Section 14A disallowance moderated, delayed PF/ESI contribution disallowed, and depreciation relief granted after typographical correction.

Section 14A read with Rule 8D was moderated because the assessee had already made a suo motu disallowance and no material change in facts was shown from earlier years; the disallowance was restricted after credit for that voluntary amount. Employees' contribution to PF/ESI deposited after the statutory due date under the welfare laws remained disallowable even though paid before filing the return, so that adjustment was sustained. A depreciation disallowance was deleted because the appellate order contained a typographical error, which was corrected in favour of the assessee. The appeal was therefore partly allowed.

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Issues: (i) Whether the disallowance under section 14A of the Income-tax Act, 1961 read with Rule 8D required interference and the extent to which the assessee's suo motu disallowance should be accepted; (ii) Whether the employees' contribution to PF/ESI deposited after the due date under the relevant welfare laws but before filing the return was allowable; (iii) Whether the depreciation disallowance was liable to be deleted on account of a typographical error in the appellate order.

Issue (i): Whether the disallowance under section 14A of the Income-tax Act, 1961 read with Rule 8D required interference and the extent to which the assessee's suo motu disallowance should be accepted.

Analysis: The assessee had already made a suo motu disallowance while computing income. The dispute was examined in the light of the assessee's own earlier years, where the Tribunal had accepted a reasonable lump sum disallowance on similar facts relating to investments in bonds and securities. As the Revenue did not show any material change in facts, the earlier view was followed and the disallowance was moderated accordingly.

Conclusion: The disallowance under section 14A was restricted to Rs. 13 lakhs after giving credit for the assessee's suo motu disallowance, and the assessee succeeded partly on this issue.

Issue (ii): Whether the employees' contribution to PF/ESI deposited after the due date under the relevant welfare laws but before filing the return was allowable.

Analysis: The applicable law, as settled, is that employees' contribution deposited beyond the due date prescribed under the PF/ESI enactments is not allowable as a deduction, even if paid before filing the return of income. Since the contribution was admittedly deposited after the statutory due date, the disallowance was sustained.

Conclusion: The disallowance under section 36(1)(va) was upheld and the assessee failed on this issue.

Issue (iii): Whether the depreciation disallowance was liable to be deleted on account of a typographical error in the appellate order.

Analysis: The appellate finding on depreciation was found to contain a typographical mistake, and the mistake was corrected in favour of the assessee.

Conclusion: The depreciation disallowance of Rs. 2,04,268 was deleted and the assessee succeeded on this issue.

Final Conclusion: The appeal was partly allowed, with relief granted on the section 14A disallowance and the depreciation issue, while the disallowance relating to delayed employees' contribution to PF/ESI was sustained.

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