Balaji Electrical Insulators Pvt. Ltd (Since merge with Golf Ceramics Ltd.), Ahmedabad V. DCIT, Circle-1(1)(1), Ahmedabad

ITA 1538/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6876 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 12-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Depreciation; Proportionate interest; Reasonable cause; Notional interest; Condonation of delay
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 1538/AHD/2018 (ASSESSMENT YEAR: 2013-14) BALJI ELECTRICAL INSULATORS P. LTD. (SINCE MERGED WITH GOLF CERAMICS LTD), BLOCK-G, 42/494, SHIVAM APARTMENT, NR. VYAS WADI, NAVA WADAJ, AHMEDABAD-380013 VS. DCIT CIRCLE-1(1)(1), AHMEDABAD [PAN NO. AACCB9879R] ( APPELLANT ) .. ( RESPONDENT ) I.T.A. NO. 1539/AHD/2018 (ASSESSMENT YEAR: 2014-15) BALJI ELECTRICAL INSULATORS P LTD. (SINCE MERGED WITH GOLF CERAMICS LTD), BLOCK-G, 42/494, SHIVAM APARTMENT, NR. VYAS WADI, NAVA WADAJ, AHMEDABAD-380013 VS. INCOME-TAX OFFICER, WARD-1(1)(2), AHMEDABAD [PAN NO. AACCB9879R] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI SAKAR SHARMA, AR RESPONDENT BY : SHRI LALIT P JAIN, SR. DR DATE OF HEARING 20.02.2020 DATE OF PRONOUNCEMENT 11.09.2020 O R D E R PER MS. MADHUMITA ROY - JM: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 06.02.2018 & 03.01.2018 PASSE D BY THE COMMISSIONER OF INCOME TAX (APPEALS)-5, AHMEDABAD F OR ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY. ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 2 - ITA NOS. 1538&1539/AHD/2018 (A.Y. 2013-14 & 2014-1 5):- 2. THERE IS DELAY IN FILING APPEAL IN ITAT. IT APP EARS FIND FROM THE RECORDS, THAT THE APPELLATE ORDER WAS SERVED AT THE OFFICE OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT ONLY ON 22.02.2018. THEREAFTER, THE ORDER WAS MADE AVAILABLE TO THE ASSESSEE SUBSTANTIALLY LA TE BY THE SAID REPRESENTATIVE. IT IS THE FURTHER CASE OF THE ASSE SSEE THAT ONLY UPON RECEIVING THE ORDER PASSED BY THE LD. TRIBUNAL HE COULD APPRO ACH THE CHARTERED ACCOUNTANT FOR PREPARATION OF THE APPEAL BEFORE US AND ULTIMATELY THE APPEAL COULD BE FILED ON 22.04.2018. THUS, THERE IS AN AP PROXIMATE DELAY OF 50 DAYS IN PREFERRING THE INSTANT APPEAL. THE EXPLANA TION GIVEN BY ASSESSEE AS NARRATED ABOVE SEEMS TO BE GENUINE. WE DO NOT FIND ANY INTENTIONAL LACKS ON THE PART OF THE ASSESSEE. HENCE THE DELAY IS CO NDONED. ITA NO. 1538/AHD/2018(A.Y. 2013-14):- 3. THE ASSESSEE HAS RAISED THE RELEVANT GROUNDS ARE AS UNDER:- 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN NOT CONDONING THE DELAY IN FILING OF APPEAL BY PLACING RELIANCE ON NOTIFICATION NO 11 /2016[F NO. 149/150/2015-TPL DATED 01/03/2016 AND CBDT CIRCULAR NO 20/2016 DATED 26/05/2016. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN NOT ADJUDICATING GROUND RELATING TO DISALLOWANCE OF INTEREST AMOUNTING TO RS. 23,36, 125/- U/S 36(1)(III). 3. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN NOT ADJUDICATING GROUND RELATING TO DISALLOWANCE OF DELAYED PAYMENT OF EMPLOYEES CO NTRIBUTION TO PROVIDENT FUND AMOUNTING TO RS. 3,650/- U/S. 36(1)(VA). GROUND NO.1:- 4. THE MAIN ISSUE RAISED IN THE APPEAL IS THIS THAT THE LD. CIT(A) HAS NOT CONDONED THE DELAY IN FILING APPEAL IN VIEW OF THE NOTIFICATION BEING NO. 11/2016 (F. NO. 149/150/2015-TPL DATED 01.03.2016 A ND CBDT CIRCULAR ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 3 - NO. 20/2016 DATED 26.05.2016 WHICH HAS CLAIMED TO B E NOT