TaxTMI 
TaxTMI 
2013 (9) TMI 4
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....rming the disallowance of a sum of Rs. 23,89,033/.- u/s. 14A of the Income Tax Act as per Rule 8D of the Income Tax Rules. 2. The learned Commissioner of Income Tax (Appeals) further erred in confirming the disallowance of provision for warranty of Rs. 53,066/-. 3. The learned Commissioner of Income Tax (Appeals) further erred in confirming the disallowance of Rs. 21,333/ under Sec. 36(1) (va) of the I. T. Act. 4. The learned Commissioner of Income Tax (Appeals) further erred in confirmation the addition of Rs. 704/- being difference in reconciliation of AIR report. 5. The appellant company craves to add to, alter or amend the foregoing grounds, which are without prejudice to one another, at the time of hearing. ITA No.3523/Mum/2012 1. The learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of a sum of Rs. 31,61,504/- u/s. 14A of the Income Tax Act. 2. The learned Commissioner of Income Tax (Appeals) further erred in confirming the disallowance of provision for warranty of Rs. 2,51,179/-. 3. The appellant company craves to add to, alter or amend the foregoing grounds, which are without prejudice to one another, at the time of he....
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....llant the AO had disallowed only the provision out of aggregate amount of Rs 19.04 lakh debited as warranty expenses the assesse had been allowed deduction on actual expenses that nothing was brought on record that the same was ascertained liability no basis for arriving at the figure had been furnished ad hoc provision could not be allowed the expenditure which was deductible for income tax purposes was one which was towards a liability actually existing at the relevant time putting aside of money which might become expenditure on the happening of an event was not an allowable item contingent liabilities did not constitute expenditure and could not be subject matter of deduction even under the mercantile system of accounting if the liability had accrued and though discharged at a later date would be deductible, that it should be capable of being estimated with reasonable certainty though the actual quantification might not be possible, that in the case under consideration these facts were missing liability would arise only when any claim was made by the purchasers and not before. He placed reliance on the judgments of Indian Molasses Co. P. Ltd (37 ITR 66),Calcutta Co. Ltd (37ITR1....
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....e matter of Rotork Controls India Pvt. Ltd. (supra),facts and figures of the earlier years are essential. Besides, AO should also consider as-what was the policy practised by the assessee in earlier years, what was the basis for calculating a certain percentage of sales for determining warranty liability, and what was the rate of reversals of liabilities in the earlier years. We find that in the case under consideration, the assessee did not provide material with regard to warranty liabilities to the AO or to FAA during assessment/appellate proceedings. We find that the AO has specifically mentioned that assessee had filed any basis of calculating the amount of warranty. It is found that assessee-company has not certified the paper-book as required by Rule,18 of ITAT, Rules 1963 and it has not mentioned that all the papers, including paper no.1,were produced before the AO.Pg.1 of the PB contains basis of warranty expenditure. In absences of the certificate as whether the paper no.1 was before the AO or not we can safely say that same was not made available to him. Even if it was furnished to him, in our opinion it is of no use. We find that the company has not scrutinised the 'hist....
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....2005. He disallowed the same u/s. 36(l)(va) of the Act. 3.1. Against the order of the AO assessee preferred an appeal before the First Appeal Authority (FAA).After considering the submissions of the assessee, he held that the appellant has not made the said payment even within the Grace period of 5 days delayed payment was not allowable as per the provisions of the Act, that none of the decisions relied upon were applicable to the facts of the case. Finally, he upheld the order of the AO. 3.2. Before us, AR submitted that there was delay only of five days , that payment of employees Rs. contribution was made within the financial year concerned, that there was no default on part of the assessee. He relied upon the judgments of AOMIL Ltd .(321 ITR 508),Alom Extrusions Ltd. (319 ITR 306).DR submitted that amount in question was contribution of employees', that assesse had to deposit it on due date. 3.3. We have heard the rival submissions and perused the material before us. From the order of the AO and the FAA it is clear that disputed amount was paid before the end of the financial year i.e. on 20.03.2005.Courts are of the view that if the payment is made even before due dat....
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....e for earning such income. He has disallowed Rs. 23.83 lacs on the assumption that assessee had made investment in shares of two companies and must have earned exempt income. AO/FAA has not enquired about the investments made by the assessee and the availibility of funds with it. Both of them have discussed the legal principles, but have totally missed the facts. In our opinion, if no exempt-income was shown by the assessee in the return of income and no expenditure was claimed by it to earn said income, provisions of section 14A as well as Rule 8D would not be applicable. As the FAA has not discussed these vital issues before rejecting the claim of the assessee, so, we are unable to endorse his views. In short, the basic facts of claim of exempt income and incurring expenses for earning the said income are missing in the matter under consideration. Therefore, reversing the order of the FAA,we decide ground no.2 in favour of the assessee. 5. Next Ground of appeal about warranty expenditure. While deciding the appeal for the last AY., we have decided identical issue against the assessee. Following the same, Ground no.2 stands dismissed. 6. Third ground of appeal is about di....