2022 (6) TMI 969 - AT - Income Tax

Tax Appeals Allowed for Adjudication with Remand for Further Verification and Computation

M/s. Sundaram BNP Paribas Home Finance Ltd. Versus The Deputy Commissioner of Income Tax, Corporate Circle-6 (2) Chennai-34. And The Assistant/Deputy Commissioner of Income Tax, Corporate Circle-6 (2) Chennai-34 Versus M/s. Sundaram BNP Paribas Home Finance Ltd.

M/s. Sundaram BNP Paribas Home Finance Ltd. Versus The Deputy Commissioner of Income Tax, Corporate Circle-6 (2) Chennai-34. And The Assistant/Deputy ... Issues Involved:1. Condonation of delay in filing appeals.2. Disallowance of deduction under Section 36(1)(viii) of the Income Tax Act, 1961.3. Disallowance of expenditure related to exempt income under Section 14A read with Rule 8D of the Income Tax Rules, 1962.4. Disallowance of employees' contribution to PF & ESI under Section 36(1)(va) read with Section 43B of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing Appeals:At the outset, both the assessee and the Revenue submitted petitions for condonation of delay in filing appeals, citing reasons such as the Managing Director being out of station and mixing of appeal papers with other files. The Tribunal, after considering the reasons provided, found them to be reasonable causes under the Act and condoned the delay, thus admitting the appeals for adjudication.2. Disallowance of Deduction under Section 36(1)(viii) of the Income Tax Act, 1961:The core issue was the disallowance of deduction under Section 36(1)(viii) concerning profits derived from the business of providing long-term finance for housing. The assessee included various incomes such as interest income, profit on sale of investments, and miscellaneous income in the eligible profits, which the Assessing Officer excluded, arguing that only profits directly derived from the eligible business should be considered. The CIT(A) deleted these additions by following the ITAT's decision for the assessment year 2005-06. The Tribunal upheld the CIT(A)'s decision regarding interest earned on SLR securities, citing the settled position by the ITAT in the assessee's own case. However, for other incomes, the Tribunal noted that the assessee's records did not clearly apportion these incomes to eligible and non-eligible businesses. Therefore, the issue was remanded to the Assessing Officer for further verification and computation in line with the Tribunal's directions.3. Disallowance of Expenditure Related to Exempt Income under Section 14A read with Rule 8D of the Income Tax Rules, 1962:The assessee had not made any suo motu disallowance under Section 14A for expenses related to earning exempt income. The Assessing Officer computed disallowance using Rule 8D, which the CIT(A) restricted to the extent of exempt income earned, following the Delhi High Court's decision in Joint Investments Pvt. Ltd. The Tribunal found merit in the assessee's claim regarding sufficient own funds for investments and the need to consider only those investments yielding exempt income. However, due to lack of clear records, the Tribunal remanded the issue back to the Assessing Officer for fresh verification and computation, directing adherence to the principles laid out in relevant judicial precedents.4. Disallowance of Employees' Contribution to PF & ESI under Section 36(1)(va) read with Section 43B of the Income Tax Act, 1961:The issue pertained to the disallowance of employees' contributions to PF & ESI remitted beyond the due date specified under respective Acts but before the due date for filing the return of income under Section 139(1). The Tribunal cited its decision in M/s. Adyar Ananda Bhavan Sweets India Ltd., which held that such contributions, if paid before the due date for filing the return, should not be disallowed. However, as the specific dates of payment were not provided, the Tribunal remanded the issue to the Assessing Officer for verification and appropriate action based on the dates of payment.Conclusion:All the appeals filed by the assessee and the Revenue were allowed for statistical purposes, with specific issues remanded to the Assessing Officer for further verification and computation in accordance with the Tribunal's directions and relevant judicial precedents.