FOLLOWED BY THE ASSESSEE. IT IS THE CASE OF THE REVENUE THAT BY AN D UNDER THIS NOTIFICATION DATED 01.03.2016 AND THE CBDT AMENDED RULE 45 OF TH E INCOME TAX RULES, 1962 WHEREBY THE APPEAL BEFORE THE CIT(A) IS REQUIR ED TO BE FILED ELECTRONICALLY IN THE NEW FORM NO. 35. SUBSEQUENTL Y BY AND UNDER A FURTHER CIRCULAR NO. 20/2016 DATED 26.05.2016 THE TIME PERI OD WAS EXTENDED THE WINDOW FOR FILING E-APPEALS WHO HAS NOT BEEN SUCCES SFUL IN FILING THEIR APPEALS THROUGH ELECTRONIC MEDIA AND THEREFORE TO F ILE PAPER APPEALS UPTO 15.06.2016 BUT THE ASSESSEE FILED THE APPEAL ONLY O N 30.08.2016 THAT TOO WITHOUT ANY PRAYER FOR CONDONATION OF DELAY IN FILI NG SUCH E-APPEAL. NO REASONABLE OR SUFFICIENT CAUSE, WHICH PREVENTED THE ASSESSEE TO FILE SUCH APPEAL WITHIN THE STIPULATED TIME, HAS BEEN SHOWN B Y THE APPELLANT AND THEREFORE, THE DELAY DOES NOT DESERVE TO BE CONDONE D AS OF THE OPINION OF THE LD. CIT(A). THE APPEAL HAS BEEN FINALLY REJECTED O N THIS PRELIMINARY GROUND OF LIMITATION. WHILE DOING SO THE LD. CIT(A ) RELIED UPON THE JUDGMENT PASSED IN THE MATTER OF PRASHANT PROJECTS LTD. VS. DCIT (2013) 37 TAXMANN.COM 137. 5. ON THE OTHER HAND THE ASSESSEE RELIED UPON THE J UDGMENT PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 3151/AHD/2016 A.Y. 2013-14 EAGEL STEEL INDUSTRIES P. LTD. VS. ITO WHERE THE ASSESSEE WHILE FILING APPEAL BEYOND THE STIPULATED TIME AS PRESCRIBED BY THE CBD T CIRCULAR BROUGHT IT TO THE NOTICE OF THE LD. CIT(A) THAT DELAYED IN FILING THE SAID APPEAL ON ELECTRONIC MODE WAS DUE TO UNINTENDED TECHNICAL LAP SE. IN THE SAID MATTER THE CO-ORDINATE BENCH HAS OBSERVED THAT SINCE THE O NLINE FILE WAS NEWLY INTRODUCED DURING THE YEAR UNDER CONSIDERATION DUE TO WHICH THE ASSESSEE ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 4 - HAS FACED DIFFICULTY IN UPLOADING THE APPEAL ELECTR ONICALLY IN THE SYSTEM. IT WAS FURTHER OBSERVED THAT THE ISSUING OF CIRCULAR O F CBDT FOR EXTENDING THE DATE OF FILING THE APPEAL IMPLICIT CONSTRAINT AND E LUCIDATE THE HICCUP IN UPLOADING THE PRESCRIBED APPEAL IN THE SYSTEM ELECT RONICALLY. IN THAT PARTICULAR CASE THOUGH THE APPEAL WAS FILED EARLIER THE SAME COULD NOT BE UPLOADED ELECTRONICALLY DUE TO IGNORANCE OF TECHNIC AL KNOWLEDGE. SINCE THERE IS A BONA FIDE REASONABLE CAUSE FOR NOT FILIN G THE APPEAL ELECTRONICALLY BY THE ASSESSEE, IN TURN THE CO-ORDINATE BENCH HAS NOT APPRECIATED THE DISMISSAL OF APPEAL MADE BY THE LD. CIT(A). 6. HAVING REGARD TO THE IDENTICAL FACT, IN THE INST ANT CASE, WE FIND NO REASON BUT TO APPRECIATE THE DIFFICULTY FACED BY TH E ASSESSEE IN PREFERRING SUCH APPEAL ELECTRONICALLY WITHIN THE PRESCRIBED TI ME PERIOD AND DISMISSAL OF THE APPEAL BY THE LD. CIT(A) IN NOT CONSIDERING THE SAME IS GROSSLY IRREGULAR AND ARBITRARY. HENCE, THE ORDER OF DISMI SSAL OF THE APPEAL ON THE GROUND OF LIMITATION BY THE LD. CIT(A) AS IMPUGNED BEFORE US IS HEREBY QUASHED. GROUND NO. 2:- 7. ON MERITS THE ASSESSEE HAS CHALLENGED THE DISALL OWANCE OF INTEREST AMOUNTING TO RS. 23,36,125/- UNDER SECTION 36(1)(II I) OF THE ACT. 8. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE IS ENTIRELY COVERED BY THE JUDGMENT PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 73/AHD/2017 FOR A.Y. 2012-13 IN FAVOUR OF THE ASSESSEE. THE ORDER WHEREOF WAS ALSO SUBMITTED BEFORE US. ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 5 - THE LD. DR FAILED TO CONTROVERT SUCH SUBMISSION MA DE BY THE LD. AR. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RES PECTIVE PARTIES, WE HAVE ALSO PERUSED THE RELEVANT MATERIAL S AVAILABLE ON RECORD. IT APPEARS THAT THE AO HAS DISALLOWED THE PROPORTI ONATE INTEREST EXPENSES ASSUMING THE INTEREST BEARING FUND USED FO R MAKING INTEREST FREE ADVANCES IN OTHER WAYS. THE AO HAS CALCULATED THE INTEREST ON INTEREST FREE ADVANCES ON NOTIONAL BASIS AND DISALLOWED THE SAME FROM INTEREST EXPENSES WITHOUT CONSIDERING THE ACTUAL BASICS OF S OME AVAILABILITY OF INTEREST FREE FUNDS, UNSECURED LOANS, CAPITAL AND B ACKGROUND OF THE ADVANCES GIVEN. THE ASSESSEE HAS MADE SOME INTERES T FREE ADVANCES TO THE TUNE OF RS. 2,37,02,673/- TO VARIOUS PERSON FOR BUSINESS PURPOSES. THE SAME WAS NOT ACCEPTED BY THE AO AND TREATING TH E SAME AS DIVERSION OF BORROWED FUNDS, PROPORTIONATE INTEREST WAS DISAL LOWED FROM INTEREST EXPENDITURE. IT IS THE CASE OF THE ASSESSEE THAT T HE COMPANY IS HAVING SUFFICIENT OWN INTEREST FREE FUNDS OUT OF WHICH SOM E WAS UTILIZED FOR SUCH INTEREST FREE ADVANCES AND THUS THE QUESTION OF DIV ERSION DOES NOT ARISE AT ALL. UPON PERUSAL OF THE RECORDS IT APPEARS THAT T HE NET INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE COMPANY WAS OF RS. 11,6 0,08,021/- ON 31.03.2004. IT FURTHER APPEARS THAT THE NET INTERE ST FREE FUND AND CAPITAL AVAILABLE WAS OF RS. 2,37,02,673/- WHICH WAS ADVANC ES TO SIX PARTIES. THUS, IT IS A FACT THAT THE COMPANY HAS MADE INTERE ST FREE ADVANCES TO THE TUNE OF RS. 237.02 LAKHS I.E. 20.43% OF TOTAL INTER EST FREE FUNDS AVAILABLE. ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 6 - THE ASSESSEE HAS ALSO BEEN ABLE TO SHOW THAT SUCH A DVANCES OF RS. 2,37,02,673/- WAS MADE FOR THE PURPOSE OF SMOOTH FU NCTIONING OF BUSINESS OF THE ASSESSEE COMPANY IN VIEW OF THE CLO SE LINKAGE OF THE BUSINESS OF PARTIES AND THE ASSESSEE COMPANY. IT I S ALSO RELEVANT TO MENTION THAT THE LD. CIT(A) DECIDED THE MATTER AGAI NST THE ASSESSEE RELYING UPON THE ORDER PASSED BY HIS PREDECESSOR IN ASSESSEES OWN CASE FOR A.Y. 2012-13. ADMITTEDLY SAID ORDER WAS QUASHE D BY THE COORDINATE BENCH IN APPEAL PREFERRED BY THE ASSESSEE IN ITA NO . 73/AHD/2017 FOR A.Y. 2012-13. THE RELEVANT PORTION WHEREOF IS AS F OLLOWS:- 3. AT THE TIME OF HEARING OF THE APPEAL, THE LEARN ED ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE APPELLANTS O WN FUNDS HAVE BEEN UTILIZED FOR THE PURPOSE OF ADVANCES TO VARIOUS PARTIES AND NOT THE BORROWED FUNDS. THE APPELLANT COMPANY HAS HUGE SURPLUS FUNDS AT ITS DISPOSAL. THE COMPANY HAD GIVEN INTEREST FREE LOANS AND ADVANCES OUT OF INTEREST FREE FUNDS WHICH CONSISTS OF CAPITAL FUND, FREE RESERVE, INTEREST FREE UNSECURED LOANS, PROVISIONS FOR DEFERRED TAX LIABILITIES CREATED OUT OF SURPLUS AND ACCUMULATED DEPRECIATION RESERVE CREATED OUT OF PROFIT AND TRADE PAYABLE. DETAILS OF THE SAME WAS ALREADY PROVIDED T O THE LEARNED AO. IT WAS FURTHER CONTENDED THAT THE FUNDS AVAILABLE WITH THE COMPANY AS ON 31.03.2012 WAS OF RS.3723.57 LACS OUT OF WHICH INTEREST FREE ADVANCE OF RS.358.34 LACS I.E. 9.62% OF TOTAL INTEREST FREE FUNDS AVAILABLE WERE GIVEN. THE BALANCE OF RS.3365.23 LACS INTEREST FREE FUNDS WERE USED IN BUSINESS FOR VARIOUS FIXED ASSETS AND MOVABLE CURRENT ASSETS I.E. STOCKS, DEBTORS BALANCE WITH BANK AND CASH AND OTHER ASSETS. IT WAS, THEREFORE, SUBMITTED THAT THE INTEREST BEARING FUNDS WERE UTIL IZED FOR OTHER SPECIFIC PURPOSE AND ADVANCES GIVEN TO PARTIES