The DCIT(OSD) Range-I, Ahmedabad V. M/s. Cama Hotels Ltd., Ahmedabad

ITA 2579/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8550 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value; Deemed dividend
• Section: 56; 28

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ ITA NO.2579/AHD/2014 & CROSS OBJECTION NO. 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ( / ASSESSMENT YEAR: 2010-11 DCIT(OSD), RANGE -1, AHMEDABAD. / VS. CAMA HOTELS LTD. KHANPUR, AHMEDABAD 380001 ./ ./ PAN/GIR NO. : AABCC 5432 G ( / APPELLANT ) .. ( / RESPONDENT ) & CROSS OBJECTOR ASSESSEE BY : SHRI MUDIT NAGPAL, SR.D.R. REVENUE BY : SHRI RAJESH C. SHAH, A.R. / DATE OF HEARING 04/09/2017 !' / DATE OF PRONOUNCEMENT 15/09/2017 #$ / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL ALONGWITH A CROSS OBJECTION FILE D BY THE DEPARTMENT AND ASSESSEE RESPECTIVELY AGAINST THE OR DER OF LD. CIT(A)-6, AHMEDABAD, DATED 4 TH JULY, 2014, FOR THE ASSESSMENT YEAR 2010-11, ON THE FOLLOWING GROUNDS: ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 2 - I. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT DESPITE THE FACT THAT THE ASSESSEE HAD ITSELF RECEIVED THE SAID DIVIDEND AS ENVISAGED U/S.2(22)(E) READ WITH SECTION 56 OF THE ACT. II. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.6,40,515/- U/S.40A(2)(B) OF THE ACT DESPITE T HE FACT THAT THE SAME WAS ABOVE THE PREVAILING MARKET RATE AND BUSIN ESS EXIGENCY WAS NOT ESTABLISHED. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, ASSESSEE COMPANY IS ENGAGED IN BUSI NESS OF RUNNING HOTEL AND RESTAURANTS. IT WAS SEEN FROM ANNEXURE-2 OF TAX AUDIT REPORT THAT THE FOLLOWING PAYMENTS TOWARDS THE CONTRIBUTIO N OF EMPLOYEES PF AND ESI WERE NOT MADE WITHIN DUE DATES. PROVIDENT FUND CAMA HOTELS LTD . MONTH EMPLOYEES CONTRIBUTION DUE DATE PAID DATE JULY 09 43,368 20/08/2009 21/08/2009 SEP 09 43,339 20/10/2009 21/10/2009 TOTAL 86,707 PROVIDENT FUND CAMA CATERERS LTD. MONTH EMPLOYEES CONTRIBUTION DUE DATE PAID DATE JULY 09 7,630 20/08/2009 21/08/2009 SEP 09 6,982 20/10/2009 21/10/2009 TOTAL 14,612 PROVIDENT FUND CAMA RAJPUTANA CLUB RESORT MONTH EMPLOYEES DUE DATE PAID DATE ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 3 - CONTRIBUTION JULY 09 17,441 20/07/2009 27/07/2009 SEP 09 17,346 20/08/2009 31/08/2009 MARCH 10 15,019 20/04/2010 22/04/2010 TOTAL 49,806 ESI CONTRIBUTION CAMA HOTELS LTD. MONTH EMPLOYEES CONTRIBUTION DUE DATE PAID DATE JULY 09 6,069 20/08/2009 21/08/2009 SEP 09 5,816 20/10/2009 21/10/2009 TOTAL 11,885 ESI CONTRIBUTION CAMA CATERERS LTD. MONTH EMPLOYEES CONTRIBUTION DUE DATE PAID DATE JULY 09 1,541 20/08/2009 21/08/2009 SEP 09 1,540 20/10/2009 21/10/2009 TOTAL 3,081 2.2 