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of <h1>ITAT restores issues for fresh consideration, corrects errors in disallowances, and refers payment dates verification.</h1> <h3>Indian Metals and Ferro Alloys Ltd. Versus JCIT, Range-2, Bhubaneswar. And (Vice-Versa)</h3> Indian Metals and Ferro Alloys Ltd. Versus JCIT, Range-2, Bhubaneswar. And (Vice-Versa) - TMI Issues Involved:1. Disallowance of deduction under Section 43B of the Income Tax Act.2. Disallowance under Section 14A read with Rule 8D of the Income Tax Rules.3. Deletion of disallowance under Section 2(24)(x) of the Income Tax Act.Detailed Analysis:1. Disallowance of Deduction under Section 43B:- The assessee challenged the CIT(A)’s decision to confirm the AO’s disallowance of Rs. 5,78,30,880 by invoking Section 43B, arguing that the amount represented deposit of electricity duty in a designated non-lien bank account as per the Orissa High Court's directions.- The assessee’s counsel referenced a prior ITAT Cuttack Bench order which dismissed similar grounds for the assessment year 2009-2010, noting an appeal was admitted by the Orissa High Court on substantial questions of law.- The ITAT, following the precedent and considering the declaration filed by the assessee under Form No.8, restored the issue to the AO for reconsideration based on the final outcome of the pending High Court appeal.- Consequently, Ground Nos. 1 to 1.2 were allowed for statistical purposes.2. Disallowance under Section 14A read with Rule 8D:- The assessee contested the CIT(A)’s confirmation of the AO’s disallowance of Rs. 48,17,000 under Section 14A read with Rule 8D, arguing no expenses were incurred for earning exempt dividend income.- The AO’s detailed enquiry concluded that the assessee had utilized interest-bearing funds for investment purposes, leading to the disallowance.- The CIT(A) found merit in the assessee’s alternative computation under Rule 8D and restricted the disallowance to Rs. 48,17,000, considering only investments that earned exempt income and correcting the AO’s computation errors.- The ITAT upheld the CIT(A)'s findings, confirming the restricted disallowance and dismissing the assessee’s grounds of appeal.3. Deletion of Disallowance under Section 2(24)(x):- The revenue appealed against the CIT(A)’s deletion of Rs. 36,347 disallowed under Section 2(24)(x), which was based on the Tribunal’s decision in a similar case where the payment was made before the due date of filing the return.- The ITAT noted that the contribution to EPF was deposited before the due date of filing the return, referencing the Delhi High Court’s decision in CIT vs. Bharat Hotels Ltd., which allowed such deductions if payments were made within the stipulated period.- The ITAT restored the issue to the AO to examine the actual dates of contributions and grant relief accordingly, allowing the ground for statistical purposes.Conclusion:- The appeals of the assessee and revenue were partly allowed, with specific issues restored to the AO for fresh consideration based on the final outcomes and compliance with the prevailing legal provisions. The ITAT’s order was pronounced on 16/12/2019.
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