WAS OUT OF THE OWN FUNDS OF THE APPELLANT COMPANY. SINCE THE INTEREST ON BORROWED FUND IS ALLOWABLE AS BUSIN ESS EXPENDITURE BY VIRTUE OF INCOME TAX PROVISION U/S 36(1)(III) HENCE PAYMENT M ADE FOR INTEREST ON BORROWED FUND SHOULD BE ALLOWED AS INTEREST EXPENSES IN ITS TOTALITY AND INTEREST FREE LOANS AND ADVANCES GRANTED OUT OF THE INTEREST FREE OWN FUNDS EVEN NOT USED FOR BUSINESS AND NO ACTUAL INTEREST IS RECEIVED BY THE ASSESSEE THAN NO TIONAL INTEREST ON SUCH FUND CANNOT BE DISALLOWED BY INTEREST EXPENSES. IF THAT BE SO, DISALLOWANCE OF PROPORTIONATE NOTIONAL INTEREST EXPENSES OF RS.20,78,380/- ON THE BASIS OF INTEREST FREE ADVANCES I.E. RS.353.34 LACS IS NOT IN TERMS OF LAW AND LIAB LE TO BE DELETED. THE LEARNED AR ALSO CONTENDED THAT INTEREST EXPENSES HAS TO BE ALL OWED AS DEDUCTION WHERE INTEREST BEARING FUND ARE ADVANCED WITHOUT INTEREST. IT IS N ECESSARY THAT ADVANCES GIVEN BY THE BUSINESSMAN AT ALL TIMES MUST BE FOR EARNING IN TEREST. THE REASONABLENESS OF THE EXPENDITURE WOULD BE COVERED INTO ONLY FOR THE PURP OSE OF THE DETERMINING WHETHER, IN FACT, THE AMOUNT WAS SPENT. ONCE IT IS ESTABLISH ED THAT THE NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF BUSINESS, THE REVENU E CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF A BUSINESSMAN OR IN THE P OSITION OF THE BOARD OF DIRECTORS AND ASSUME THE SAID ROLE TO DECIDE HOW MUCH IS A RE ASONABLE EXPENDITURE HAVING ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 7 - REGARD TO THE CIRCUMSTANCES OF THE CASE. IN SUPPORT OF HIS CONTENTION HE RELIED UPON THE JUDGMENT PASSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF DALMIA CEMENT (B) LTD. (2002) 254 ITR 377. ON THE OTHER HAND, LEA RNED DR RELIED UPON THE ORDER PASSED BY THE AUTHORITY BELOW. 4. HEARD THE REPRESENTATIVE OF THE RESPECTIVE PARTI ES, PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. IT APPEARS FROM THE RECORD THAT DURING THE APPELLANT PROCEEDING, THE ASSESSEE MADE SUBMISSIONS BEFORE TH E LEARNED CIT(A) WHEREFROM IT REVEALS THAT ASSESSEES OWN FUND HAVE BEEN UTILIZED FOR THE PURPOSE OF ADVANCES TO VARIOUS PARTIES. THE ASSESSEE COMPANY HAS HUGE SURP LUS FUNDS AT ITS DISPOSAL. THE DETAILS OF THE PARTY WISE ADVANCE AND OWNED FUN DS AS SUBMITTED BY THE ASSESSEE IS AS FOLLOWS: SR. NO. NAME OF THE PARTY AMOUNT IN RS. 1. DINESHCHANDRA A PATEL 14379486.00 2. SHREE BALAJI CORPORATION 70000.00 3. SUBHAUBHAI M. SHAH (REAL ESTATE) 13791000.00 4. SUBHAUBHAI M. SHAH 1093660.00 5. VIBRAT P PATEL (REAL ESTATE) 1000000.00 6. SHREE SHYAM DISTRIBUTORS (REAL ESTATE) 4500000.00 7. SHAKARBHAI CHATURBHAI PATEL (REAL ESTATE) 1000000.00 TOTAL 35834146.00 FOLLOWING DETAILS OF INTEREST FREE FUND CONSISTING OF CAPITAL FUND, FREE RESERVES, INTEREST FREE UNSECURED LOANS, PROVISION FOR DEFERR ED TAX LIABILITIES CREATED OUT OF SURPLUS AND ACCUMULATED DEPRECIATION RESERVE OUT OF THE COMPANY HAD GIVEN INTEREST FREE LOAN AND ADVANCES: FUND AMOUNT SHARE CAPITAL 139320000 SHARE APPLICATION MONEY 500000 RESERVE AND SURPLUS 25158606 INTEREST FREE UNSECURED LOANS 8562459 DEFERRED TAX LIABILITIES NET OF 22132121 DEPRECIATION RESERVE 35395402 TRADE PAYABLE 141288991 TOTAL 372357579 WE HAVE ALSO GONE THROUGH THE OTHER FINANCIAL DETAI LS OF THE ASSESSEE COMPANY. WE FIND SUFFICIENT INTEREST FREE FUND WAS AVAILABLE WI TH THE ASSESSEE OUT OF WHICH INTEREST FREE LOAN AND ADVANCES WERE PROVIDED TO PARTIES. WH ETHER THE DECISION AS TO