Appeal partly allowed, remitting disallowance for reconsideration. Upheld deduction for timely fund contributions.

The Tribunal partly allowed the Revenue's appeal, remitting the disallowance under Section 14A back to the Assessing Officer for reconsideration on the availability of surplus funds for investments. The disallowance of contributions to ESI and Provident Fund was upheld based on the Madras High Court's judgment, allowing the deduction under Section 36(1)(va) if contributions were deposited before the income tax return due date.

---

---

Issues:
1. Disallowance under Section 14A of the Income-tax Act, 1961
2. Disallowance of contribution made to ESI and Provident Fund

Issue 1: Disallowance under Section 14A of the Income-tax Act, 1961:
The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding disallowance made under Section 14A of the Income-tax Act, 1961. The Assessing Officer estimated the disallowance at Rs. 1,08,15,631 under Rule 8D(2) of Income-tax Rules, 1962, but the CIT(Appeals) restricted it to the dividend income earned by the assessee. The Tribunal found that the CIT(Appeals) did not consider the available funds with the assessee and the source thereof. Therefore, the matter was remitted back to the Assessing Officer for reconsideration to determine if surplus funds were available for making the investments. The Assessing Officer was directed to decide the issue after establishing the availability of surplus funds and their source.

Issue 2: Disallowance of contribution made to ESI and Provident Fund:
The Assessing Officer found that the contribution to Provident Fund and ESI collected from employees was remitted belatedly. The assessee claimed deduction under Section 36(1)(va) of the Act, arguing that the employees' contribution should be treated on par with employer's contribution. The CIT(Appeals) allowed the claim based on a judgment of the Madras High Court, stating that as long as the contributions were deposited before the due date for filing the return of income, no disallowance could be made under Section 43B of the Act. The Tribunal upheld the decision, citing the Madras High Court's judgment and confirmed the order of the lower authority.

In conclusion, the Tribunal partly allowed the appeal of the Revenue for statistical purposes, remitting the first issue back to the Assessing Officer for further consideration and confirming the decision on the second issue based on the Madras High Court's judgment.

---