Appeal partially allowed: Disallowance under Income Tax Act vacated, professional tax disallowance upheld

The Tribunal partially allowed the appeal by the assessee, vacating the disallowance under section 14A r.w.r 8D of the Income Tax Act, 1961, as there was no exempt dividend income received during the relevant year. However, the disallowance of Rs. 16,800 under section 43B on account of professional tax was upheld due to non-contestation by the appellant.

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Issues:
1. Failure to provide a last notice before passing the order by the Commissioner of Income Tax.
2. Disallowance of Rs. 21,99,136 under section 14A r.w.r 8D of the Income Tax Act, 1961.
3. Disallowance of Rs. 16,800 under section 43B on account of professional tax.

Issue 1: Failure to provide a last notice before passing the order by the Commissioner of Income Tax:
The appeal was filed against the order passed by the Commissioner of Income Tax, (Appeals)-1, Raipur, which arose from the order passed by the assessing officer under Sec.143(3) of the Income tax Act, 1961 for assessment year 2012-13. The appellant contended that the order was passed without giving a last notice, violating the principle of natural justice. The appellant argued that the order was unjustified and unwarranted due to non-compliance with notices issued in Jan-Feb, 2016 after two years. However, the Tribunal did not delve into this issue further in the judgment.

Issue 2: Disallowance of Rs. 21,99,136 under section 14A r.w.r 8D of the Income Tax Act, 1961:
The Assessing Officer made a disallowance of Rs. 21,99,136 under section 14A r.w.r 8D due to the investment in exempt income yielding shares by the assessee company. The Commissioner of Income Tax (Appeals) sustained this disallowance, stating that unless there is a correlation between own funds and investment, a part of the expenses must be ascertained as relating to exempt income and disallowed. However, the Tribunal, after considering judicial pronouncements, found that since the assessee did not receive any exempt dividend income during the year under consideration, no disallowance under section 14A was justified. Citing relevant case laws, the Tribunal vacated the disallowance of Rs. 21,99,136, allowing the appeal on this ground.

Issue 3: Disallowance of Rs. 16,800 under section 43B on account of professional tax:
The Assessing Officer disallowed Rs. 16,800 under section 43B on account of professional tax paid beyond the due date. The Commissioner of Income Tax (Appeals) upheld this disallowance, stating that the payment was made beyond the due date and therefore disallowable under Sec. 43B. The Tribunal noted that the appellant did not provide any submission or arguments regarding this issue during the hearing. As the appellant did not contest this disallowance, the Tribunal upheld the decision of the lower authorities to dismiss this ground.

In conclusion, the Tribunal partially allowed the appeal of the assessee, vacating the disallowance under section 14A r.w.r 8D while dismissing the disallowance under section 43B on account of professional tax.

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