DCIT, BHILWARA V. M/s. Suzuki Textiles Ltd., BHILWARA

ITA 356/JODH/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4803 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MADHUK
• Keywords: Business income
• Section: 43B; 142(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SHRI B.P JAIN ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY JUDICIAL MEMBER ITA NO.356/JODH/2014 ASSESSMENT YEAR: 2009 - 10 THE DCIT VS. M/S. SUZUKI TEXTILES LTD. CIRCLE - 3 VILLAGE GUDDA, BHILWARA P.O. MANDAL BHILWARA PAN NO. AABCS9142F (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJENDRA JAIN DEPARTMENT BY : SH. S.K. MADHUK DATE OF HEARING : 07/12/2016 DATE OF PRONOUNCEMENT : 14/12/2016 ORDER PER PARTHA SARATHI CHAUDHURY , JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), AJMER DT. 28/03/2014, ON THE FOLLOWING GROUNDS OF APPEAL: 1. DELETING THE ADDITION OF RS. 8,33,25,885/ - MADE BY THE AO, ON ACCOUNT OF UNEX PLAINED INVESTMENT IN STOCK & DEBTORS, WITHOUT APPRECIATING THE FACTS OF THE CASE; 2. DELETING THE ADDITION OF RS. 28,29,912/ - MADE BY THE AO, ON ACCOUNT OF DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III), WITHOUT APPRECIATING THE FACTS OF THE CASE; 2 3. DELETING THE DISALLOWANCE OF LATE DEPOSIT OF ESIC & PF AMOUNTING TO RS. 3,77,935/ - MADE BY THE AO, UNDER SECTION 36(1)(VA) OF THE I.T. ACT, 1961; 4. THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DELETE OR MODIFY THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. BRIEF FACTS APPEARING IN THIS CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF SYNTHETIC FABRIC, READYMADE GARMENT AND YARN ETC. AT ITS VARIOUS UNITS. THE ASSESSEE HAS FILED ITS E - RETURN ON 30/09/2009 DECLARING INCOME AT RS. 95,74,080/ - . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE UNDER SECTION 143(2) DT. 26/08/2010 WAS ISSUED BY DCIT, CIRCLE, BHILWARA AND WAS DULY SERVED UPON THE ASSESSEE. THEREAFTER, THE JURISDICTION OVER THE CASE WAS ASSIGNED TO THE JOINT C IT, RANGE BHILWARA BY THE CIT, AJMER BY HIS ORDER UNDER SECTION 120(1) & (2) OF INCOME TAX ACT, 1961 VIDE NO. 4 OF 2011 - 12 / 589 DT. 06/06/2011. DUE TO CHANGE OF INCUMBENT, FRESH NOTICE UNDER SECTION 143(2) ALONGWITH NOTICE UNDER SECTION 142(1) AND QUERY L ETTER DT. 22/07/2011 WAS ISSUED TO THE ASSESSEE FIXING THE CASE FOR HEARING ON 03/08/2011. THE ASSESSEE ATTENDED PROCEEDINGS FROM TIME TO TIME AND BOOKS OF ACCOUNTS CONSISTING CASH BOOK, LEDGER, JOURNAL, PURCHASE AND SALES REGISTERS WERE PRODUCED WHICH WER E EXAMINED ON TEST CHECK BASIS BY THE AO. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY DECLARED TOTAL TURNOVER FROM BUSINESS AT RS. 400.34 CRORE AND THE GROSS PROFIT(G.P.) OF RS. 4726.92 LACS GIVING G.P. RATE OF 11.81% AS AGAINST THE G.P. RAT E OF 10.55% DECLARED ON THE TOTAL TURNOVER OF RS. 389.99 CRORE WITH G.P. OF RS. 4115.87 LACS IN THE IMMEDIATELY PRECEDING YEAR. 3 3. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3)WITH TOTAL ASSESSED INCOME AT RS. 9,81,40,275/ - AS AGAINST THE RETURNED INC OME OF RS. 95,74,080/ - . 4. THAT, WITH REGARD TO THE FIRST GROUND OF APPEAL WHICH RELATES TO THE DELETION OF ADDITION OF RS. 8,33,25,885/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT IN STOCK AND DEBTORS. 5. THE LD. CIT(A) IN PARA 4.3 OF HIS ORDER IS HELD AS UN DER 4.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE AO HAS NOTED THAT THERE WAS DIFFERENCE OF RS. 7,87,79,278/ - (RS. 113,96,44,000 - RS. 106,08,64,722/ - ) IN CLOSING STOCK AND THAT OF RS. 45,46,607/ - (RS. 21,95,65,000 RS. 21,50,18,393/ - ) ON ACCOUNT OF DEBTORS AS ON 31/03/2009 IN THE STOCK STATEMENT SUBMITTED TO THE BANKERS AND STOCK/DEBTORS SHOWN IN THE BALANCE SHEET OF THE ASSESSEE. THE AO ALSO NOTED THAT SAID STOCK STATEMENTS CONTAINS THE QUANTITAT IVE AS WELL AS VALUE WISE DETAILS OF THE STOCK. THE ASSESSEE HAS EXPLAINED THAT PROVISIONAL POSITION OF THE STOCK WAS GIVEN IN THE STOCK SUBMITTED TO THE BANK AND STATEMENT WAS SUBMITTED ON THE ESTIMATE BASIS. IT DID NOT CONTAIN THE LIST OF INVENTORIES A ND NO VERIFICATION OF STOCK WAS DONE BY THE BANKERS. THE STOCK WAS ONLY HYPOTHECATED AND WAS NOT PLEDGED WITH THE BANK. THE ASSESSEE CONTENDED THAT COMPLETE BOOKS OF ACCOUNTS ALONG WITH THE BANK. THE ASSESSEE CONTENDED THAT COMPLETE BOOKS OF ACCOUNTS ALON G WITH THE QUANTITATIVE STATEMENTS HAVE BEEN PRODUCED ALONG WITH THE BILLS AND VOUCHERS BEFORE THE AO IN WHICH NO DEFECTS HAVE BEEN POINTED OUT. THE SOLE BASIS OF THE ADDITION MADE BY THE AO IS THE STOCK STATEMENT SUBMITTED TO THE BANK. FURTHER, THE STOCK AUDITORS ALSO HAVE POINTED VARIOUS DEFICIENCIES IN THE STOCK STATEMENT SUBMITTED TO THE BANK UPTO THE MONTH OF FEBRUARY 2009. IT WAS POINTED OUT THAT STOCK STATEMENT IS TO BE FURNISHED BY 14 TH OF FOLLOWING MONTH BASED ON WHICH COMPANY CAN DRAW OUT OF THE SANCTIONED LIMIT OF RS. 100 CRORES UPTO 75% OF THE INVENTORY VALUE OTHER THAN STORES AND SPARES AND 60% OF THE DEBTORS AND STORES AND SPARES. SO, ADEQUATE MARGIN IS KEPT BY THE BANKERS. FURTHER, IN SUCH SHORT TIME IT IS NOT POSSIBLE TO DRAW THE CORRECT STO CK STATEMENT AND THERE MAY BE SOME ERRORS AND PENDING RECONCILIATIONS. THE ASSESSEE ALSO POINTED OUT THAT SALE SHOWN IN THE STOCK STATEMENT ARE ONLY OF RS. 364 CRORES WHILE ASSESSEE HAS SHOWN THE SALES IN THE AUDITED BALANCE SHEET AT RS. 367 CRORES WHICH I S HIGHER BY RS. 361.88 LACS AND IT SHOWS THAT FIGURES SHOWN IN THE STOCK STATEMENT SUBMITTED TO THE BANK ARE ONLY ON THE PROVISIONAL BASIS. NO UNACCOUNTED DEBTORS HAVE BEEN IDENTIFIED BY THE AO BEFORE MAKING THE ADDITIONS. ANALYZED IN ABOVE CONTEXT, IT IS SEEN THAT AS PER THE STOCK STATEMENT GIVEN TO THE BANKERS, THE STOCK IS SHOWN AT RS. 113,96,44,000 - AS AGAINST RS. 106,08,64,7228/ - SHOWN IN THE BOOKS AND DEBTORS HAVE BEEN