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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the Ld. Commissioner of Income Tax (Appeals)-20, New Delhi [hereinafter referred to as the ‘Ld. CIT(A)’], dated 23.10.2017 arising out the assessment order dated 30.12.2016 passed u/s 143(3) of the Income Tax Act, 1961(hereinafter referred to as the “Act”] by the Joint Commissioner of Income Tax (hereinafter referred to as ‘AO’) pertaining to Assessment Year (AY) 2014-15.
None appeared on behalf of the assessee; therefore, we decided to hear the case ex parte with the able assistance of the Ld. DR. We have carefully perused the material available on record.
In Ground No. 1 of the assessee’s appeal, the assessee has contested the disallowance of additional service tax and the interest thereon of Rs. 34,05,576/- in absence of any documentary evidence. The Ld. CIT(A) confirmed the addition on account of the fact that no documentary evidence in support of the claim was made before him. Even before us, there is no documentary evidence. We therefore, find no reasons to interfere with the decision of the CIT(A). The ground 1 is dismissed.
Ground 2 relates to disallowance of interest. The brief facts of the case are that the assessee filed the return of income on 17.09.2014 for the Assessment Year 2014–15, declaring a total income of Rs. 50,42,251/-. The AO from the Balance Sheet of the assessee found that that the assessee has advanced loans and advances to various parties including sister concerns and no interest was charged on it. The AO also found that the assessee had debited an interest of Rs. 30,35,343/- and disallowed the same considering that the assessee has given interest free loans to sister’s concerns from the borrowed funds from the Bank and there is no commercial expediency involved.
The Ld. CIT(A) found that, out of Rs. 30,35,343/-, a sum of Rs. 15,97,621/-, pertains to loans received from sister concerns, which only needs to be disallowed and therefore, he restricted the addition of Rs. 14,37,772/-.
We have perused the materials on record. We find that the Ld. CIT(A)’ decided the issue as under:
“4.3.2During the course of appellate proceedings, the appellant was asked in this year also to give the calculation on the basis of the decision of CIT(A) as relied upon by the appellant which was submitted and reproduced in the appellant submission in para 4.2 supra and again reproduced as under:
“ interest free loan received from Sister Concerns / Capital Interest Expenditure disallowed X ……………………….. Interest free loan given to Sister concerns 4,36,22,862 i.e. 30,35,343/- x …………………= 23,29,515/-5,68,40,305/-
Hence out of total interest of Rs. 28.39,426/- the disallowance is Rs. 7,05,828/ [Rs. 30,35,343/- (-) Rs. 23,29,515/-
However, this calculation reveals that where as in A.Y. 2012-13 in Appeal No. 54/2015-2016 in the case of the proprietorship firm Shri Ram Mehar Mann and in A.Y. 2013-14 Appeal No.468/2015-16 order dated 23.03.2017 in A.Y. 2013-14 in the case of the sister concern Sukhmaa Sons & Associates the CIT(A) has taken into account only the interest free loan received from sister concern and not the capital account but in the calculation submitted by the appellant, the appellant has taken undue benefit of the interest free loan received from sister concern as well as the capital account of the appellant which is not acceptable. The correct calculation of disallowance is as under: -
Interest Free Loan Received from Sister Concerns Interest Expenditure disallowed X……………………………… Interest Free Loan given to Sister Concerns 2,99,17,306 30,35,343/- X ………………….= 15,97,621/-5,68,40,305/-
Hence out of total interest of Rs.30,35,343/- the disallowance will come to Rs.14,37,722/- (3035343 - 1597621) and not Rs.7,05,828/- as calculated by the appellant. In this light, the disallowance of Rs.30,35,343/- is restricted to Rs.14,37,722/-and the appellant will get relief accordingly.”
We find that the CIT(A) has considered only the interest free component of loan taken and given from the sister concern. Further there is no evidence establishing business expediency for advancing interest free loans to sister concern. We therefore find no reasons to interfere with the decision of the Ld. CIT(A). The ground 2 is dismissed.
In the 3rd Ground, the AO was made an addition on account of disallowance of late payment of Haryana Labour Welfare funds u/s 43B of the Act. The AO made an addition of Rs. 2,22,089/- finding that the audit report stated that the same has not been paid on or before due date. The Ld. CIT(A) confirmed the said addition by stating that the same was not paid before the due date as provided under Haryana Labour Welfare fund. The relevant extract of the decision Ld. CIT(A) is reproduced as under:
5.3The Assessing Officer has made the addition of Rs.2,22,089/- under section 43B of the Act on the ground that in the Tax Audit Report in Form 3CD the auditor has reported that this amount was not paid on or before the aforesaid date on account of employees contribution welfare. During the course of appellate proceedings, the appellant has taken a totally new plea that the due date of payment in this case is 31.01.2015 as the payments are covered under Haryana Labour Welfare Fund and this should be allowed. The submission of the appellant has been considered and it is gathered that the accounts of the appellant is audited and the auditor has given this note. Incidentally the same auditor is the Ld. Counsel of the appellant also during this appellate proceeding. The Ld. AR could not give any satisfactory explanation how this payment is to be considered by taking the due date of 31/01/2015 and not 31/01/2014. As the account of the appellant has been audited, no fresh plea at this stage can be admitted to give the relief to the appellant which is not arising from the books of accounts. In this light, the addition of Rs.2,22,089/- is confirmed.
We find that the ld CIT(A) has arrived at a reasonable finding on the basis of the Audit report. We therefore find no reason to interfere with the decision of the Ld. CIT(A). Ground 3 is dismissed.
In the result, appeal of the assessee is dismissed.