THEREAFTER, A SHOW-CAUSE NOTICE WAS ISSUED TO T HE ASSESSEE. IN RESPONSE TO THE ASSESSEE, SUBMITTED AS UNDER: REGARDING SMALL DELAY IN DEPOSITION EMPLOYEES CON TRIBUTION TO PF & ESI, THE APPELLANT COMPANY HAS MADE PAYMENT OF EMPL OYEES CONTRIBUTION OF PF & ESI. THE SAID PAYMENT WAS DEPO SITED BY LITTLE DELAY OF 1-7 DAYS WITH RESPECTIVE DEPARTMENT. IN VI EW OF THE RECENT JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. ALOM EXTRUSION LTD. (319 ITR 306) EVEN DEPOSIT OF EMPLOY EES CONTRIBUTION TOWARDS ESI & PF BEFORE DUE DATE OF FILING OF INCOM E TAX RETURN IS ALLOWABLE EXPENSE AND CANNOT BE TREATED AS INCOME O F THE ASSESSEE U/S.36(1)(VA) R.W.S. 2(24)(X) BUT THE ABOVE SUBMISSION OF THE ASSESSEE IS NOT FOU ND TENABLE AND THE SUM OF RS.1,51,125/- AND RS.14,966/- RECEIVED F ROM EMPLOYEES ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 4 - TOWARDS PF & ESI RESPECTIVELY ARE TO BE TREATED AS INCOME OF THE ASSESSEE AS PER PROVISION OF SECTION 2(24)(X) R.W.S. 36(1)(V A) OF THE ACT. HENCE, THE LATE PAYMENTS OF EMPLOYEES CONTRIBUTION OF RS. 1,66,091/- TOWARDS PF & ESI WERE ADDED TO THE TOTAL INCOME OF THE ASSE SSEE. 2.3 ON PERUSAL OF THE ACCOUNTS, IT IS SEEN THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.31,75,791/- FROM CAMA MOTORS PVT. L TD. AND RECEIVED RS.1,99,39,955/- FROM R. J. CAMA & CO. PVT. LTD. TH E ASSESSEE WAS SHOW CAUSED THAT WHY THE AMOUNT OF RS.31,75,791/- RECEIV ED FROM CAMA MOTORS PVT. LTD. AND RS.1,99,38,955/- FROM R. J. CA MA & CO. PVT. LTD. SHOULD NOT BE TREATED AS DEEMED DIVIDEND U/S.2(22)( E) OF THE I.T. ACT. 2.4 IN RESPONSE TO THE SAID NOTICE ASSESSEE SUBMITT ED ITS REPLY, SAME IS REPRODUCED AS UNDER: AS REGARDS THE LOANS RECEIVED FROM CAMA MOTORS PVT . LTD. AND R.J. CAMA & CO. PVT. LTD., AT THE OUTSET, WE HAVE TO STA TE THAT WE HAVE GONE THROUGH THE LEDGER ACCOUNT OF THESE PARTIES AND WE FIND THAT DURING THE YEAR, THE ASSESSEE HAD REPAID LOAN OF RS.11.00 LACS TO CAMA MOTORS IN WHICH OPENING BALANCE WAS RS.37,74,168/- WHEREAS CL . BALANCE IS RS.31,75,791 WHICH IS INCLUSIVE OF INTEREST OF RS.5 ,01,623/-. IN THE CASE OF R.J. CAMA & CO. PVT. LTD.. IT HAS RE CEIVED NEW LOAN OF RS.3.00 LACS & CLOSING BALANCE IS RS.1,99,38,955/- (INCLUSIVE OF INTEREST OF RS.27,00,936) AS AGAINST OPENING BALANCE OF RS. 1,69,38,020/-. WITHOUT PREJUDICE TO THE ABOVE, WE HAVE TO STATE TH AT THE ABOVE ASSESSEE COMPANY IS A PUBLIC LIMITED COMPANY AND IS NOT HOLD ING ANY SHARE IN THE SAID COMPANIES. MOREOVER, THOUGH SHRI JEHANGIR R. CAMA, MRS. ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 5 - MEHROO J. CAMA AND SHRI RUSTOM J. CAMA HOLD MORE TH AN 10% OF THE SHARE CAPITAL I.E. THE VOTING POWER, NONE OF THEM H OLDS 20% OR MORE OF THE SHARE CAPITAL OF THE ABOVE ASSESSEE COMPANY. TH EREFORE, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT A PPLICABLE AT ALL ON FACTS OF THE CASE AND, HENCE, THERE IS NO QUESTION OF TAXING SUCH AMOUNTS AS 'DEEMED DIVIDEND' IN THE HANDS OF THE ABOVE ASSE SSEE COMPANY. IN VIEW OF THE FACTS OF THE CASE, THERE IS NO NEED TO RELY UPON THE DECISION OF THE SPECIAL BENCH, MUMBAI IN THE CASE O F ACIT V. BHAUMIK COLOUR PVT. LTD. REPORTED IN 118 I.T.D. 1 (MUM) (SB ), A COPY OF WHICH IS ENCLOSED HEREWITH. AS REGARDS THE LOAN RECEIVED FROM RJ. CAMA & CO. PV T. LTD., WE HAVE FURTHER TO STATE THAT THE SAID COMPANY IS IN THE BU SINESS OF BORROWING MONEY AND LENDING MONEY. MAJORITY OF INCOME IS BY W AY OF INTEREST INCOME AND THEREFORE THE SAID LOAN IS EXCLUDED BY V IRTUE OF THE SUB- CLAUSE (II) OF SECTION 2(22)(E) OF THE I.T. ACT. KINDLY, THEREFORE, NOTE THAT THE LOAN OF RS.1,69,38 ,020/- WAS IN THE ORDINARY COURSE OF BUSINESS OF THE SAID COMPANY AND , THEREFORE, THE PROVISIONS OF SECTION-2(22)(E) OF THE ACT DO NOT AP PLY TO THE SAME. REFERENCE MAY BE MADE TO THE DECISION OF THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF C.I.T. VS. PARLE PLASTICS PVT. LTD. REPORTED IN 236 CTR 382(BOM). SIMILARLY, CAMA MOTORS PVT. LTD. BEING A COMPANY EN GAGED IN THE AUTOMOBILE BUSINESS ALSO USED TO LEND MONEY TO PART IES AND EARNED INTEREST INCOME. DURING THE YEAR, THE INTEREST INCO ME OF THE SAID COMPANY WAS ALSO SUBSTANTIAL. THEREFORE, IT CAN BE SAFELY SAID THAT THE LOAN GIVE N TO THE ABOVE COMPANY WAS IN THE ORDINARY COURSE OF ITS BUSINESS AND, THEREFORE, THE SAME CANNOT BE CONSIDERED TO BE 'DEEMED DIVIDEND' U /S 2(22) (E) OF THE ACT. AS REGARDS THE APPLICABILITY OF THE PROVISIONS OF S ECTION 2(22)(E),THE SAME ARE NOT AT ALL APPLICABLE AS THE APPELLANT DOE S NOT HOLD ANY SHARE ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 6 - IN CAMA MOTORS PVT LTD. AND R.J. COMA & CO. PVT. LT D. AND, THEREFORE, IN VIEW OF THE DECISION OF HON'BLE ITAT MUMBAI IN T HE CASE OF ACIT V. BHAUMIC COLOUR PVT. LTD. REPORTED IN 118 ITD 1 (MUM )(SB) NO DEEMED DIVIDEND CAN BE TAXED IN THE HANDS OF THE APPELLANT EVEN IF THE PROVISIONS OF SECTION 2(22) (E) WERE OTHERWISE APPL ICABLE. AS A MATTER OF FACT, NONE OF THE SHAREHOLDERS OF CAMA MOTORS PVT. LTD. AND R.J. CAMA & CO. PVT. LTD. HOLDING MORE THAN 10% OF ITS SHAREH OLDING HOLDS NOT LESS THAN 20% OF THE TOTAL SHARE CAPITAL OF 2059200 SHARES I.E. VOTING POWER OF THE APPELLANT COMPANY AND, THEREFORE, THE PRE-CONDITIONS OF SECTION 2(22) (E) ARE NOT FULFILLED AT ALL. THE SAI D PROVISIONS REQUIRE THAT IN CASE OF A LOAN TO A CONCERN, THE SHAREHOLDER OF LOAN GIVING COMPANY HOLDING MORE THAN 10% OF SHARE CAPITAL SHOULD