TaxTMI 
TaxTMI 
2016 (4) TMI 304
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....he ld. CIT(A) has erred in confirming addition of Rs. 4,08,471/- on account of prior period expenses. The same may be deleted. 3. On the facts and in the circumstances of the appellant's case the ld. CIT(A) has erred in confirming disallowance of Rs. 5,88,998/- made by the A) under section 14A of the Act. The same may be deleted. 4. The appellant craves leave to add to alter, amend and or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3. Briefly stated facts are that the assessee is a limited company engaged in the business of manufacturing/refining and trading of edible oil, seeds and cakes. It filed its return of income on 6.10.2007. Assessee's case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued on 22/07/2008 which was duly served on the assessee. Assessment was completed after making following additions :- 1. Disallowance of preliminary expenses Rs.12,10,000/- 2. Disallowance for late payment of PF/ESIC Rs.6,68,797/- 3. Disallowance of prior period expenses Rs.4,08,471/- 4. Disallowance u/s 14A r.w. rule 8D Rs.5,88,998/- 4....
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....ns that the amount of Rs. 17,23,464/- pertaining to the expenditure of prior period which had crystallized during the assessment year under appeal. The assessee, therefore, made a claim which was denied by the AO. The submission of the assessee is reproduced in the appellate order. The learned CIT(A) found that the entire amount in question pertains to the payment of employees which was in the nature of incentives and performance rewards. The same was worked out by the HR Department on the basis of performance etc. and the same was cleared for payment during the year under appeal i.e. assessment year 2004-05 and this working itself was done in the month of July, 2003 on the basis of performance of the employees in the earlier year. The liability crystallized during the assessment year under appeal and was, therefore, held to be allowable deduction. Addition was accordingly deleted. 5. The learned DR relied upon the order of the AO without pointing out any infirmity in the orders of the learned CIT(A). On the other hand, the learned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the liability was crystallized during ....
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....be admitted only on giving such a certificate. The learned CIT(A), therefore, rightly found that the liability to pay the expenditure crystallized during the assessment year in question. Similarly, in assessment year 2004-05 the payment to employees was made based upon the performance of the employees in the earlier year. The liability crystallized during the assessment year in question, because the working of the incentives based on performance was cleared for payment in the month of July, 2003 which falls during the assessment year under appeal i.e. assessment year 2004-05. Since the liability to pay the expenditure crystallized during the assessment year under appeal, therefore, the learned CIT(A) was justified in deleting the addition. The learned DR has not produced any material contrary to the findings of the learned CIT(A). Thus, the Revenue has failed to rebut the findings of the learned CIT(A). We, therefore, do not find any infirmity in the order of the learned CIT(A) in deleting the disallowance of the expenditure. We confirm his findings and dismiss both the appeals of the Revenue. 7. As a result, both the appeals of the Revenue are dismissed. In view of our ab....
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....aim made by the assessee that no expenditure has been incurred. We find that Hon. Jurisdictional High Court in the case of CIT vs. Torrent Power Ltd. 363 ITR 474 (Guj) - Section 14A of the Income-tax Act, 1961 - Expenditure incurred in relation to income net includible in total income (Interest - Non-user of borrowed funds) - Assessment year 2006-07 - For relevant year, assessee filed its return declaring exempt income being interest on bonds, exempted under section 10(15) and dividend income exempt under section 10(23D) - Assessing Officer having invoked provisions of section 14A. disallowed one per cent of interest expenses incurred for earning exempt income -Tribunal deleted said disallowance - Whether in view of fact that assessee had sufficient funds for making investments and it had not used borrowed funds for such purpose, impugned order passed by Tribunal deleting disallowance was to be upheld - Held, yes [Para 7] [In favour of assessee] FACTS * For the relevant assessment year, the assessee filed its return showing exempt income being fax free imerest on bonds, exempted under section I Of I5j and dividend exempt under section IO(23Di. The total sum worked ou....
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....at only 1.08% of the total of share capital and reserve & surplus has been invested in equity shares and unquoted government securities and also there has not been any major investment during the year under appeal incurred as the figure in both the years is approx. Rs. 2 crores and there is minor decrease in investment in NSC which has scaled down from Rs. 1,56,000/- to Rs. 1,09,000/-. 15. In view of our above discussion and respectfully following the decision of Hon. Jurisdictional High Court in the case of CIT vs. Torrent Power (supra) and also looking to the related facts and figures of assessee we are of the view that looking to the huge base of capital and free reserve and surplus vis-à-vis minor investment it can be easily inferred that most probably non-interest bearing funds have been invested in the Investments. Accordingly, we delete the addition of Rs. 5,88,998/- made u/s 14A of the Act and allow this ground of assessee. 16. Ground No.4 is general in nature and needs no adjudication. 17. Now we take up Revenue's appeal in ITA No.2140/Ahd/2012 for asst. year 2007-08 wherein following grievances have been raised: 1. That the Id. CIT(A) has erred in....