EPF paid before the date of return cannot be disallowed as per Delhi High court decision and all expenses should be genuine to claim deduction

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The brief facts of the case are that assessee during the year was engaged in the business of solar photo-voltaic wafers, cells, modules and systems etc. It has filed its return of income on 30th October, 2002 declaring loss of Rs.7,47,14,276. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Income-tax Act, 1961 was issued and served upon the assessee. On an analysis of the record, it reveled to the Assessing Officer that assessee had entered into an international transaction with M/s. Maharishi Technology Corporation BV, The Netherlands which is an associate enterprises of the assessee. It took a loan of Rs.12,95,000 US dollars, based on certain guidelines of External Commercial Borrowings (ECB), during the accounting year. The assessee has claimed an amount of Rs.32,19,503 payable towards interest as on 31.3.2002. Learned Assessing Officer made a reference under sec. 92CA(i) of the Income-tax Act, 1961 to the Learned Transfer Pricing Officer for determining whether the interest shown by the assessee as payable to the associate enterprises is at arm’s length or not. Learned TPO after giving an opportunity to the assessee recording a finding that assessee paid interest @ 8.5% whereas as per the comparable instances, the interest ought to have been paid @ 4.934%. He worked out a disallowance of Rs.13,52,191.. On the basis of the recommendation of the learned TPO, learned Assessing Officer has made the disallowance.

Citation :
Income-tax Officer, Ward 6(1), New Delhi. (Appellant) Vs. Maharishi Solar Technology Pvt. Ltd., A-14, Mohan Co- Operative Industrial Estates, Mathura Road, New Delhi (PAN: AACCM0458M) (Respondent)