ALSO HAVE A SUBSTANTIAL INTEREST WHICH IS NOT LESS THAN 20% OF THE SHARE CA PITAL I.E. VOTING POWER. MOREOVER, CAMA MOTORS PVT. LTD. AND R.J. CAMA & CO. PVT. LTD. BOTH USED TO LEND MONEY TO PARTIES AND EARN INTEREST INC OME AND, THEREFORE, ALSO THE LOAN AMOUNT CANNOT BE TAXED AS 'DEEMED DIV IDEND' BY VIRTUE OF SUB-CLAUSE (II) OF SECTION 2(22)(E) OF THE ACT AND THE DECISION OF THE HONOURABLE BOMBAY HIGH COURT IN THE CASE OF C.I.T. V. PARLE PLASTICS PVT. LTD. REPORTED IN 236 CTR 382 (BOM). IN VIEW OF THE ABOVE, KINDLY NOT TO APPLY PROVISION S OF SECTION 2(22) (E) IN THE HANDS OF THE COMPANY AND OBLIGE.' THE SUBMISSIONS OF THE ASSESSEE COMPANY HAVE BEEN CONSIDERED THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE CO MPANY IS A PUBLIC LIMITED COMPANY AND IS NOT HOLDING ANY SHARE IN THE SAID COMPANIES IS NOT ACCEPTABLE. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A) WHO PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 7 - 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. LD. AR STATED THAT CAMA HOTEL LTD. IS NOT HAVING AN Y SHARE HOLDING IN CAMA MOTORS PVT. LTD. AND ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. SIMILARLY, MATTER CAME BEFORE THE ITAT FO R ASST. YEAR 2009-10, IN WHICH ASSESSEE COMPANY HAD PAID INTEREST OF RS.3 2,43,885/- TO PERSON COVERED U/S.40A(2)(B) OF THE INCOME TAX ACT. HE FUR THER OBSERVED THAT INTEREST HAS BEEN PAID @15% IN THE CASE OF CAMA MOT ORS PVT. LTD. AND @16% IN THE CASE OF R.J. CAMA & CO. PVT. LTD. THE L D. ASSESSING OFFICER HAS ALLOWED THE INTEREST PAYMENT @12% AND D ISALLOWED THE BALANCE. THE DISALLOWANCE HAS BEEN COMPUTED BY THE ASSESSING OFFICER AS UNDER: DISALLOWANCE IS COMPUTED AS UNDER R. J. CAMA & CO. PVT. LTD. INTEREST @ 16% RS.23,50,167/- INTEREST @ 12% RS.17,62,625/- DIFFERENCE RS. 5,87,542/- CAMA MOTORS PVT. LTD. INTEREST @ 16% RS.4,78,846/- INTEREST @ 12% RS.3,83,077/- DIFFERENCE RS. 95,769/- ACCORDINGLY, EXCESS PAYMENT OF INTEREST OF RS.6,83, 311/- IS DISALLOWED. 4.2 ON APPEAL, LD. CIT(A) HAS DELETED THE DISALLOWA NCE. HONBLE ITAT HELD THAT DISALLOWANCE OF RS.6,83,311/- . ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 8 - 4.3 HONBLE ITAT FURTHER HELD THAT WE HAVE GONE THR OUGH THE RECORD CAREFULLY, SECTION 40A(2)(B) CONTEMPLATES THAT IF S OME UNDUE BENEFIT IS BEING EXTENDED BY THE ASSESSEE TO THE PERSONS MENTI ONED IN SUB- CLAUSE(2)(B) OF SECTION 40A OF THE INCOME TAX ACT O N ACCOUNT OF THEIR ASSOCIATION WITH THE ASSESSEE, THEN THE DEDUCTION C LAIMED FOR THAT BENEFIT OUGHT TO BE DISALLOWED TO THE ASSESSEE. IN OTHER WO RDS, IF THE ASSESSEE CAN AVAIL THE FACILITY FROM THE OPEN TO MARKET AT A LOW ER PRICE, THEN SIMILAR FACILITY AVAILED FROM THE PERSONS