SHOWN AT RS. 21,95,65,000/ - AS AGAINST RS. 21,50,18,393/ - SHOWN IN THE BOOKS. THE ASSESSEE HAS PRODUCED THE COPY OF THE SAID STOCK STATEMENT SUBMITTED TO THE BANK. AS PER THE TITLE OF THE SAME IT IS MENTIONED AS UNDER: 4 STATEMENT OF STOCK AND DEBTORS AS ON 31/03/2009 PROVISIONAL UNDER THIS HEADING, DETAILS OF THE RAW MATERIAL, GRAY F ABRIC, FINISHED PRODUCE, READYMADE UNIT, SPINNING UNIT I & II, STORES AND SPARES AND DEBTORS WERE GIVEN. FROM ABOVE, IT IS APPARENT THAT THIS IS A PROVISIONAL STOCK STATEMENT. AS PER THE CHAMBERS 21 ST CENTURY DICTIONARY, THE WORD PROVISIONAL IS DEFINED A S UNDER: TEMPORARY; FOR THE TIME BEING OR THE IMMEDIATE PURPOSE ONLY; LIABLE TO BE ALTERED. FROM ABOVE, IT IS APPARENT THAT THIS STATEMENT WAS NOT THE FINAL STOCK STATEMENT. THIS IS ALSO SUPPORTED BY THE FACT THAT ALONG WITH THIS STATEMENT ANOTHER STAT EMENT WAS SUBMITTED TO THE BANKERS UNDER THE FOLLOWING HEADING: PROVISIONAL STATEMENT OF SELECT OPERATION DATA FOR THE MONTH 31.03.2009 IN THIS STATEMENT, TOTAL SALES SHOWN BY THE ASSESSEE WERE RS. 364,09.04 LACS WHILE AS PER THE BALANCE SHEET FILED B Y THE ASSESSEE SAME HAVE BEEN SHOWN TO BE RS. 367,70.92 LACS. SO HIGHER SALES BY AN AMOUNT OF RS. 361.88 LACS HAVE BEEN SHOWN BY THE ASSESSEE. THE ASSESSEE HAS EXPLAINED THAT RECONCILIATION OF THE PAYMENTS (MADE BY THE VARIOUS PARTIES AGAINST THE SALES) FR OM BANKS TAKES TIME AND PROVISIONAL FIGURES ARE SHOWN IN THE STOCK STATEMENT SUBMITTED TO THE BANKERS FOR THE PURPOSE OF DRAWING LIMITS. IT HAS ALSO BEEN EXPLAINED THAT THERE IS A MARGINAL DIFFERENCE OF 7.69% ONLY IN THE STOCK AND 2.07% IN RESPECT OF DEBT ORS AS PER THE STOCK STATEMENT SUBMITTED TO THE BANK AND THAT SHOWN IN THE BALANCE SHEET. FOR THIS, THE WORD PROVISIONAL WAS SPECIFICALLY NOTED IN THE STATEMENT SUBMITTED TO THE BANK TO ACCOUNT FOR THE DIFFERENCE ARISING DUE TO RECTIFICATION, CORRECTION, ADDITIONS, DEDUCTIONS ON ACCOUNT OF WASTAGE, SHRINKAGE, SHORTAGE IN THE TEXTILE BUSINESS AND RECONCILIATIONS WHILE FINALIZING THE ACCOUNTS AND IT CAN BE DETERMINED ONLY AT THE TIME OF PHYSICAL STOCK TAKING AND DRAWING UP THE FINAL ACCOUNTS. AFTER SUCH REC ONCILIATIONS, THE FINAL STOCK AND DEBTORS IS SHOWN IN THE BOOKS OF ACCOUNTS WHICH ARE AUDITED. THE ASSESSEE HAS ALSO POINTED OUT THAT THE ABOVE STOCK STATEMENT WAS NOT VERIFIED BY THE BANKERS AS THE STOCK WAS ONLY HYPOTHECATED TO THE BANK AND NOT PLEDGED TO THE BANK. IN THE CASE OF HYPOTHECATION THE BANK HAS NO DIRECT PHYSICAL CONTROL OVER THE STOCK AND THE SAME REMAIN IN THE CUSTODY OF THE ASSESSEE AND NOT UNDER THE LOCK AND KEY OF THE BANK AS HAPPEN IN THE CASE OF PLEDGE UNDER THE LOCK AND KEY OF THE BAN K AS HAPPEN IN THE CASE OF PLEDGE OF STOCK. THE ASSESSEE HAS ALSO POINTED OUT THAT NO VERIFICATION WAS CARRIED OUT BY THE BANKERS AND WHILE FIXING THE DRAWING LIMITS, THE BANKERS REDUCE THE MARGIN OF 25% FROM THE VALUE OF INVENTORY AND MARGIN OF 40% FROM T HE VALUE OF BOOK DEBTS. SO, ADEQUATE MARGIN HAS BEEN KEPT BY THE BANKERS. SO, MUCH STATEMENT CANNOT BE RELIED UPON TO DRAW IRREBUTTABLE PRESUMPTION AGAINST THE APPELLANT. THE ASSESSEE MENTIONED THAT IT IS NOT POSSIBLE TO VERIFY THE STOCK IN RESPECT OF SPI NNING DIVISION, WEAVING DIVISION AND READYMADE DIVISION SPREAD OVER SIX 5 MANUFACTURING UNITS AND THE THREE DIFFERENT PLACES I.E. BHILWARA, TONK, GULABPURA AND STOCK GIVEN ON THE JOB WORK BASIS TO VARIOUS CONCERNS AT DIFFERENT PLACES WITHIN A PERIOD OF TWO W EEKS AS REQUIRED BY THE BANKERS. SO THE PROVISIONAL STOCK STATEMENTS ARE GIVEN TO THE BANKERS. IT WAS ALSO POINTED OUT THAT BOOKS OF ACCOUNTS ARE SUPPORTED BY THE BILLS AND VOUCHERS AND NO DISCREPANCY IN THE SAME HAVE BEEN POINTED OUT REGARDING TH PURCHAS ES AND SALES. THE COMPLETE QUANTITATIVE TALLY OF THE YARN, GRAY FABRIC FINISHED FABRIC WAS SUBMITTED TO THE AO IN WHICH NO DISCREPANCIES HAVE BEEN FOUND OR POINTED OUT. THESE BOOKS OF ACCOUNTS HAVE BEEN AUDITED BY THE STATUTORY AUDITORS AND TAX AUDITORS. AS REGARDING THE DEBTORS, THE AO HAS POINTED OUT THAT ASSESSEE HAS SHOWN IN THE STOCK STATEMENT, THE DEBTORS OF RS. 21,95,65,000/ - WHILE DEBTORS IN THE BALANCE SHEET ARE SHOWN ONLY RS. 21,50,18,393/ - . THE ASSESSEE HAS EXPLAINED THAT VARIOUS PURCHASERS MAKE THE PAYMENTS TO THE BANKERS WHICH NEED RECONCILIATION WHICH HAS NOT BEEN DONE WHILE SUBMITTING THE PROVISIONAL STOCK STATEMENT. THE SAID RECONCILIATION FROM THE BANKS TAKE TIME WHICH IS DONE BEFORE FINALIZATION OF THE ACCOUNTS. THE AO HAS NOT POINTED OUT ANY UNACCOUNTED DEBTOR OF THE ASSESSEE IN RESPECT OF SALES OR OTHER DEBTS. IT IS SEEN THAT AO HAS MADE THE ADDITION SOLELY ON THE BASIS OF STOCK STATEMENT GIVEN TO THE BANKERS TREATING IT TO BE THE FINAL STOCK STATEMENT OF THE ASSESSEE WHILE IN THE STOCK STATEMENT IT WAS SPECIFICALLY MENTIONED BY THE ASSESSEE THAT IT IS PROVISIONAL STOCK STATEMENT. IF IT WAS THE FINAL STOCK STATEMENT, THERE WAS NO NEED TO ADD THE QUALIFICATION OF PROVISIONAL TO THE STOCK STATEMENT SUBMITTED TO THE BANKERS. SO THE SAID W ORD PROVISIONAL CANNOT BE IGNORED FROM THE ABOVE STOCK STATEMENT GIVEN TO THE BANKERS. FURTHER, HONBLE JURISDICTIONAL ITAT JODHPUR HAS HELD IN THE CASE OF ITO VS. RELAXO FOOTWEAR 73 TTJ 712 (JD) AS UNDER: THE AO HAS MAINLY RELIED ON THE STATEMENT OF STOCK FURNISHED BY THE ASSESSEE TO THE BANK AUTHORITIES BUT SUCH STOCK STATEMENT CANNOT BE CONSIDERED AS AUTHENTIC PIECE OF EVIDENCE FOR MAKING ADDITION ON THE BASIS OF THE SAME ESPECIALLY WHEN SUCH ADDITIONS ARE TO BE MADE UNDER S. 69B WHICH CASTS MORE B URDEN ON THE REVENUE IN THE MATTER OF ESTABLISHING / PROVING SUCH INVESTMENT. MOREOVER, THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE UNRECORDED PURCHASES AND ON THE CONTRARY ENQUIRIES MADE BY AO WITH SUPPLIERS OF THE ASSESSEE REVEALED NORMAL DISC REPANCY WHICH STOOD EXPLAINED BY THE ASSESSEE - FIRM IN THE ASSESSMENT PROCEEDINGS ITSELF. IT IS ALSO OBSERVED THAT THE G.P. RATE DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION COMPARED WELL WITH THE G.P. RATE OF IMMEDIATELY PRECEDING YEAR AND THE AO HAS NOT RECORDED ANY ADVERSE FINDING IN RESPECT OF THE SAME. AS SUCH CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE THE AO WAS PATENTLY WRONG IN RELYING ON THE STOCK STATEMENT FURNISHED BY THE ASSESSEE TO THE BANK WHILE MAKING THE ADDITION UND ER S. 69B. IT IS THUS CLEAR THAT THE AO HAS NOT MAKE OUT A BEFITTING CASE TO ESTABLISH / PROVE THE TAX AVOIDANCE ON THE PART OF THE ASSESSEE. THEREFORE, THE IMPUGNED ORDER ON THIS ISSUE IS REVERSED AND THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY HIM ON THIS COUNT. 6 THE SAID DECISION HAS BEEN CONFIRMED BY HONBLE RAJASTHAN HIGH COURT IN ITA APPEAL NO. 91 OF 2001 REPORTED AT 259 ITR 744. FROM ABOVE FACTS, IT IS APPARENT THAT THE ASSESSEE HAD SUBMITTED THE PROVISIONAL STOCK STATEMENT TO THE BANKERS FOR THE PURPOSE OF DRAWING LIMITS ON THE ESTIMATE BASIS ONLY AND IT DOES NOT REFLECT THE ACTUAL CLOSING STOCK OR DEBTORS OF THE ASSESSEE WHICH HAVE BEEN DULY SHOWN IN THE REGULAR BOOKS OF ACCOUNTS. IN VIEW OF ABOVE DISCUSSIONS AND SUBMISSIONS OF THE APPELLA NT, THE ADDITION MADE BY THE AO IS DELETED. 6. WE HAVE PERUSED THE CASE RECORDS, FACTS AND CIRCUMSTANCES AND WE FIND THAT IN THE PAPER BOOK ALSO THE PROVISIONAL STOCK STATEMENT HAVE BEEN FILED AND WE HAVE PERUSED THE SAME. 7. THAT, IT IS A MATTER OF CO MMON PRACTICE IN BUSINESS PARLANCE TO SUBMIT PROVISIONAL STATEMENT TO THE BANKERS FOR THE PURPOSE OF DRAWING LIMITS WHICH IS ON ESTIMATE BASIS BUT IT DOES NOT REFLECT THE ACTUAL CLOSING STOCK OR DEBTORS OF THE ASSESSEE WHICH IS DULY SHOWN IN THE REGULAR BO OKS OF ACCOUNTS THAT MOREOVER THE COORDINATE BENCH OF THE ITAT, JODHPUR IN CASE OF ITO VS. RALAXO FOOTWEAR 73 TTJ 712 (JD) ALSO OBSERVED THAT THE AO WAS PATENTLY WRONG IN THE RELYING ON THE STOCK STATEMENT FURNISHED BY THE ASSESSEE TO THE BANK. THE RELIAN CE PLACED BY THE AO ON SUCH STOCK STATEMENT CANNOT BE CONSIDERED AS AUTHENTIC PIECE OF EVIDENCE FOR MAKING ADDITION. THE SAID DECISION WAS EVEN CONFIRMED BY THE HONBLE RAJASTHAN HIGH COURT IN ITA NO. 91 OF 2001 259 ITR 744. 8. ON THE BASIS OF THE AFORESA ID DISCUSSIONS WE ARRIVE AT OUR CONSIDERED VIEW THAT THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION MADE BY THE AO AND HENCE THE DELETION IN THIS GROUND IS SUSTAINED. 7 9. THIS GROUND OF APPEAL FILED BY THE REVENUE IS DISMISSED. 10. THAT WITH REGARD T O THE NEXT GROUND OF APPEAL IS THE DELETION OF ADDITION OF RS. 28,29,912/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III). 11. THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 22.78 CRORES THE AO FOUND THAT ASSESSEE HAS GIVEN INTER EST FREE LOAN AND ADVANCES TO VARIOUS PARTIES AMOUNTING TO RS. 1,57,21,737/ - AS PER THE CHART GIVEN ON PAGE 11 OF THE ASSESSMENT ORDER. THE ASSESSEE CLAIMED THE LOANS TO BE TEMPORARY AND GIVEN IN VIEW OF POTENTIAL BUSINESS WHICH MAY BE OBTAIN FROM ABOVE PE RSONS. THE AO POINTED OUT THAT THE ASSESSEE HAS NO BUSINESS RELATIONSHIP WITH THESE PERSONS AND ASSESSEE IS AVAILING TERM LOANS , WORKING CAPITAL LIMITS AND UNSECURED LOANS ON WHICH RS. 22.78 CRORES HAVE BEEN PAID AS INTEREST. SO THE SOURCE OF SAID INTERES T FREE LOANS AND ADVANCES IS THE INTEREST BEARING LOANS AS NO SPECIFIC BORROWING WERE MADE FOR ADVANCING THESE LOANS. ACCORDINGLY THE AO DISALLOWED THE INTEREST OF RS. 28,29,912/ - @ 18% ON ACCOUNT OF INTEREST FREE LOANS GIVEN BY THE ASSESSEE OF RS. 1,57,21 ,737/ - . 12. THAT, DURING THE APPEAL PROCEEDING BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THE DETAILED SUBMISSIONS WHICH FIND PLACE IN THE ORDER OF THE LD. CIT(A) AND HENCE ON RECORD. THE LD. CIT(A) ON THIS GROUND HELD THAT IT IS SEEN ON 31/03/2008 ASSES SEE HAD THE INTEREST FREE GENERAL RESERVES TO THE EXTENT OF RS. 2,35,00,000/ - AND SURPLUS IN P&L A/C OF RS. 29.71 CRORES WHICH ARE SUFFICIENT TO 8 TAKE CARE OF THE INTEREST FREE LOANS AND ADVANCES GIVEN BY THE ASSESSEE TO THE EXTENT OF RS. 1,57,21,737/ - . IT HAS NOT BEEN SHOWN BY THE AO THAT ASSESSEE HAS OBTAINED THE INTEREST BEARING LOANS TO GIVE THE INTEREST FREE ADVANCE OF RS. 1.57 CRORES. THE ASSESSEE COMPANY HAD ITS OWN SUFFICIENT FUNDS IN THE FORM OF GENRAL RESERVE AND SURPLUS OTHER THAN THE BORROWED FUN DS WHICH CAN BE UTILIZED IN THE MANNER BEST SUITED TO THE ASSESSEE, THEREFORE, THE LD. CIT(A) DELETED THE ADDITION OF RS. 28,29,912/ - . 13. WE ARRIVE AT OUR CONSIDERED VIEW THAT IN THIS CASE THE FACTS ON RECORD STATES THAT THE ASSESSEE HAD INTEREST FREE GE NERAL RESERVES TO THE EXTENT OF RS. 2,35,00,000/ - AND SURPLUS IN PROFIT AND LOSS ACCOUNT OF RS. 29.71 CRORES WHICH ARE SUFFICIENT FOR THE INTEREST FREE LOANS AND ADVANCES GIVEN BY THE ASSESSEE TO THE EXTENT OF RS. 1,57,21,737/ - . FACTS ALSO STATES THAT AO H AS NOT SHOWN THAT ASSESSEE HAS OBTAINED INTEREST BEARING LOANS TO GIVE THE INTEREST FREE ADVANCES OF RS. 1.57 CRORES. THE ASSESSEE COMPANY HAD ITS OWN SUFFICIENT FUNDS IN THE FORM OF GENERAL RESERVE AND SURPLUS OTHER THAN THE BORROWED FUNDS. THE LEGAL POSI TION IS ALSO CLEAR ON THE ISSUE THAT WHEN THERE IS AVAILABILITY OF INTEREST FREE FUNDS WITH THE ASSESSEE AND THERE IS ABSENCE OF NEXUS BETWEEN INTEREST BEARING BORROWINGS AND INTEREST FREE ADVANCES, THERE CAN BE NO DISALLOWANCE OF INTEREST. THIS JUDICIAL D ECISION HAVE ALSO BEEN BROUGHT BEFORE US IN THE PAPER BOOK FILED BY THE ASSESSEE WHICH ARE AS FOLLOWS: A. ACIT VS. ASHOK KUMAR CHHUGANI [104 TTJ(JD)134] [JUDICIAL DECISIONS PB PG 64 TO 71 B. GOVIND RAM CHHUGANI VS. ACIT [77 TTJ(JD) 339) 9 C. ITO VS. KUNDANMAL SURANA [83 TTJ (JD)582] D. SHYAM OIL CAKE LTD. VS. ACIT [83 TTJ (JD) 414] E. CHHOTULAL AJITSINGH & CO. VS. ITO [94 TTJ(JD)911] F. SALEEM CHAWDA VS. ITO [96 TTJ(JD) 656] G. CIT VS. TIN BOX CO. [260 ITR 637 (DEL)] [JUDICIAL DECISIONS PB PG 72 TO 76] H. CIT VS. SOUTH INDIA CORPORA TION (AGENCIES) LTD. [290 ITR 217 (MAD)] [JUDICIAL DECISIONS PB PG 77 TO 87] I. CIT VS. RADICO KHAITAN LTD. [274 ITR 354 (ALL)] [JUDICIAL DECISIONS PB PG 88 TO 96] J. CIT VS. PREM HEAVY ENGINEERING WORKS (P) LTD. [285 ITR 554 (ALL)] K. CIT VS. BRITANNIA INDUSTRIES LTD. [280 ITR 525 (CAL)] [JUDICIAL DECISIONS PB PG 97 TO 106] L. CIT VS. KANDAGIRI MILLS LTD. [298 ITR 306 (MAD)] M. HANDI CRAFT EMPORIUM VS. ITO [2 SOT 666 (AGRA)] N. SATISH KATTA VS. ACIT [13 DTR (JP) (TRIB) 237] O. ACIT VS. RAM KISHAN VERMA [143 TTJ (JP) (UO)1] P. TAT A FINANCE LIMITED VS. ACIT [20 SOT 47 (MUMBAI)] [JUDICIAL DECISIONS PB PG 107 TO 120] Q. EICHER MOTORS LTD. VS. DCIT [82 TTJ (IND) 61] 14. THAT WE ARRIVE AT OUR CONSIDERED VIEW BASED ON THE AFORESAID DISCUSSIONS AND THE VARIOUS JUDICIAL PRONOUNCEMENT THAT TH E LD. CIT(A) WAS CORRECT TO DELETE THE ADDITION OF RS. 28,29,912/ - MADE BY THE AO AND THE SAME IS SUSTAINED, THEREFORE THIS GROUND OF APPEAL IS DISMISSED. 15. THE NEXT GROUND OF APPEAL IS WITH REGARD TO THE DELETION OF DISALLOWANCE OF LADE DEPOSIT OF ESIC & PF AMOUNTING TO RS. 3,77,935/ - MADE BY THE AO UNDER SECTION 36(1)(VA) OF THE INCOME TAX ACT. 16. THE AO NOTED THAT CERTAIN PAYMENTS OF PF & ESI ARE LATE PAYMENT AS PER ESI AND PF ACT AS NOTED ON PAGE NO. 17 OF THE ASSESSMENT ORDER. AO OBSERVED THAT EMP LOYEES CONTRIBUTION OF ESI AND PF WHICH IS PAID AFTER THE DUE DATE SPECIFIED IN THE EXPLANATION IS NOT ALLOWABLE. THE AO NOTED THAT EMPLOYEES 10 CONTRIBUTION OF RS. 1,78,613/ - ON ACCOUNT OF ESI AND RS. 1,99,322/ - ON ACCOUNT OF PF IS DELAYED AND PAID AFTER THE DUE DATE AS PER THE RELEVANT PROVISIONS OF PF & ESI AS PER CHART GIVEN ON PAGE NO. 18 OF THE ORDER AND THE SAME IS NOT ALLOWABLE, ACCORDINGLY THE DISALLOWANCE OF RS. 3,77,935/ - . 17. THE LD. CIT(A) IN HIS ORDER OBSERVED THAT THE ASSESSEE HAS PLAYED THE EMP LOYEES CONTRIBUTION ON ACCOUNT OF PF AND ESI DURING THE PREVIOUS YEAR AND UP TO 23/04/2009 AS PER THE CHART GIVEN ON PAGE NO. 18 OF THE ASSESSMENT ORDER. THIS ISSUE HAS BEEN DECIDED BY THE HONBLE ITAT IN CASE OF SOMA BLOCKS PRINTS (P) LTD. IN ITA NO. 1173 /JP/2010 DT. 28/04/2011 FOR AY 2007 - 08 AS UNDER: 5.2 THIS ISSUE HAS BEEN DECIDED AGAINST THE REVENUE BY THE TRIBUNAL IN THE CASE OF M/S SWASTICK METAL CASTING VS. ACIT (ITA NO. 964/JP/2010) VIDE ORDER DATED 20/04/2011. IT WILL BE USEFUL TO REPRODUCE PARA 3.2 AND 3.3 OF THE ABOVE REFERRED ORDER. 3.2 THE LD. CIT(A) HELD THAT THE EMPLOYEES CONTRIBUTION TO PF AND ESI IS NOT TO BE ALLOWED AS THE SAME HAS NOT BEEN PAID WITHIN THE STIPULATED TIME AS PROVIDED IN RESPECTIVE ACT OF PF AND ESI. THE LD. CIT(A) CONFI RMED THE ACTION OF THE AO. 3.3 WE HAVE HEARD BOTH THE PARTIES. HONBLE APEX COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD. 319 ITR 306 HAS HELD THAT THAT THE PROVISO INTRODUCED BY THE FINANCE ACT, 2003 IS CURATIVE IN NATURE AND IS RETROSPECTIVE. HOWEVER , WE ARE CONCERNED WITH THE ASSESSMENT YEAR 2007 - 08. THE HONBLE APEX COURT HAS REFERRED TO THE EXPLANATION GIVEN IN SECTION 36(1)(V)(A) OF THE ACT. THE ISSUE OF EMPLOYEES CONTRIBUTION COVERED U/S 43B HAS BEEN CONSIDERED BY THE HONBLE KARNATAKA HIGH COUR T IN THE CASE OF CIT VS. SABRI ENTERPRISES, 298 ITR 141. THE HONBLE APEX COURT HAS UPHELD THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SABRI ENTERPRISES (SUPRA) WHILE DECIDING THE APPEAL IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. ( SUPRA). THE HONBLE APEX COURT HAS DISMISSED THE SLP IN THE CASE OF CIT VS. VINAY CEMENT 313 ITR 1(ST.). WHILE DISMISSING THE SLP, THE HONBLE APEX COURT HAS REFERRED TO DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. GEORGE WILLIAMSON(ASSAM) LTD. 284 ITR 619. IN THE CASE BEFORE HONBLE GAUHATI HIGH COURT, THE ISSUE WAS IN RESPECT OF CONTRIBUTION OF PF AND ESI RELATING TO 11 EMPLOYEES SHARES. IT IS NOTED FROM THE AUDIT REPORT THAT ALL THE PAYMENTS HAVE BEEN PAID BEFORE THE DUE DATE OF FILING OF R ETURN AND THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT DELETING THE SUM OF RS. 150294. THE SAME IS DELETED. THUS THE LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AO. 4.3 MOREOVER, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. A IMIL LTD. 321 ITR 508 HAS HELD THAT NO DISALLOWANCE CAN BE MADE IN RESPECT OF EMPLOYEES P.F. CONTRIBUTION AND EMPLOYEES P.F. CONTRIBUTION IN CASE SUCH CONTRIBUTION ARE PAID BEFORE DUE DATE OF FILING. IT IS NOT IN DISPUTE BEFORE US THAT THE CONTRIBUTION HAV E NOT BEEN PAID BEFORE DATE OF FILING OF THE RETURN. WE THEREFORE, HOLD THAT LD. CIT(A) WAS JUSTIFIED IN DELETING THE EMPLOYERS P.F. CONTRIBUTION AND EMPLOYEES P.F. CONTRIBUTION. 18. THE LD. CIT(A) HELD THAT THE SAID CONTRIBUTION IS LIABLE UNDER SECTION 4 3B, IF IT HAS BEEN PAID BEFORE THE DATE OF FILING THE RETURN UNDER SECTION 139(1) OF THE ACT. THEREFORE THE DISALLOWANCE OF RS. 3,77,935/ - WAS DELETED. 19. THAT, ON PERUSING THE CASE RECORDS WE FIND NO INFIRMITY WITH THE FINDINGS OF THE LD. CIT(A) IN HIS ORDER WHICH IS PURELY BASED ON JUDICIAL PRINCIPLES SUPPORTED BY THE COORDINATE BENCH OF ITAT DECISION, HONBLE DELHI HIGH COURT DECISION AND ACCORDINGLY THE DELETION OF RS. 3,77,935/ - IS SUSTAINED THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 20. GROUND NO. 4 IS GENERAL IN NATURE HENCE NEEDS NO ADJUDICATION. 21. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/ - SD/ - (B.P. JAIN) ( PARTHA SARATHI CHAUDHURY ) ACCOUN TANT MEMBER JUDICIAL MEMBER DATED : 14/12/2016 12 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR