Tribunal decision: Disallowed expenses upheld, reduced adhoc disallowance, interest levy imposed.

The Tribunal upheld the addition under Sections 36(1)(iii) and 40A(2)(b), disallowance under Section 14A with Rule 8D, and interest levy under Sections 234A, 234B, and 234C. The disallowance of foundation day expenses was upheld, and the adhoc disallowance of various expenses was reduced to 5%. The appeal was partly allowed, with the Tribunal dismissing some grounds and directing a reduction in the adhoc disallowance percentage.

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Issues Involved:
1. Confirmation of addition under Sections 36(1)(iii) and 40A(2)(b) of the Income Tax Act.
2. Disallowance under Section 14A read with Rule 8D of the Income Tax Rules.
3. Disallowance of foundation day expenses.
4. Adhoc disallowance of various expenses.
5. Levy of interest under Sections 234A, 234B, and 234C.

Issue-wise Detailed Analysis:

1. Confirmation of Addition under Sections 36(1)(iii) and 40A(2)(b):
The assessee challenged the confirmation of an addition of Rs. 34,10,881 made by the Assessing Officer (AO) by invoking Sections 36(1)(iii) and 40A(2)(b) of the Income Tax Act. The Tribunal noted that similar grounds were dismissed in the assessee's own case for the Assessment Years (AY) 2009-10 and 2010-11. The AO had disallowed an amount of Rs. 33,37,059 as excess interest paid to Directors, Members, and related parties. The assessee had previously offered this amount for taxation to "buy peace of mind," acknowledging the excess interest paid over the bank rate. The Tribunal found no merit in the grounds raised by the assessee, reiterating that the issue was factual and not legal. The Tribunal upheld the addition, dismissing the grounds raised by the assessee.

2. Disallowance under Section 14A read with Rule 8D:
The assessee contested the disallowance of Rs. 93,288 under Section 14A read with Rule 8D, arguing that no expenditure was incurred for earning exempt dividend income and that the company had sufficient non-interest-bearing funds. The Tribunal noted that similar disallowances were upheld in the assessee's own case for AY 2009-10 and 2010-11. The AO had disallowed Rs. 1,07,291 (incorrectly mentioned as Rs. 93,288) as per the provisions of Section 14A read with Rule 8D. The Tribunal upheld the disallowance, finding no infirmity in the CIT(A)'s order.

3. Disallowance of Foundation Day Expenses:
The assessee incurred Rs. 12,68,794 on foundation day expenses and agreed to a 20% disallowance during assessment proceedings. The AO disallowed Rs. 2,53,759, which was upheld by the CIT(A). The Tribunal found no infirmity in the CIT(A)'s order, noting that the assessee had agreed to the disallowance and had not provided relevant bills and vouchers to justify the expenditure. The disallowance was upheld.

4. Adhoc Disallowance of Various Expenses:
The AO made an adhoc disallowance of Rs. 1,32,400 out of Rs. 13,23,995 debited under Postage and Telephone, Furniture repair and maintenance, and cartage, noting that some expenses were supported by self-made vouchers. The CIT(A) upheld the disallowance. The Tribunal, following its decision in the assessee's own case for AY 2009-10 and 2010-11, directed the AO to restrict the disallowance to 5% of the expenses claimed, reducing the disallowance from 10%.

5. Levy of Interest under Sections 234A, 234B, and 234C:
The assessee contested the levy of interest under Sections 234A, 234B, and 234C. The Tribunal held that the levy of interest under these sections is mandatory and consequential in nature, dismissing the ground raised by the assessee.

Conclusion:
The Tribunal dismissed the grounds related to the confirmation of addition under Sections 36(1)(iii) and 40A(2)(b), disallowance under Section 14A read with Rule 8D, and levy of interest under Sections 234A, 234B, and 234C. The Tribunal upheld the disallowance of foundation day expenses and directed the AO to restrict the adhoc disallowance of various expenses to 5%. The appeal was partly allowed.

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