COVERED U/S.40A(2 )(B) THEN THAT EXCESS PAYMENT WOULD NOT BE ALLOWED TO THE ASSESSEE AS DED UCTION. THE QUESTION BEFORE US IS WHAT WAS THE FAIR MARKET VALUE OF INTE REST PAID BY THE ASSESSEE ON THE LOANS OBTAINED FROM THE PERSONS COV ERED U/S.40A(2)(B). ACCORDING TO THE ASSESSING OFFICER, THE LOANS OUGHT TO HAVE BEEN TAKEN AT THE INTEREST RATE OF 12% AND NOT THE INTEREST RATE OF 15 OR 16%. THE ASSESSEE OUGHT TO HAVE PROVIDED A SECURITY FOR THE LOANS TAKEN FROM THE BANK, THESE ARE UNSECURED LOANS. IT HAS AVOIDED A L OT OF FORMALITIES BY TAKING LOANS FROM THE ASSOCIATE CONCERN. IN OUR OPI NION, THE PAYMENT OF INTEREST AT A LITTLE HIGHER RATE TO THE PERSON EVEN IF COVERED U/S.40A(2)(B) CANNOT BE TERMED AS EXORBITANT WHEN THE FAIR MARKET VALUE OF SUCH INTEREST COST IS BEING CONSIDERED. THE ASSESSEE HAS PAID INTEREST COMMENSURATE WITH THE INTEREST RATE PREVAILING IN T HE OPEN MARKET. AN ORDER OF THE ITAT, AHMEDABAD IN ITA NO.869/AHD/2010 RENDERED IN CASE OF VIPUL Y. MEHTA VS. AC1T HAS BEEN BROUGHT TO OUR NOTICE, WHEREIN TRIBUNAL HAS UPHELD THE ALLOWANCE OF THE IN TEREST RATE @18% PER ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 9 - ANNUM TO THE RELATIVES ON UNSECURED LOAN. CONSIDERI NG ALL THESE ASPECTS, WE ARE OF THE VIEW THAT LD. FIRST APPELLATE AUTHORI TY HAS APPRECIATED THE CONTROVERSY IN RIGHT PERSPECTIVE. ASSESSEE HAS NOT EXTENDED ANY UNDUE BENEFIT TO THE PERSONS COVERED U/S.40A(2)(B) OF THE INCOME TAX ACT. 4.4 WITH REGARD TO DELETION OF ADDITION OF DEEMED D IVIDEND U/S.2(22)(E) OF THE ACT DESPITE THE FACT THAT THE A SSESSEE HAD ITSELF RECEIVED THE SAID DIVIDEND AS ENVISAGED U/S.2(22)(E ) R.W.S. 56 OF THE ACT IS CONCERNED. LEARNED AR CITED AN ORDER OF ASSESSEE S OWN CASE, IN THE MATTER OF DCIT(OSD) VS. M/S. CAMA HOTELS PVT. LTD. IN ITA NO.1834/AHD/2012. SIMILAR FACTS HAVE BEEN TAKEN IN THIS APPEAL WHICH IS FILED BY THE DEPARTMENT AND APPEAL IS DISMISSED FOR ASST. YEAR 2009-10. THE BRIEF FACTS OF THE CASE WERE THAT ON PERUSAL OF THE ACCOUNTS, IT REVEALS TO THE ASSESSING OFFICER THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS.62,06,638/- FROM CAMA MOTORS PVT. LTD. AND RECE IVED RS.1,69,38,020/- FROM R. J. CAMA AND CO. PVT. LTD. THE LD. ASSESSING OFFICER HAS CONSIDERED THESE LOANS AS DEEMED DIVIDE ND IN THE HANDS OF ASSESSEE. HE ACCORDINGLY MADE ADDITION OF RS.2,63,1 2,188/- U/S.2(22)(E) OF THE INCOME TAX ACT. ON APPEAL, LD. CIT(A) HAS DE LETED THE ADDITION. 4.5 LEARNED AR AT THE VERY OUTSET, SUBMITTED THAT I SSUE IN DISPUTE IS CLEARLY COVERED IN FAVOUR OF ASSESSEE. HE POINTED OUT THAT ASSESSEE IS NOT A SHARE HOLDER OF EITHER CAMA MOTORS PVT. LTD. OR R . J. CAMA & CO. PVT. ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 10 - LTD. SECTION 2(22)(E) CAN BE APPLIED IF THE ASSESSE E IS REGISTERED SHARE HOLDER OF THE LENDER COMPANY AND AVAILED SOME AMOUN TS WHICH CAN BE TREATED AS DEEMED DIVIDEND. THE LD. ASSESSING OFFIC ER HAS TREATED THE ALLEGED LOAN AS DEEMED DIVIDEND ON THE GROUND THAT THE DIRECTORS ARE HOLDING MORE THAN 10% OF THE SHARE CAPITAL OF CAMA MOTORS PVT. LTD. AND R. J. CAMA & CO. PVT. LTD. BUT IN THE APPEAL LEARNE D CIT(A) RECORDED A FINDING OF FACT THAT ASSESSEE IS NOT THE SHARE HOLD ER OF BOTH THE COMPANIES. 4.6 IN OUR OPINION, IF ASSESSEE IS NOT A SHARE HOLD ER OF BOTH THE COMPANIES THEN SECTION 2(22)(E) OF THE INCOME TAX ACT CANNOT BE ATTRACTED OR EFFECTED. AS IT HAS BEEN HELD BY THE HON'BLE DELHI HIGH COURT , IN THE CASE OF CIT VS. ANKITECH (P.) LTD. IN [2012] 340 1TR 14 THAT THE AS SESSEE SHOULD BE A SHARE HOLDER IN THE LENDER COMPANY AND SUCH HOLDING SHOUL D BE MORE THAN 10% OF THE VOTING RIGHTS, ONLY THEN SECTION 2(22)(E) WOULD BE ATTRACTED. THEREFORE, THIS GROUND OF DEBARMENT IS DISMISSED. 4.7 THE RATIO OF THE JUDGMENT IS THAT IT IS THE FAI R MARKET VALUE OF INTEREST PAID BY THE ASSESSEE ON THE LOANS OBTAINED FROM THE PERSONS COVERED U/S.40A(2)(B). SOMETIME IT IS NOT AVAILABLE EVEN @15% OR 16% BECAUSE FROM MARKET A PERSON HAS TO COMPLETE SO MAN Y FORMALITIES. SOMETIME IT IS NOT POSSIBLE FOR THE PERSON TO COMPL ETE ALL THE COMPLEX FORMALITIES. THEREFORE, IN OUR CONSIDERED OPINION, ASSESSEE HAS NOT TAKEN UNDUE ADVANCES AND THEN GROUND OF APPEAL IS DISMISS ED. ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 11 - 5. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 6. NOW WE TAKE UP THE ASSESSEES CROSS OBJECTION IN CO NO.287/AHD/2014 FOR ASST. YEAR 2010-11, ON THE FOLL OWING GROUNDS OF CROSS OBJECTION: THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHO LDING THE DISALLOWANCE OF RS.1,66,091/- IN RESPECT OF LATE PA YMENT TO PF & ESIC TREATING THE SAME AS INCOME U/S.2(24)(X) R.W.S. 36(I)(VI) OF THE INCOME TAX ACT, 1961 AND NOT ALLOWING THE SAID PAYMENT AS EXPENDITURE IN COMPUTING TOTAL INCOME. 6.2 IN THIS CASE, LEARNED ASSESSING OFFICER HAS TRE ATED EMPLOYEES CONTRIBUTION TO PF OF RS.1,51,125/- AND ESIS AGGREG ATING TO RS.14,966/- AGGREGATING TO TOTAL CONTRIBUTION RS.1,66,091/- AS INCOME U/S.2(24)(X) R.W.S. 36(1)(VA) OF THE INCOME TAX ACT. IN THIS CAS E, LEARNED CIT(A) HAS DECIDED THE MATTER AGAINST THE ASSESSEE QUOTING THE JUDGMENT OF CIT(A) VS. GUJARAT STATE ROAD TRANSPORT CORPORATION, IN WH ICH IT IS HELD (SUPRA) THE SECTION 36(1)(VA) OF THE INCOME TAX ACT, 1961 R EAD WITH SUB- CLAUSE(X) OF CLAUSE 24 OF SECTION 2 WAS APPLIED, TH E ASSESSEE SHALL BE ENTITLED TO DEDUCTION IN COMPUTING THE INCOME REFER RED TO IN SECTION 28 WITH RESPECT TO SUCH SUM CREDITED BY THE ASSESSEE T O THE EMPLOYEES' ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE 'DUE DATE' MENTIONED IN EXPLANATION TO SECTION 36(L)(VA). CONS EQUENTLY, IT IS HELD THAT THE LEARNED TRIBUNAL HAS ERRED IN DELETING RES PECTIVE DISALLOWANCES BEING EMPLOYEES' CONTRIBUTION TO PF ACCOUNT / ESI A CCOUNT MADE BY THE ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 12 - AO AS, AS SUCH, SUCH SUMS WERE NOT CREDITED BY THE RESPECTIVE ASSESSEE TO THE EMPLOYEES' ACCOUNTS IN THE RELEVANT FUND ON OR BEFORE THE DUE DATE AS PER THE EXPLANATION TO SECTION 36(L)(VA) OF THE ACT I.E. DATE BY WHICH THE CONCERNED ASSESSEE WAS REQUIRED AS AN EMPLOYER TO C REDIT EMPLOYEES' CONTRIBUTION TO THE EMPLOYEES' ACCOUNT IN THE PROVI DENT FUND UNDER THE PROVIDENT FUND ACT AND/OR IN THE ESI FUND UNDER THE ESI ACT. CONSEQUENTLY, ALL THESE APPEALS ARE ALLOWED AND THE IMPUGNED JUDGEMENT AND ORDERS PASSED BY THE TRIBUNAL IN DELE TING THE DISALLOWANCES MADE BY THE AO ARE HEREBY QUASHED AND SET ASIDE AND THE DISALLOWANCES OF THE RESPECTIVE SUMS WITH RESPECT TO THE PROVIDEN T FUND / ESI FUND MADE BY THE AO IS HEREBY RESTORED. THE QUESTIONS RA ISED IN PRESENT APPEAL ARE ANSWERED IN FAVOUR OF THE REVENUE. WITH THIS, ALL THESE APPEALS ARE ALLOWED. 6.3 SECTION 36(1)(VA) AND SECTION 43B(B) OPERATE IN DIFFERENT FIELDS, I.E. FORMER TAKES CARE OF EMPLOYEES CONTRIBUTION A ND LATER THE EMPLOYERS CONTRIBUTIONS. THEREFORE, AN ASSESSEE IS ENTITLED T O GET BENEFIT OF DEDUCTION U/S.43B(B) AS PROVIDED UNDER THE PROVISO THERETO ONLY WITH REGARD TO PORTION OF AMOUNT PAID BY THE EMPLOYER TO CONTRIBUTORY FUND. SO FAR AS THE EMPLOYEES CONTRIBUTION IS CONCERNED, THE ASSESSEE IS ENTITLED TO GET DEDUCTION OF AMOUNTS AS PROVIDED UN DER SECTION 36(1)(VA) ITA NO. 2579/AH D/2014 & CO 287/AHD/2014 (IN ITA NO.2579/AHD/2014) ASST.YEAR 2010-11 - 13 - ONLY IF AMOUNTS SO RECEIVED FROM THE EMPLOYEE IS CR EDITED IN SPECIFIED ACCOUNT WITHIN DUE DATE AS PROVIDED UNDER RELEVANT STATUE. 6.4 IN OUR CONSIDERED OPINION CROSS OBJECTION OF TH E ASSESSEE IS ALSO DISMISSED. 7. IN THE RESULT, APPEAL IN ITA NO.2579/AHD/2014 FO R ASST. YEAR 2010-11 IS DISMISSED AND CROSS OBJECTION NO.287/AHD /2014( IN ITA NO.2579/AHD/2014) FOR ASST. YEAR 2010-11 IS ALSO DI SMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 15/09/2017 SD/- SD/- IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/09/2017 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. % &' ( / CONCERNED CIT 4. ( () / THE CIT(A)-6, AHMEDABAD. 5. +,- ..&' , &'' , 01#%# / DR, ITAT, AHMEDABAD 6. -23 4 / GUARD FILE. % & / BY ORDER, + . //TRUE COPY/ '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD