Real Estate Consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that the assessee has not earned any dividend income during the year. Therefore, Ld. CIT(A) has rightly deleted the addition in light of the judgment of Hon'ble Gujarat High Court in the case of CIT vs. Correcteh Energy 272 CTR 262 and another judgment of Hon'ble Gujarat High Court Pr. CIT vs. Adani Enterprises Ltd. (2017) 248 Taxman 449 (Guj.). Thus, we find no infirmity in finding of Ld. CIT(A) deleting disallowance u/s 14A of the Act at Rs. 3,57,623/-. Thus, ground no.2 raised by the revenue is dismissed. 14. Revenue's Ground no.3 is towards deletion of adhoc disallowance of expenses of Rs. 21,33,556/-. We find that Ld. AO has made disallowance on ad hoc basis @ 5% of the expenses. No specific observation with regard to any irregularity in the records and Books of accounts has been pointed out by Ld. AO. Thus in the given facts where the assessee owns cranes, dumpers, trailors, trolleys and trucks etc., records regarding fuel expenses, daily allowance of drivers and toll tax paid are maintained, we find no justification in such ad hoc disallowance made by the Ld. AO ignoring the books of account and the tax audit report. Thus Ld. CIT(A) has rightly deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Accordingly out of the total disallowance of depreciation of Rs. 9,93,337/- deleted by the ld. CIT(A), we confirm the disallowance only at Rs. 93,578/- and partly allow ground no.5 and dismiss ground no.6 raised by the revenue. 17. Apropos to ground no.7 relating to disallowance of contribution to Provident Fund u/s 36(1)(va) of the Act at Rs. 2,80,643/- we find that Ld. CIT(A) has rightly deleted the said disallowance in light of the decisions of this Tribunal in case of DCIT vs. D & H Secheron Electrodes P. Ltd. (ITANo.172/Ind/2011), Som Distilleries & Breweries v. DCIT (ITANo.296 & 97/Ind/2009),ACIT vs. M.P. State Cooperative Oil Seed Growers Federation (ITANo.145/Ind/2013) &Indira Exports Pvt. Ltd. vs. ACIT (ITANo.66/Ind/2012 wherein it has been held that if there has been delay in deposit in contribution as per the dates prescribed under the PF and ESI Act but ultimately such payments for the said year is deposited with the concerned authority before the due date of filing return of income u/s 139(1) of the Act then in light of the provisions of section 43B of the Act disallowance u/s 36(1)(va) is uncalled for towards the delay in deposit of employees contribution. Recent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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