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TMI Blog2019 (9) TMI 1694X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of ld. AO in making disallowance of Rs. 1,03,508/- u/s 36(1)(va) and, thereby, adding the same as income u/s 2(24)(x). The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the expense of Rs. 1,03,508/- u/s 36(1)(va). 3. The assessee craves its right to add, amend, or alter any of the grounds on or before the hearing." Ground No. 1 is regarding the addition made by the TPO/AO on account of adjustment in respect of the payment of interest to related parties. 2. The assessee company is engaged in the business of manufacturing and sale of Transformers, PCC Poles etc. The assessee filed its return of income on 01.10.2014 declaring total income of Rs. 3,53,27,440/-. The case was selected for scrutiny and the AO noted that the assessee has entered into certain Specified Domestic Transactions on account of payment of interest to the related parties. Accordingly the AO made a reference under section 92CA to the TPO for determination of Arm's Length Price in respect of the Specified Domestic Transactions entered into by the assessee with the Associated Enterprises. The assessee filed its Trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest paid to the unrelated parties and excluded the brokerage paid by the assessee in respect of such transactions of loan taken from unrelated parties. Therefore, the ld. CIT (A) has arrived to the Arm's Length interest rate at 14.5% being the average interest rate excluding brokerage paid by the assessee to the unrelated parties. 3. Before us, the ld. A/R of the assessee has submitted that when the Internal CUP is accepted by the ld. CIT (A) as most appropriate method then the actual cost of finance obtained from the unrelated parties ought to have been taken at Arm's Length Price to benchmark the Specified Domestic Transactions of payment of interest to the related parties. He has referred to the details of the interest paid to the related parties as well as to unrelated parties and submitted that the TPO as well as the AO has not disputed the actual cost of loan taken from the unrelated parties being interest and brokerage at 15.36% in comparison to the interest paid to the related parties at 15%. Therefore, the ld. A/R has submitted that the transaction of payment of interest to the related parties is at Arm's Length and no adjustment/addition is called for on this acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 970 - 15% Annually 15% 4. Alok Agrawa 21 Y 15% 577,555 - 15% Annually 15% 5. Alok Agrawal HUF 22 Y 15% 297,714 - 15% Annually 15% 6. Atul Agrawal 23- 24 Y 15% 578,513 - 15% Annually 15% 7. Atul Agrawal HUF 25 Y 15% 327,449 - 15% Annually 15% 8. Deepali Garawal 26 Y 15% 356,401 - 15% Annually 15% 9. Himanshi Agarwal 27 Y 15% 80,114 - 15% Annually 15% 10. Purva Agarwal 28 Y 15% 239,577 - 15% Annually 15% 11 Pushpa Agarwal 29 Y 15% 641,333 - 15% Annually 15% 12 Sapna Agarwal 30 Y 15% 541,065 - 15% Annually 15% 13. Siddhanth Agarwal 31 Y 15% 1,366 - 15% Annually 15% 14. Tanmay Agarwal 32 Y 15% 113,392 - 15% Annually 15% 15. Vedant Agarwal 33 Y 15% 74,053 - 15% Annually 15% 16 Veena Agarwal 34 Y 15% 11,352 - 15% Annually 15% AVERAGE 15% 4,515,807 15% 15% UNRELATED PARTIES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party payment of interest. Having regard to the undisputed fact that the assessee has paid the effective average rate of interest inclusive of brokerage at 15.36%, then the payment of interest to related parties at 15% is at Arm's Length. It is also pertinent to note that even by applying the Arm's Length Interest at 14.50% based on the Internal CUP which is an average of 15 transactions then the tolerance range provided under second proviso to section 92C(2) is also applicable in the case of the assessee and, therefore, in any case the Specified Domestic Transactions price falls in the tolerance range of (+)(-) 3%. Accordingly, the addition sustained by the ld. CIT (A) is deleted. Ground No. 2 is regarding disallowance of Employees Contribution to PF & ESI paid after the due date as provided under the relevant Acts. However, it was paid before the due date of filing the return of income under section 139(1) of the Act. 6. We have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. The ld. CIT (A) has not disputed the fact that the payment of Employees Contribution to PF & ESI was made before the due date of filing the return of income unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 which was followed by the ld. CIT (A) while passing the impugned order, has decided this issue in favour of the assessee in para 2 as under :- "2. The only issue in this appeal is regarding disallowance of employees contribution to PF & ESI after the due date of payment as per respective Acts PF & ESI however, it was paid before the due date of filing of return of income U/s 139(1) of the Act. The ld. CIT(A) has accepted the fact that the assessee has paid the contribution towards to PF & ESI prior to due date of filing of return of income U/s 139(1) of the Act but the claim was disallowed on the basis of the decision of Hon'ble jurisdictional High Court in case of in case of PCIT vs. M/s Rajasthan Renewable Energy Corporation Limited in DB ITA No. 10,11 & 12/2018 dated 13.03.2018 which was misunderstood by the ld. CIT(A). We note that there was typographical mistake in the said decision of the Hon'ble jurisdictional High Court whereas the Hon'ble High Court has followed the earlier decision in case of CIT vs. Jaipur Vidyut Vitran Nigam Ltd. 363 ITR 307. The ld. AR has pointed out that the decision of Hon'ble Jurisdictional High Court in case of PCIT vs. Rajasthan State Bever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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