HOW ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 8 - MUCH IS A REASONABLE EXPENDITURE OUGHT TO HAVE BEEN DECIDED BY THE ASSESSEE COMPANY; THE REVENUE CANNOT QUESTION THAT ONCE THE NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF BUSINESS HAS BEEN ESTABLISHED AS ALREADY DECIDED BY THE NUMBER OF JUDGMENTS PRONOUNCES BY DIFFERENT LEGAL FORUM IN CLUDING THE JUDGMENT PASSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT-VS- DALMIA CEMENT (P.) LTD. (2002) 254 ITR 377. IN THAT VIEW OF THE MATTER, WE DO NOT FIND ANY REA SON FOR DISALLOWANCE U/S 36(1)(III) OF THE ACT AS MADE BY THE AUTHORITIES BE LOW. THE ADDITION IS THUS DELETED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. KEEPING IN VIEW THE FACTUAL POSITION OF THE MATTER ON THE BASIS OF THE DETAILS AVAILABLE BEFORE US AND THE DECISION MADE B Y THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE ON THE IDENTICAL ISSUE AS NA RRATED ABOVE. WE FIND NO REASON TO DEVIATE FROM THE SAME HAVING REGARD TO TH E SAME SET OF FACTS. WE FIND NO REASON TO DISALLOW SUCH INTEREST AMOUNTING TO RS. 23,36,125/- UNDER SECTION 36(1)(III) OF THE ACT. THUS, THE ADDITION IS HEREBY DELETED. GROUND NO. 3:- 10. THE GROUND OF APPEAL RELATES TO NON-ADJUDICATIO N OF RELATING DISALLOWANCE OF DELAYED PAYMENT OF EMPLOYEES CONTR IBUTION TO PROVIDENT FUND AMOUNTING TO RS. 3,650/- UNDER SECTION 36(1)(V A) OF THE ACT. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RE SPECTIVE PARTIES, WE HAVE ALSO PERUSED THE RELEVANT MATERIAL S AVAILABLE ON RECORD. 11. ADMITTEDLY THE ASSESSEE HAS MADE DELAYED PAYMEN T IN PROVIDENT FUND ACCOUNT AFTER THE EXPIRY OF DUE DATE PROVIDED UNDER THE CONCERN PROVIDENT FUND ACT. SUCH EXPENSES, THEREFORE, IS N OT ALLOWABLE IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION [2 014] 41 ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 9 - TAXMANN.COM 100 (GUJARAT), WHICH, ACCORDING TO US WAS RIGHTLY TAKEN INTO CONSIDERATION WHILE REJECTING THE CASE OF THE ASSESSEE BY THE REVENUE. HENCE, WE FIND THIS GROUND OF APPEAL HAS NO LEGS TO STAND AND THUS DISMISSED. ITA NO. 1539/AHD/2018(A.Y. 2014-15):- 12. THE ASSESSEE HAS CHALLENGED CONFIRMING DISALLOW ANCE OF INTEREST AMOUNTING TO RS. 6,78,045/- U/S. 36(1)(III) OF THE ACT. GROUND NO.1:- 13. THIS GROUND OF APPEAL IS IDENTICAL TO THAT OF THE G ROUND ALREADY BEEN DEALT WITH BY US IN ITA NO. 1538/AHD/2018 FOR A.Y. 2013-14 AND IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES THE SAM E SHALL APPLY MUTATIS MUTANDIS. HENCE, THE GROUND PREFERRED BY THE ASSES SEE IS ALSO ALLOWED UPON DELETING THE IMPUGNED ADDITION. 14. IN THE COMBINED RESULT, ASSESSEES APPEAL IS PA RTLY ALLOWED. 15. BEFORE PARTING WE WOULD LIKE TO MAKE CERTAIN OB SERVATION RELATING TO THE ISSUE CROPPED UP UNDER PRESENT SCENARIO OF COVI D-19 PANDEMIC AS TO WHETHER WHEN THE HEARING OF THE MATTER WAS CONCLUDE D ON 20.02.2020 THE ORDER CAN BE PRONOUNCED TODAY I.E. ON 10.09.2020. THE ISSUE HAS ALREADY BEEN DISCUSSED BY THE CO-ORDINATE BENCH IN THE CASE OF DCIT VS. JSW LTD. (ITA NOS. 6264 & 6103/MUM/2018) PRONOUNCED ON 14.05 .2020 IN THE LIGHT OF WHICH IT IS WELL WITHIN THE TIME LIMIT PERMITTED UNDER RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963 IN VIEW OF THE FOLLO WING OBSERVATIONS MADE THEREIN: ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 10 - 7. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MUS T DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THESE A PPEALS WAS CONCLUDED ON 8TH JANUARY 2020, THIS ORDER THEREON IS BEING PRONO UNCED TODAY ON THE DAY OF 14TH MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING. WE ARE ALSO ALIVE TO THE FAC T THAT RULE 34(5) OF THE INCOME TAX APPELLATE TRIBUNAL RULES 1963, WHICH DEA LS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWIN G MANNERS : (A) THE BENCH MAY PRONOUNCE THE ORDER IM MEDIATELY UPON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONO UNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A DATE FOR PRO NOUNCEMENT. (C) IN A CASE WHERE NO DATE OF PRONOUNCE MENT IS GIVEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONOUNCE T HE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCL UDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTIONAL A ND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR PRON OUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED BY US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXE D SHALL BE GIVEN ON THE NOTICE BOARD. 8. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPE AL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTANT T O NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN THE SAID RULE ITSELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 4 33 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTED THAT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLATE TRIBUNAL TO FRAME AND LA Y DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COUR T IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIR ECTIONS TO ALL THE BENCHES ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 11 - OF THE TRIBUNAL IN THAT BEHALF. WE HOPE AND TRUST THAT SUITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY A LL THE BENCHES OF THE TRIBUNAL. IN THE MEANWHILE(EMPHASIS, BY UNDERLINING , SUPPLIED BY US NOW), ALL THE REVISIONAL AND APPELLATE AUTHORITIES UNDER THE INCOME-TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A P ERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT. IN TH E RULED SO FRAMED, AS A RESULT OF THESE DIRECTIONS, THE EXPRESSION ORDINAR ILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE THE ORDER WITHIN A PER IOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS OR DER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANC ES. 9. LET US IN THIS LIGHT REVERT TO THE PREVAILING SI TUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDI A TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PRE VENT SPREAD OF COVID 19 EPIDEMIC, AND THIS LOCKDOWN WAS EXTENDED FROM TI ME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTR A GOVERNMENT, AND ON ACCOUNT OF STRICT ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBA I BEING GRAVE, THERE WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWN S ALSO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY , THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HI STORY OF INDIA AND VIDE ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 12 - ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.202 0, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN THE PE RIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JUR ISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISES SH ALL BE EXTENDED FOR A PERIOD OF 15DAYS AFTER THE LIFTING OF LOCKDOWN. HO NBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESI