Tribunal upholds CIT(A)'s decision on expenditure disallowances under Section 40(a)(ia) for AY 2008-09

The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal against the relief granted on expenditure disallowances under Section 40(a)(ia) for the assessment year 2008-09. The CIT(A) allowed the appeal of the assessee, directing verification of tax deducted at source and concluding that the disallowance was unwarranted as the tax was paid before the due date. The order was pronounced on 11th October 2021.

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Issues:
Appeal against order dated 01/02/2018 passed by CIT(A)-42, New Delhi for assessment year 2008-09 regarding disallowance of expenditure on provisions for advertisement expenses u/s. 40A(IA) and disallowances u/s. 14A.

Analysis:
The assessee, a Public Limited Company engaged in manufacturing and sale of two wheelers, filed a return of income for the assessment year 2008-09 declaring total income of Rs. 1307,37,84,038. The draft assessment order was passed on 13/6/2012 proposing additions/disallowances, leading to a final assessment order on 30/05/2013 determining total income at Rs. 4585,87,70,541 after various adjustments. The assessee appealed before the Tribunal, resulting in deletion of major additions/disallowances and setting aside of some for reconsideration. The remaining additions/disallowances of Rs. 38.57 crores were confirmed by the Tribunal, leading to the appeal before the CIT(A).

The CIT(A) partly allowed the appeal of the assessee, leading to the Revenue's appeal against the relief of Rs. 38.57 crores on expenditure not ascertained or crystallized during the year and TDS not deducted. The CIT(A) held that the Assessing Officer failed to dispute the deposit of tax deducted at source before the due date of filing the Income Tax Return, directing to verify the amount and allow the same. The CIT(A) rightly concluded that the disallowance under Section 40(a)(ia) was unwarranted, as the tax was paid before the due date, thus dismissing the Revenue's appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal against the relief granted on expenditure disallowances. The order was pronounced on 11th October 2021.

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