TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 275
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....Respondent by Shri C. K. Singh, D. R. suo motu had made a disallowance u/s 14A which the Assessing Officer had enhanced by applying the provisions of section 8D of the Act. In this respect Learned A. R. submitted that there was no exempt income to the assessee and in this respect our attention was invited to computation of income placed at page 2 of the paper book where no exempt income was mentioned. Our attention was also invited to audited financial statement available at pages 5 to 32 of the paper book and our specific attention was invited to page 23 of the paper book where the break-up of total revenue along with other income was placed and in the break-up there was no mention of any exempt income. Therefore, it was argued that in the absence of exempt income, no disallowance u/s 14A would have been called for. Reliance in this respect was placed on a decision of Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT [2015] 61 taxmann. com 118 (Delhi). Further reliance was placed on an order of Hon'ble Allahabad High Court in the case of CIT vs. Shivam Motors (P. ) Ltd. [2015] 55 taxmann. com 262 (Alld). Without prejudice Learned A. R. submitted that no satis....
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.... the assessee, disallowance u/s 14A cannot be made. For the sake of completeness, the findings of Hon'ble Allahabad High Court in the case of Shivam Motors are reproduced below: "10. As regards the second question, s. 14A of the Act provides that for the purposes of computing the total income under the chapter, no deduction shall be allowed in respect of 4 expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what s. 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax-free' income. Hence, in the absence of any tax-free income, the corresponding expenditure could not be worked out for disallowance. The view of the CIT(A), which has been affirmed by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion, of the disallowance of Rs. 2,03,752/- made by the AO was in order. " In the present case we have already noted from the audited financial s....
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....tion was deposited before filing Return under Section 139(1) of Act 1961 for the relevant period. Revenue, in its turn, preferred appeal before Tribunal. Relying on judgment in Commissioner of IncomeTax Vs Alom Extrusions Ltd. (supra), Tribunal dismissed appeal and confirmed order passed by CIT(A). That is how matter came before High Court in appeal. Court considered following question, posed in para 7. 01, reads as under:- "Short question which is posed for consideration of this court is with respect to the disallowance of the amount being the employees' contribution to the PF account/ESI contribution which admittedly which the concerned assessee did not deposit with the PF Department/ESI Department within due date under the PF Act and/or the ESI Act. " 18. Gujrat High Court referred to Section 2(24)(x) and found that any sum received by Assessee (employer) from his employees as contributions to any provident fund or superannuation fund or any fund set up under Act, 1948, or any other fund for welfare of such employees, constitute income. However, Section 36 of Act 1961 provides for deduction in computing income referred to in Section 28. The relevant provision of Section 36....
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....me reason Gujrat High Court dissented with the judgments of Rajasthan High Court in Commissioner of IncomeTax Vs Udaipur Dugdh Utpadak Sahakari Sangh Ltd. , (2014) 366 ITR 163, Punjab & Haryana High Court in Commissioner of IncomeTax Vs Hemla Embroidery Mills P. Ltd. , (2014) 366 ITR 167, Himachal Pradesh High Court in Commissioner of IncomeTax Vs Nipso Ployfabriks Ltd. , (2013) 350 ITR 327 and Karnataka High Court in Commissioner of IncomeTax Vs Sabri Enterprises, (2008) 298 ITR 141. 7 21. Karnataka High Court had an occasion to consider, whether it should dissent with the view taken in the earlier judgments and follow the view taken by Gujrat High Court in Commissioner of IncomeTax Vs Gujrat State Road Transport Corporation (supra) and this occasion came in Essae Teraoka P. Ltd. Vs Deputy Commissioner of IncomeTax, (2014) 366 ITR 408. Dispute relates to A. Y. 2008-09. Assessee filed Return on 26. 09. 2008. Return was processed under Section 143(1) and thereafter on scrutiny, notice under Section 143(2) was issued. Assessing Officer completed assessment by order dated 24. 12. 2010 under Section 143(3) disallowing Rs. 12,51,737/- under Section 36(1)(va) and also disallowing Rs. ....
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....oyer is entitled for deduction. 23. Though in a short judgment, but Punjab & Haryana High Court in Commissioner of IncomeTax Vs Hemla Embroidery Mills (P. ) Ltd. , (supra) not only followed Commissioner of IncomeTax Vs Alom Extrusions Ltd. (supra) but also its own earlier judgment in Commissioner of IncomeTax Vs Rai Agro Industries Ltd. , (2011) 334 ITR 122, to hold that Section 43B shall apply to both 'contributions' i. e. employers' and employees'. 24. Kerala High Court in recent judgment in Commissioner of IncomeTax Vs Merchem Ltd. , (2015) 378 ITR 443, has followed the decision of Gujrat High Court in Commissioner of IncomeTax Vs Gujrat State Road Transport Corporation (supra) and dissented with the otherwise judgments of Rajasthan High Court in Commissioner of IncomeTax Vs State Bank of Bikaner and Jaipur, (2014) 363 ITR 70, Karnataka High Court in Commissioner of IncomeTax Vs Spectrum Consultants India P. Ltd. (supra) and Bombay High Court in Commissioner of IncomeTax Vs Ghatge Patil Transports Ltd. , (2014) 368 ITR 749. 25. Before following a particular view when there is divergence in views of different High Courts, we find it appropriate to examine....
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....due date was after the date of filing of returns and thus industries made representations to the Ministry of Finance. Court, looking to the history of amendments held, it is evident that Section 43B, when enacted in 1984, commences with a non obstante clause. The underlying object being to disallow deductions claimed merely by making a book entry based on the mercantile system of accounting. At the same time, Section 43B made it mandatory for the Department to grant deduction in computing income under Section 28 in the year in which tax, duty, cess etc. is actually paid. Parliament took cognizance of the fact that accounting year of a company did not always tally with the due dates under Provident Fund Act, Municipal Corporation Act (Octroi) and other Tax laws. Therefore, by way of First Proviso, an incentive/relaxation was sought to be given in respect of tax, duty, cess or fee by explicitly stating that if such tax duty cess or fee is paid before the date of filing of the return under Act 1961, Assessee would than be entitled to deduction. This relaxation/incentive was restricted only to tax, duty, cess and fee. It did not apply to contributions to labour welfare funds. The reaso....