DES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME- BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CO NTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY , AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TILL 15TH JUNE 2020. IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA BUT ALL O VER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19 TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONA VIRUS SHOULD BE CONSIDE RED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAY BE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE . THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY , AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHE N SUCH IS THE POSITION, AND IT IS OFFICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID-19 EPIDEMIC HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE AN YTHING BUT AN ORDINARY PERIOD. ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 13 - 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPORTAN T FACT THAT THE ENTIRE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERI OD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHICH THE LOCK DOWN WAS IN FORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHILE INTERPRE TING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMN IPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSIGNED BY US IS NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC AP PROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT AC T 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2 017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPROVE A N ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THE N IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE T IME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY. THE EXTRAORDINARY STEPS TAKE N SUO MOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN O UR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORDINARILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 14 - POSITION, THE PERIOD DURING WHICH LOCKOUT WAS IN FO RCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90-DAY TIME-LI MIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE ANY, BAR O N THE DISCRETION OF THE BENCHES TO RE-FIX THE MATTERS FOR CLARIFICATIONS BE CAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHEN THE HEARING IS C ONCLUDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO B E CARRIED OUT ON THE FACTS OF THIS CASE. 16. ON THE BASIS OF THE OBSERVATION MADE IN THE AFO RESAID JUDGMENT WE EXCLUDE THE PERIOD OF LOCKDOWN WHILE COMPUTING THE LIMITATION PROVIDED UNDER RULE 34(5) OF THE INCOME TAX (APPELLATE TRIBU NAL) RULE 1963. ORDER IS, THUS, PRONOUNCED IN THE OPEN COURT. 17. IN THE COMBINED RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 11/09/2020 SD/- SD/- (AMARJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/09/2020 TANMAY, SR. PS TRUE COPY ITA NOS.1538&1539/AHD/2018 BALAJI ELECTRICAL INSULATORS P LTD. VS. DCIT & ITO ASST.YEARS 2013-14& 2014-15 - 15 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 02.07.2020 & 03.09.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.09.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 04.09.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .09.2020 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 11.09.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11 .09.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER