Kanchan Pharma Pvt. Ltd., Ahmedabad V. The Asst. CIT, Circle-2(1)(2), Ahmedabad

ITA 1854/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4760 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-04-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: P B PARMAR ARS
• Keywords: Principle of natural justice; Earning of tax free income; Fair market value; Rule 8D; Set aside
• Section: 143(3); 14A; 115JB; 201; 143(2); 192; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER KANCHAN PHARMA PVT. LTD. BASEMENT HARIKRUPA SHOPPING CENTRE, NR. DEEPALI CINEMA, ASHRAM ROAD, AHMEDABAD. PAN NO. AABCK6444J (APPELLANT) VS THE ACIT, CIRCLE-2(1)(2), AHMEDABAD (RESPONDENT) REVENUE BY: SHRI L.P. JAIN, SR. D.R. ASSESSEE BY: SHRI TUSHAR HEMANI & SHRI P.B. PARMA R, A.RS. DATE OF HEARING : 09-09-2020 DATE OF PRONOUNCEMENT : 07-10-2020 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2013-14, ARISES FRO M ORDER OF THE CIT(A)-2, AHMEDABAD DATED 04-10-2017, IN PROCEEDINGS UNDER SE CTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE MADE BY THE AO OF ESTIMATED INTEREST E XPENSES OF RS.22,21,096/- U/S.36(L)(III) OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO OF INVOKING THE PROVISIONS OF RULE 8D WITHOUT RECORDING ANY DISSATISFACTION TO THE CLAIM OF APPELLANT. ITA NO. 1854/AHD/2018 ASSESSMENT YEAR 2013-14 I.T.A NO. 1854/AHD/2018 A.Y. 2013-14 PAGE NO KANCHAN PHARMA PVT. LTD. VS. ACIT 2 3. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING DISALLOWANCE MADE BY THE AO U/S.L4A OF THE ACT R.W. R.BD OF THE INCOME-TAX RULES, 1962 TO THE EXTENT OF RS.1,54,676/-. 4. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN NOT FOLLOWING THE BINDING DECISIONS OF HON'BLE GUJARAT HIGH COURT ALL OWING CREDIT OF OWNED FUNDS WHILE COMPUTING THE DISALLOWANCE U/S 14A OF THE ACT R.W. RULE 8D OF THE INCOME-TAX RULES, 1962. 5. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THAT DISALLOWANCE U/S.14A IS TO BE MADE WHILE CALCULATIN G BOOK PROFIT U/S. 115JB. 6. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO OF DISALLOWING EMPLOYEE'S CONTR IBUTION TOWARDS PF AND ESIC AMOUNTING TO RS.6,09,138/- U/S 36(1)(VA) R.W.S.2(24)(X) OF THE A CT. 7. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE, THE MATTER SHOULD BE REMANDED TO THE AO TO VERITY WHETHER THE SUM WAS DEPOSITED WITHIN 21 D AYS FROM THE END OF THE MONTH OF PAYMENT OF SALARY AS CONTEMPLATED UNDER THE PROVISIONS OF EMPL OYEES PROVIDENT FUNDS & MISCELLANEOUS PROVISIONS ACT, 1952 AND EMPLOYEES STATE INSURANCE ACT, 1948. 8. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACTS AND THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHOR ITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUA SHED. 9. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. A.O. IN LEVYING INTEREST U/S. 234A/B/C OF THE A CT. 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLA RING INCOME OF RS. 56,80,207/- WAS FILED ON 10 TH SEP, 2013. THE CASE WAS SUBJECT TO SCRUTINY AND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 3 RD SEP, 2014. THE RELEVANT FACTS PERTAINED TO THE ISSUE CONTESTED IN THE GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE NARRATED AS UNDER. GROUND NO. 1 (DISALLOWANCE OF RS. 22,21,096/- U/S. 36(I)(III) OF THE ACT) 4. DURING THE COURSE OF ASSESSMENT, THE ASSESSING O FFICER NOTICED THAT ASSESSEE HAS DEBITED INTEREST EXPENDITURE OF RS. 96 ,10,085/- UNDER THE HEAD FINANCE COSTS. ON PERUSAL OF THE DETAIL FILED BY THE ASSES SEE, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS PAID INTEREST TO VARIOUS PARTIES AMOUNTING TO RS. 69,76,459/- @ 24% AND TO SOME OF THE PARTIES @ 12% . ON QUERY, THE ASSESSEE EXPLAINED THAT NON BANKING FINANCIAL INSTITUTIONS W ERE CHARGING INTEREST BETWEEN 18 TO 24% FOR SHORT TERM LOAN AND ALSO NEED SECURIT Y OR MORTGAGE AGAINST THE LOAN. THEREFORE, THE ASSESSEE HAD NO OPTION BUT TO PAY TH E INTEREST @ 24% AND IT WAS THE BUSINESS EXPEDIENCY. THE ASSESSING OFFICER WAS NO T AGREED WITH THE ASSESSEE AND I.T.A NO. 1854/AHD/2018 A.Y. 2013-14 PAGE NO KANCHAN PHARMA PVT. LTD. VS. ACIT 3 STATED THAT ASSESSEE WAS UNABLE TO PROVE THE REASON ABLENESS OF THE PAYMENT MADE U/S. 40A(2)(B), THEREFORE, RESTRICTED THE RATE OF I NTEREST ON LOAN TO THE EXTENT OF 18% AS AGAINST 24% PAID BY THE ASSESSEE, THE EXCESS INT EREST AMOUNTING TO RS. 22,21,096/-WAS DISALLOWED AND ADDED TO THE TOTAL IN COME OF THE ASSESSEE. 5. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT (A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL HAS BROUGHT TO OUR NOTICE THAT SIMILAR ISSUE ON IDENTICAL FACTS FO R THE ASSESSMENT YEAR 2012-13 IN THE CASE OF THE ASSESSEE ITSELF HAS BEEN ADJUDICATE D BY THE CO-ORDINATE BENCH OF THE ITAT VIDE ITA NO. 29/AHD/ 2016 DATED 1 ST JUNE, 2020 WHERE THE SIMILAR DISALLOWANCE HAS BEEN DELETED. THE LD. DEPARTMENTA L REPRESENTATIVE WAS FAIR ENOUGH NOT TO CONTROVERT THESE UNDISPUTED FACTS. 7. WE HAVE GONE THROUGH THE DECISION OF CO-ORDINATE BENCH OF THE ITAT AS CITED ABOVE BY THE LD. COUNSEL AND NOTICED THAT IDE NTICAL ISSUE ON SIMILAR FACT HAS BEEN ADJUDICATED AND DISALLOWANCE WAS DELETED. HE RELEVANT PART OF DECISION OF CO-ORDINATE BENCH IS REPRODUCED IS UNDER:- 11.WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT CASE RELATE S TO THE DISALLOWANCE OF THE INTEREST EXPENSES PAID ON THE MONEY BORROWED FROM THE RELATED PARTIES AS S PECIFIED UNDER SECTION 40A(2)(B) OF THE ACT. THE ASSESSEE HAS PAID INTEREST AT THE RATE OF 24% W HEREAS THE REVENUE WAS OF THE VIEW THAT THE RATE OF INTEREST AT 18% IS REASONABLY ENOUGH. ACCOR DINGLY THE INTEREST PAID OVER AND ABOVE THE RATE OF 18% ON THE MONEY BORROWED WAS DISALLOWED BY THE AO WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LEARNED CIT(A). 12. UNDER THE PROVISION OF SECTION 40A OF THE ACT T HE AO CAN MAKE THE DISALLOWANCE UNDER SECTION 40A OF THE ACT, IF HE IS OF THE OPINION THAT THE EX PENDITURE IN RESPECT OF WHICH PAYMENT HAS BEEN MADE TO THE RELATED PARTIES IS EXCESSIVE OR UNREASO NABLE AFTER HAVING REGARD TO THE FAIR MARKET VALUE. BUT THE AO IN THE CASE ON HAND HAS NOT BROUG HT SUCH COMPARABLE CASES. THEREFORE WE ARE OF THE VIEW THAT THERE CANNOT BE ANY DISALLOWANCE U NDER THE PROVISIONS OF SECTION 40A(2) OF THE ACT WITHOUT BRINGING ANY COMPARABLE CASES BASED ON COGE NT MATERIAL. 13. IT IS ALSO PERTINENT TO NOTE THAT THE MONEY WAS BORROWED FROM THE RELATED PARTIES IN THE EARLIER YEARS AND THE INTEREST PAID TO THEM WAS ACCEPTED IN THOSE YEARS. THEREFORE IN OUR CONSIDERED VIEW I.T.A NO. 1854/AHD/2018 A.Y. 2013-14 PAGE NO KANCHAN PHARMA PVT. LTD. VS. ACIT 4 THERE CANNOT BE ANY DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION ON THE MONEY BORROWED IN THE EARLIER YEAR. IN THIS REGARD WE FIND SUPPORT AND GU IDANCE FROM THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS.SRIDEV ENTERPRISE REPORTED IN 192 ITR 165 WHEREIN IT WAS HELD AS UNDER: IN THE INSTANT CASE THE STATUS OF THE AMOUNT STANDI NG AS OUTSTANDING DUE FROM N ON THE FIRST DAY OF THE ACCOUNTING YEAR WAS THE AMOUNT THAT STOOD OUTST ANDING ON THE LAST DAY OF THE PREVIOUS ACCOUNTING YEAR; THEREFORE, ITS NATURE AND STATUS C OULD NOT BE DIFFERENT ON THE FIRST DAY OF THE CURRENT ACCOUNTING YEAR, FROM ITS NATURE AND STATUS AS ON THE LAST DAY OF THE PREVIOUS ACCOUNTING YEAR. REGARDING THE PAST YEARS, THE ASSESSEE'S CLAI MS FOR DEDUCTIONS WERE ALLOWED IN RESPECT OF THE SUMS ADVANCED DURING THOSE YEARS; THIS COULD BE ONL Y ON THE ASSUMPTION THAT THOSE ADVANCES WERE NOT OUT OF BORROWED FUNDS OF THE ASSESSEE. THIS FIN DING DURING THE PREVIOUS YEARS WAS THE VERY BASIS OF THE DEDUCTIONS PERMITTED DURING THE PAST Y EARS, WHETHER A SPECIFIC FINDING WAS RECORDED OR NOT. A DEPARTURE FROM THE FINDING IN RESPECT OF THE SAID AMOUNTS ADVANCED DURING THE PREVIOUS YEAR, WOULD RESULT IN A CONTRADICTORY FINDING; IT W OULD NOT BE EQUITABLE TO PERMIT THE REVENUE TO TAKE A DIFFERENT STAND NOW, IN RESPECT OF THE AMOUN TS WHICH WERE THE SUBJECT-MATTER OF PREVIOUS YEARS' ASSESSMENTS CONSISTENCY AND DEFINITENESS OF APPROACH BY THE REVENUE 'WAS NECESSARY IN THE MATTER OF RECOGNISING THE NATURE OF AN ACCOUNT MAIN TAINED BY THE ASSESSEE SO THAT THE BASIS OF A CONCLUDED ASSESSMENT WOULD NOT BE IGNORED WITHOUT A CTUALLY REOPENING THE ASSESSMENT. THE PRINCIPLE IS SIMILAR TO THE CASES WHERE IT HAS BEEN HELD THAT A DEBT WHICH HAD BEEN TREATED BY THE REVENUE AS A GOOD DEBT IN A PARTICULAR YEAR CANNOT SUBSEQUENTLY BE HELD BY IT TO HAVE BECOME BAD PRIOR TO THAT YEAR. THE TRIBUNAL WAS, THEREFORE, JU STIFIED IN HOLDING THAT SINCE NO ADDITIONS HAD BEEN MADE IN EARLIER YEARS, THE OPENING DEBIT BALAN CE COULD NOT BE CONSIDERED DURING THE CURRENT YEAR AND THE ENQUIRY HAD TO BE LIMITED TO THE INCRE ASE IN THE CURRENT YEAR ONLY. 14. IN VIEW OF THE ABOVE, WE HOLD THAT THERE CANNOT BE ANY DISALLOWANCE ON ACCOUNT OF INTEREST EXPENSES BEING EXCESSIVE PAID TO THE RELATED PARTIE S UNDER SECTION 40A OF THE ACT. HENCE WE SET ASIDE THE FINDING OF THE LEARNED CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH AS CITED ABOVE, DISALLOWANCE ON EXCESS INTEREST PAYMENT MADE U/S. 3 6(1)(III) IS DELETED. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. GROUND NO. 2 (DISALLOWANCE OF RS. 1,54,676/- U/S. 1 4A OF THE ACT) 8. DURING THE COURSE OF ASSESSMENT, THE ASSESSING O FFICER HAS NOTICED THAT ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 1,54,676 /- AS EXEMPT INCOME. HOWEVER, NO DISALLOWANCE U/S. 14A WAS MADE. THEREF ORE, THE ASSESSING OFFICER HAS COMPUTED THE DISALLOWANCE U/S. 14A R.W. RULE 8D OF THE I.T. RULE, 1961 TO THE AMOUNT OF RS. 3,85,005/- AND ADDED TO THE TOTAL INC OME OF THE ASSESSEE. 9. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT (A). THE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF INCOME TO THE AMOUNT OF RS. 1,54,676/-. I.T.A NO. 1854/AHD/2018 A.Y. 2013-14 PAGE NO KANCHAN PHARMA PVT. LTD. VS. ACIT 5 10. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE US, THE LD. COUNSEL HAS BROUGHT TO OUR NOTICE THAT ASSESSEE WAS HAVING SUBS TANTIAL INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL OF RS. 81,04,600/- AND RESERV E AND SURPLUS TO THE AMOUNT OF RS. 4,93,44,667/- TOTALING TO THE AMOUNT OF RS. 5,7 4,49,267/- AS AGAINST THE INVESTMENT OF RS. 75,45,186/-. AFTER REFERRING THE AFORESAID POSITION OF SUBSTANTIAL FUND, THE LD. COUNSEL HAS SUBMITTED THAT NO DISALLO WANCE OUT OF INTEREST EXPENDITURE SHOULD BE MADE IN THE CASE OF THE ASSESSEE. THE LD . COUNSEL HAS ALSO REFERRED THE JUDICIAL PRONOUNCEMENT AND STATED THAT IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2012-13 THE CO-ORDINATE BENCH OF TH E ITAT VIDE ITA NO. 29/AHD/2016 HAS DELETED THE DISALLOWANCE MADE UNDER THE HEAD INTEREST COMPONENT. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 11. WE HAVE GONE THROUGH THE ORDER OF THE CO-ORDINA TE BENCH OF THE ITAT AS REFERRED ABOVE BY THE LEARNED COUNSEL. IT IS NOTIC ED THAT THE CO-ORDINATE BENCH HAS ADJUDICATED THE SIMILAR ISSUE ON IDENTICAL FACTS AN D DELETED THE ADDITION PERTAINING TO THE INTEREST EXPENSES. THE RELEVANT PART OF DEC ISION IS AS UNDER:- 22. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD BEFORE US. IT IS THE SETTLED LA WS THAT THERE CANNOT BE ANY DISALLOWANCE OF INTEREST EXPENSES IF THE OWN FUND OF THE ASSESSE E EXCEEDS THE AMOUNT OF INVESTMENTS. ADMITTEDLY THE OWN FUND OF THE ASSESSEE EXCEEDS THE AMOUNT OF INVESTMENT IN THE PRESENT CASE. IN THIS CONNECTION, WE FIND SUPPORT AND GUIDA NCE FROM THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. REPORTED IN 313 ITR 340 WHEREIN IT WAS HELD AS UNDER:- 'THE PRINCIPLE THEREFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST- FREE AND OVERDRAFT AND/OR LOANS TAKEN, THEN A PRESU MPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST-FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST-FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. IN THIS CASE THIS PRESUMPTION IS ESTABLISHED CONSIDERING TH E FINDING OF FACT BOTH BY THE CIT(A) AND TRIBUNAL'. 23. SIMILARLY, WE ALSO RELY ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD REPORTED IN 366 I TR 505 (BOM). THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW:- 'WHERE ASSESSEE'S CAPITAL, PROFIT RESERVES, SURPLUS AND CURRENT ACCOUNT DEPOSITS WERE HIGHER THAN THE INVESTMENT IN TAX-FREE SECURIT IES, IT WOULD HAVE TO BE I.T.A NO. 1854/AHD/2018 A.Y. 2013-14 PAGE NO KANCHAN PHARMA PVT. LTD. VS. ACIT 6 PRESUMED THAT INVESTMENT MADE BY THE ASSESSEE WOULD BE OUT OF THE INTEREST-FREE FUNDS AVAILABLE WITH ASSESSEE AND NO DISALLOWANCE W AS WARRANTED U/S 14A.' 24. SIMILARLY, WE ALSO FIND SUPPORT FROM THE JUDGM ENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF UTI BANK LTD. REPORTED IN 32 TAXMANN.COM 370 WHERE THE HEAD NOTE READS AS UNDER: IF THERE ARE SUFFICIENT INTEREST FREE FUNDS TO MEET TAX FREE INVESTMENTS, THEY ARE PRESUMED TO BE MADE FROM INTEREST FREE FUNDS AND NO T LOANED FUNDS AND NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A '. 25. IN VIEW OF THE ABOVE PROPOSITION, WE HOLD THAT NO DISALLOWANCE OF INTEREST EXPENSE CLAIMED BY THE ASSESSEE CAN BE MADE ON ACCOUNT OF I NVESTMENTS AS DISCUSSED ABOVE UNDER THE PROVISION OF SECTION 14A R.W.R. 8D OF INCOME TA X RULES. HENCE, WE REVERSE THE ORDER OF THE AUTHORITIES BELOW. THE AO IS DIRECTED TO DEL ETE THE ADDITION MADE BY HIM ON ACCOUNT OF THE INTEREST EXPENSES. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH ON SIMILAR FACTS AND ISSUE AS CITED ABOVE, WE RESTRICTED THE DISALLO WANCE PERTAINING TO ADMINISTRATIVE EXPENDITURE TO THE AMOUNT OF RS. 37, 726/- AND DELETE THE DISALLOWANCE PERTAINING TO THE INTEREST COMPONENT. ACCORDINGLY, THIS GROUND OF APPEAL IS PARTLY ALLOWED. GROUND NO. 3 (DISALLOWANCE U/S. 14A WHILE COMPUTING BOOK PROFIT U/S. 115JB) 12. THE ASSESSING OFFICER HAS TAKEN INTO CONSIDERAT ION THE DISALLOWANCE U/S. 14A FOR COMPUTING BOOK PROFIT U/S. 115JB. THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 13. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE US, THE LD. COUNSEL HAS BROUGHT TO OUR NOTICE THAT THIS ISSUE HAS BEEN ADJU DICATED BY THE SPECIAL BENCH OF THE ITAT IN THE CASE ACIT VS. VINEET INVESTMENTS 16 5 ITD 27 (DEL) SB WHEREIN IT IS HELD THAT DISALLOWANCE U/S. 14A R.W. RULE 8D CAN NOT BE SUBJECT MATTER OF DISALLOWANCE WHILE COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT TH IS UNDISPUTED FACT. THEREFORE, AFTER FOLLOWING THE DECISION OF SPECIAL BENCH IN TH E ABOVE REFERRED CASE OF ACT VS. VINEET INVESTMENTS SUPRA, WE ARE NOT INCLINED W ITH THE DECISION OF LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. I.T.A NO. 1854/AHD/2018 A.Y. 2013-14 PAGE NO KANCHAN PHARMA PVT. LTD. VS. ACIT 7 GROUND NO. 4. (DISALLOWANCE OF RS. 6,09,138 U/S. 36 (1)(VA) R.W.S. 2(24)(X) OF THE ACT) 14. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEFAULTED IN DEPOSITING THE CONTRIBUTI ON OF EMPLOYEES PROVIDED FUND AND ESIC WITHIN THE PRESCRIBED DUE DATE. THEREFORE , THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS. 6,09,138/- U/S. 36(1)(VA) R.W.S. 2(24)(X) STATING THAT THE DEDUCTION FROM EMPLOYEES CONTRIBUTION IS ALLOWABLE ONLY IF SUCH SUM IS CREDITED BY EMPLOYER TO THE EMPLOYEES ACCOUNT IN THE RELEVA NT FUND OR FUNDS BEFORE THE DUE DATE. THE CIT(A) HAS SUSTAINED THE DISALLOWANC E MADE BY THE ASSESSING OFFICER. 15. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE US, THE LD. COUNSEL HAS AGREED THAT THIS ISSUE HAS BEEN DECIDED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GSRTC TAX APPEAL NO. 637 OF 201 3 AGAINST THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL AND THE SAME IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-10-2020 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 07/10/2020 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 1854/AHD/2018 A.Y. 2013-14 PAGE NO KANCHAN PHARMA PVT. LTD. VS. ACIT 8 BY ORDER/ , / ,