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of <h1>Tribunal Ruling on Deductions: PF, ESI, Depreciation, TDS</h1> <h3>KIFS Securities Ltd Versus JCIT And DCIT, Circle, 1 (3) Versus Khandwala Integrated Financial Services P. Ltd, KIFS Securities Ltd, KIFS Securities Ltd Versus ACIT, Circle, 1 (3), Ahmedabad And Vice-Versa.</h3> KIFS Securities Ltd Versus JCIT And DCIT, Circle, 1 (3) Versus Khandwala Integrated Financial Services P. Ltd, KIFS Securities Ltd, KIFS Securities Ltd ... Issues Involved:1. Disallowance under section 43B for delay in depositing employees' contribution to PF and ESI.2. Disallowance under section 14A read with Rule 8D for expenses related to exempt income.3. Depreciation on software.4. Treatment of gains from transactions in shares and securities.5. Depreciation and insurance expenses on motor cars.6. Disallowance of bad debts.7. Disallowance under section 40(a)(ia) for non-deduction of TDS on V-Sat charges, lease line charges, and sub-brokerage/commission.8. Addition to book profit under section 115JB.Detailed Analysis:1. Disallowance under section 43B for delay in depositing employees' contribution to PF and ESI:The Tribunal confirmed the disallowance under section 43B for the delay in depositing employees' contribution to PF and ESI, following the judgment of the Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation. The assessee's appeal on this issue was dismissed for all assessment years 2010-11 to 2014-15.2. Disallowance under section 14A read with Rule 8D for expenses related to exempt income:The Tribunal addressed two components of disallowance under section 14A:- Interest Disallowance: The Tribunal upheld the CIT(A)'s decision to delete the disallowance of proportionate interest under Rule 8D(2)(ii), as the assessee had sufficient interest-free funds and net interest income during the years.- Administrative Expenses: The Tribunal partly allowed the assessee's appeal, reducing the administrative expenses disallowance under Rule 8D(2)(iii) to Rs. 15,00,000, Rs. 17,00,000, and Rs. 20,00,000 for assessment years 2010-11, 2011-12, and 2012-13 respectively.3. Depreciation on software:The Tribunal allowed the assessee's claim for depreciation on software at 60%, reversing the lower authorities' restriction to 25%. This decision was based on the precedent set by the ITAT in the case of ACIT vs. Zydus Infrastructure Pvt. Ltd.4. Treatment of gains from transactions in shares and securities:The Tribunal ruled in favor of the assessee, accepting the treatment of gains from shares as capital gains rather than business income. This decision was based on consistent treatment in the assessee’s books and the absence of contrary evidence from the revenue authorities.5. Depreciation and insurance expenses on motor cars:The Tribunal upheld the CIT(A)'s decision to allow depreciation and insurance expenses on motor cars registered in the names of directors but used for the company's business. This decision was supported by the Supreme Court's judgment in Mysore Minerals Ltd. vs. CIT and the Gujarat High Court's judgment in CIT vs. Aravali Finlease Ltd.6. Disallowance of bad debts:The Tribunal confirmed the CIT(A)'s decision to allow the bad debts as trading loss, following the precedent in the assessee's own case for the earlier assessment year.7. Disallowance under section 40(a)(ia) for non-deduction of TDS on V-Sat charges, lease line charges, and sub-brokerage/commission:- V-Sat Charges and Lease Line Charges: The Tribunal upheld the CIT(A)'s decision to delete the disallowance, following the precedent in the assessee's own case for the earlier assessment year.- Sub-brokerage/Commission: The Tribunal upheld the CIT(A)'s decision to delete the disallowance, relying on the ITAT Delhi's decision in ITO vs. Mittal Investment & Co.8. Addition to book profit under section 115JB:- Disallowance under section 14A: The Tribunal upheld the CIT(A)'s decision to exclude the disallowance under section 14A from the book profit calculation under section 115JB, following the Special Bench decision in ACIT vs. Vineet Investment Pvt. Ltd.- Addition of Rs. 1.11 Crores: The Tribunal remanded the issue to the AO to verify the assessee's claim that the capital gains were already included in the book profit.Conclusion:The appeals of the assessee for assessment years 2010-11 to 2014-15 were partly allowed, while the revenue's appeals for assessment years 2010-11, 2011-12, and 2012-13 were dismissed except for the issue of Rs. 1.11 Crores, which was remanded for verification.
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