TaxTMI 
TaxTMI 
2019 (3) TMI 1826
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....Since, the identical facts and issues are involved in these appeals, we proceed to dispose the same vide this common order. 3. For the sake of convenience and clarity the facts relevant for the AY 2007-08 in ITA No.688/Chny/2013 are stated herein. 4. The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of refinery of petroleum and petroleum chemical products and the sale of the same. The return of income for the AY 2007-08 was filed on 27.10.2007 declaring income of Rs. 422,47,34,220/-. Against the said return of income, the assessment was completed by the Addl. CIT (LTU), Chennai vide order dated 16.12.2009 passed u/s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') at a total income of Rs. 438,99,85,730/-. While doing so, the AO made the following disallowances: 1) Effect of change in Accounting Policy (para No.4.1.2) 2365202 2) Disallowance u/s. 35DDA (para No.5) 100291 3) Provision for Leave Encashment (para No.6) 118584791 4) Payment to Indocoserve (para No.7) 35251825 5) Bad Debts (para No.8) 700416 6) Social & Comm....
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.... 2. The Commissioner of Income tax (Appeals) LTU erred in confirming the disallowance of Rs. 11,85,84,791/- Lakhs under sec 43B(f). 2.1 the Commissioner of Income tax (Appeals) LTU ought to have appreciated that the Appellant had provided the above amount towards provision for leave encashment on an actuarial basis. 2.2 The Appellant relied on the decision of Calcutta High Court in the case of Exide Industries reported in 292 ITR 479 (Cal) wherein the High Court has held that Liability of Leave encashment cannot be disallowed for non payment under Section 43B. 3. The Commissioner of Income tax (Appeals) LTU erred in confirming the disallowance of Rs. 3,52,51,8251- u/s 40(a)(ia) paid to M/s. lndocoserve for non- deduction TDS. 3.1 The Commissioner of Income tax (Appeals) LTU ought to have appreciated that it is merely reimbursement of expenses and hence no tax need to be deducted on the same. - 3.2 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that the disallowance u/s 40(a)(ia) can be made only in respect of amounts outstanding and payable as on 31 March and not on the amounts which have been paid during the p....
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....havan, Advocate submitted that the provision for encashment is allowable as deduction as the Hon'ble High Court of Calcutta has held the provisions to be ultra virus in the case of Exide Industries reported in 292 ITR 470 (Cal). Without prejudice to the above, he submitted that the same should be allowed as deduction on payment basis and he further submitted that the payment made to LIC towards group leave encashment scheme should be treated as a payment to employees be allowed as deduction. Reliance in this regard was placed on the decision of Hon'ble High Court of Kerala in the case of CIT v. Hindustan Latex Ltd. 209 Taxman 42 (Ker.). This issue was dealt with by us in the case of Karur Vysya Bank Ltd. in ITA No.1343/Chny/2013 dated 28.02.2019, wherein it was held as under: "23.1 Ground No.2 & 3 challenges the addition of provision for leave encashment and medical leave. The addition was made by the Assessing Officer invoking the provision of s. 43B of the Act. The clause (f) to s. 43B of the Act enacts that no expenditure shall be allowed on account of any leave salary unless, the expenditure is actually paid. Thus, provision is intended to overcome the decision of Hon&....
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....the ld. Counsel that the payment made towards the LIC group leave encashment scheme should be allowed as a deduction on the payment basis cannot be accepted for two reasons 1) No evidence was filed before us showing that during the year under consideration the assessee company made any payment towards LIC group leave encashment scheme 2) The decision of Hon'ble High Court of Kerala in the case of Hindustan Latex Ltd. (supra) cannot come to the rescue of the assessee company, as in the said decision, the Hon'ble Kerala High Court had not laid down any law that the payment made towards the group leave encashment policy is allowable as a deduction. It merely held that the issue is a debatable and therefore, it cannot be subject matter of the revision u/s. 263 of the Act. 7.6 In the result, ground of appeal No.2 of the assessee is dismissed. 8. Ground of appeal No.3 challenges the disallowance of sum of Rs. 3,52,51,825/- on the payments made to M/s. Indocoserve for non deduction of tax at source. It is submitted that M/s. Indocoserve was formed by the MRL as registered co-operative society under Tamil Nadu Co-operative Society Act, 1951 and is formed by MRL for the benefit of....
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....income in its hands and made necessary arrangements for payment of tax. If so, to allow the same as deduction in terms of provisions of second proviso to s. 40(a)(ia) of the Act. 8.4 In the result, ground of appeal No.3 of the assessee is partly allowed for statistical purposes. 9. Ground of appeal No.4 challenges the disallowance of Rs. 5,92,750/- under the clause (iii) of Rule 8D of the Rules. It is contended before us that the resort to disallowance u/s. 14A of the Act cannot be made in the years prior to insertion of the provision of Rule 8D of the Rules and reliance in this regard placed on the decision of Hon'ble High Court of Bombay in the case of Godrej & Boyce Mfg. Co. Ltd. v. DCIT [2010] 328 ITR 81 (Bom.). 9.1 On the other hand, the ld. Departmental Representative placed reliance on the orders of lower authorities. 9.2 This issue was considered by us in the case of Karur Vysya Bank in ITA No. 1342/Chny/2013 dated 28.02.2019, wherein it is held that the disallowance u/s. 14A of the Act prior to insertion of Rule 8D of the Rules should be restricted @ 2% of the dividend income received following decision of Hon'ble Jurisdictional High Court in the case of Simpso....
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....d the decision of Tribunal for the assessment year 1992-93 & 1993-94 in ITA No.578 and 22/Mds/1997 dated 19.03.2010. Being aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us in the present grounds of appeal. 10.5 We heard the rival submissions and perused the material on record. The AO disallowed the expenditure placing reliance on the orders for the earlier years. The AO noted that the decision by the Tribunal in the assessment year 1992-93 had been restored to the Tribunal by the Hon'ble Supreme Court. It appears that these facts not taken note of by the ld. CIT(A). Even before us neither the assessee nor the Department had filed copies of the Hon'ble Supreme Court order. The assessee-company made the following submissions before ld. CIT(A) on this issue: "8.1 The appellant contested the above addition. The ld.AR submitted as under: "An appeal is preferred against the order of the Learned Assessing officer on the grounds that such expenses have been incurred with an intention of securing the support of the public near the area of operation to avoid potential losses due to any interruption to the organization. Such expenses....
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....and petrochemical products. The return of income for the AY 2007-08 was filed on 27.10.2007 disclosing income of Rs. 422,47,34,220/-. Against the said return of income, the assessment was completed vide order dated 16.12.2009 passed u/s. 143(3) of the Act at a total income of Rs. 438,99,85,730/- after making certain disallowances. These disallowances were being contested by the assessee in separate proceedings. 11.2 Subsequently, the AO formed a belief that the income chargeable to tax had escaped the assessment on the following issues: "a. Payment made to Chennai Metro Water & Sewerage Board of Rs. 27.49 lakhs without deduction of tax at source is to be disallowed u/s 40(a)(ia). b. Payment of Rs. 50 lakhs by the assessee company as founder member of consortium of sponsors to conduct tennis tournament at Chennai, to be disallowed as the expenditure is not for business purpose. c. Deduction allowed u/s 80-IS of Rs. 448.95 crore to be withdrawn due to the reasons that the unit is not a separate unit and no separate final accounts were prepared." 11.3 Therefore, a notice was issued u/s. 148 of the Act on 28.03.2012. On receipt of the said notice, the a....
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....Rs. 27, 49,000/- u/s 40(a)(ia) on the ground that the appellant had not deducted TDS from the payments made to Chennai Metro Water Supply a Sewerage Board(CMWSSB). 3.1 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that the recipient has offered this amount as their income, and arranged for payment of tax and hence there can be no disallowance in the hands of the Appellant .The Appellant relies on the decision in the case of Hindustan Coca Cola Beverage P Ltd Vs CIT - 293 ITR 226 (SC)." 12.1 The assessee-company raised four grounds of appeal. Grounds of appeal No.1 & 4 are general in nature therefore, do not require any adjudication. 12.2 Ground of appeal No.2 challenges the validity of the reopening of the assessment u/s. 147 of the Act. This ground of appeal was not pressed during the course of hearing of appeal. Hence, dismissed the same as not pressed. 12.3 Grounds of appeal No.3 challenges the addition of disallowance of payment of Rs. 27,49,000/- made to CMWSB towards lease rent for non deduction of tax at source. The AO disallowed the lease rent payment made to CMWSB u/s. 40(a)(ia) of the Act for non deduction of tax at source on th....
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....ing the return of income by recipient payee. The second proviso has been held to be declarative and curative and it is retrospective from 01.4.2005 by Hon'ble High Court of Delhi in the case of Ansal Land Mark Township (P) Ltd. (supra). However, the Hon'ble Supreme Court granted SLP against the Hon'ble Jurisdictional High Court ruling in the case of CIT v. Ansal Landmark Township (P.) Ltd. [2016] 73 taxmann.com 68 (SC). Now, in the present case, no material was placed before us showing that the assessee has not been declared "assessee in default" under first proviso to s. 201 of the Act. However, keeping in view the legal position that the assessee cannot be expected to prove the negative, we remit the matter back to the file of AO with a direction to verify whether the assessee is declared as default under first proviso of s. 201 of the Act and adjudicate the matter keeping in view the outcome of the pending appeal before Hon'ble Supreme Court in the case of Ansal Land Mark Township (P) Ltd. (supra). 12.7 In the result, ground of appeal No.3 of the assessee is partly allowed. 12.8. In the result, appeal of the assessee in ITA No.494/Chny/2014 for assessment year 2007....
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....irection of the Government of Tamil Nadu and he also placed before us the copy of letter from Chief Secretary of Govt. of Tamil Nadu vide page 1 & 2 of paper book, therefore, the same should be allowed as a deduction placing reliance on the decision of Hon'ble Madras High Court in the case of Cheran Transport Corporation Ltd. (supra). 13.5. We heard the rival submissions and perused the material on record. The short issue involved in the present appeal is whether the sponsorship expenditure of Rs. 50 lakhs towards tennis tournament incurred by the assessee is allowable as a deduction. The AO had not assigned any reasons for disallowances except stating that in the earlier years similar disallowance was made. However, the ld. CIT(A) had allowed by placing reliance on the orders of his predecessor in the earlier years. The submission of the ld. Counsel that the expenditure was incurred only on the direction of the Government of Tamil Nadu cannot be accepted for the reasons that from the perusal of the letter of the Chief Secretary of Government of Tamil Nadu dated 27.01.2004 vide DO letter No.1044/Secy./2004-2, it is clear that the Government of Tamil Nadu had only extended an inv....
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....- under normal provisions and book profit of Rs. 1721,62,93,440/- u/s. 115JB of the Act after making certain disallowances. The AO made the following disallowances while computing the income under normal provisions of the Act: 1) Effect of change in accounting policy Effect of change in accounting policy 10608178 67634396 2) Provision for leave encashment 319926000 3) Payments of Indocoserve 39252455 4) Social & Community welfare expenses 3963298 5) Under sec.14A 3238398 6) Lease rent paid to Chennai Metrowater Supply & Sewerage Board 2052789 7) Expenses incurred for conducting Chennai Open Tennis Tournament 5000000 451675514 14.2. Being aggrieved by the above additions, an appeal was preferred before ld. CIT(A), who vide impugned order had directed the Assessing Officer to allow deduction u/s. 80-IB of the Act in respect of the profits derived from refinery-III projects. As regards to the disallowance of provision for service awards and gift cheques to the employees who have completed certain years of service or at the time of retirements, the ld. CIT(A) held tha....
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....c 43B(f) of the Act and hence confirmed. 7.2.1 However, there is substance in the alternative submission of the Id.AR that only Rs. 2429.76 lakhs can be disallowed. It is so because the total amount debited for the year was Rs. 1538.58 Iakhs and the assessee had claimed further amount of Rs. 1244.47 lakhs relating to the earlier years. Thus, the total comes to Rs. 2783.06 lakhs, out of which a sum of Rs. 353.29 Iakhs had been actually paid, leaving a balance of Rs. 2429.76 lakhs which alone can be disallowed u/s43B(f). In the result, the ground is, accordingly, partly allowed." 14.3. The disallowance of payment of Rs. 392.52 lakhs made to M/s. Indocoserve is confirmed by the ld. CIT(A). The ld. CIT(A) deleted the addition of community welfare expenses of Rs. 39,63,298/- following the decision of Hon'ble Madras High Court in assessee's own case reported in 266 ITR 170 (Mad) regarding the disallowance u/s. 14A of the Act, the ld. CIT(A) directed the Assessing Officer to restrict the addition under clause (iii) of Rule 8 D of the Rules at ½ percentage average value of the investments. The ld. CIT(A) confirmed the addition of lease rent of Rs. 20,52,789/- pa....
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.... Indocoserve has filed the return of income including the amount received and has been arranged for payment of tax there can be no disallowance in the hands of the Appellant. Appellant reLies on the decision of Apex court in the case of Hindustan Coca Cola Beverages (P) Ltd Vs CIT reported in 293 ITR 226(SC). 4. The Commissioner of Income tax (Appeals) erred in confirming the disaLlowance of expenses of 6,97,700/- alLeged to be relatabLe to earning the dividend income, by applying Rule 8D. 4.1 The Commissioner of Income tax (Appeals) ought to have appreciated that u/s.14A only the actuaL expenditure incurred for the purpose of earning exempt income shouLd be disaLlowed. The appellant has not incurred any expenditure for earning the dividend income. 4.2 The Commissioner of Income tax (AppeaLs) ought to have appreciated that the Hon'b(e Punjab & Haryana High Court in the case of CIT Vs M/s. Hero Cycles Limited - reported in 323 ITR 518 has held that "Disallowance u/s.14A requires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance u/s.14A cannot stand." 5. The Commiss....
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....the case of Essar Exploration and Production India v. ACIT in ITA No.6189/Mum/2011 dated 08.08.2012. 15.5. This issue was dealt by us in the assessee's own case for AY 2007-08 in ITA No. 688/Chny/2013 for the detailed reasons mentioned therein, we are unable to accept the contention of the assessee that the provision for leave salary encashment cannot be disallowed. 15.6. It is further contended that the amount of contribution to LIC Group Leave Encashment Scheme should be allowed as a deduction on payment basis placing reliance on the decision of Hon'ble Kerala High Court in the case of Hindustan Latex Ltd. 74 DTR 212 (Ker.) and the decision of Hon'ble Supreme Court in the case of Taxtool 263 CTR 257 (SC). We find that these decisions are in the context of provisions of s. 36(1)(v) of the Act. The purport and the phraseology of the provisions of s. 36(1)(v) of the Act and s. 43B(f) of the Act are totally different. The contribution made by an assessee towards approved scheme of employees group leave encashment cannot be construed as a payment to the employees. Therefore, the decisions relied upon by the ld. counsel for the assessee is not of any help. Therefore, we do not fi....
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....pany: * Asphalt filling/was filling and Loading * Grabber Maintenance * Plumbing, Indcoserve canteen, Collection and Distribution of mail * Indcoserve time office * Assisting Company employees in various departments/sections like OM&S, Lab, Power Plant, Pumps, R&D, OIlS, etc. 18.1. The AO disallowed this sum invoking the provision of s. 40(a)(ia) of the Act on the ground that the assessee-company had failed to deduct tax at source on such payment. The ld. CIT(A) also confirmed the addition on the ground that the certificate of Nil TDS issued by the Income tax Department was not produced before him. Being aggrieved, the appellant is in appeal before us in the present appeal. 18.2. The ld. Counsel for the assessee submitted that the payment is in the nature of reimbursement of expenditure and therefore, the provisions of TDS are not applicable to the subject payments, without prejudice, it is contended that the recipient had filed return of income including this sum as income payee made necessary arrangement for payment of tax. The assessee also filed copy of certificate issued by M/s. MJV & Associates, Chartered Accountants stating ....
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.... The CIT(A) ought to have appreciated that the provision for gifts and awards can be allowed only during the year when such expenses are actually incurred and ought to have upheld the action of the assessing officer who had correctly allowed the actual expenditure incurred during the year by way of payment made to employees retiring during the year and disallowed the balance. 4.1 The CIT(A) erred in holding that the amount paid in connection with pay revision for supervisory employees was nothing but advance of part of salary 4.2 The CIT(A) ought to have appreciated that pending government ratification for wage revision, any payment made under this head cannot be claimed as ascertained liability and ought to have upheld the disallowance as being in the nature of provision for unascertained liability. 5.1. The learned CIT(A) has erred in restricting the disallowance u/s.14A r.w.Rule 8D to Rs. 6,97,700/- as against Rs. 32 38,398!-. 5.2. The Ld.CIT(A) has erred in not considering the decision of the Hon'ble Supreme Court in CIT Vs. Rajendra Prasad Mody 115 ITR 519 wherein it was held that even if no dividend income is earned the provision of section....
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....o.2 challenges the decision of the ld. CIT(A) allowing the deduction of Rs. 800.54 crores under the provisions of s. 80IB of the Act. The factual backgrounds of the issue are as under: 20.4 The assessee made a claim for deduction of the profits derived from Refinery-III under the provisions of s. 80-IB of the Act. the AO had disallowed the claim on the ground that it is only an expansion of the existing business and it does not amount to setting up of a new undertaking and the AO also relied on the approval granted by Ministry of Petroleum and Natural Gas, Government of India vide letter No.R31011/9-97-or-I dated 27.07.2000. On appeal before the ld. CIT(A), the ld. CIT(A) held that the deduction under the provisions of sub s. (9) of s. 80IB of the Act is allowable only in respect of undertaking. He further placing reliance on the decision of Hon'ble Supreme Court in the case of Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195 (SC) that the expansion of an existing business amounts to a new undertaking and directed the AO to allow the deduction. 20.5 Being aggrieved by the decision of ld. CIT(A), the Revenue is in appeal before us in the present grounds of appe....
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....the existing unit. The judicial precedents relied upon by the ld. Counsel in support of the proposition that the substantial expansion of the unit also amounts to a new undertaking is not relevant, inasmuch as, the said judicial precedents were rendered in the context of provisions of s. 80J of the Act. The purpose and purport and phraseology of the provisions of s. 80IB(10) of the Act & s. 80J of the Act are different. 20.9 However, we note that the Assessing Officer himself allowed the deduction in the subsequent year. But, from the perusal of the assessment order, there is nothing to show that the Assessing Officer examined the aspect of whether the assessee set up a new undertaking or not. The fact that the Assessing Officer allowed the deduction in the subsequent year cannot be bar to examine the eligibility/conditions in the every year of claim as held by Hon'ble Supreme Court in the case of DCIT v. Ace Multi Axes Systems Ltd. [2018] 400 ITR 141 (SC). The decision of the ld. CIT(A) is based on the reasoning that expansion of the existing unit also amounts to new undertaking as observed by us supra this meaning cannot be adopted in the context of provisions of s. 80IB(9) of....
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....o be discharged at a future date would be allowed as a deduction while computing the profits and gains of business. In this regard reference can be on the decision of Hon'ble Supreme court in the case of Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53 (SC). In the present case, it is not the case of the Assessing Officer that the liability had not accrued therefore, having regard to the principles enunciated in the judicial precedents cited above, we do not see any difficulty to allow the same as a deduction. Hence, we do not find any fallacy in the reasoning of the ld. CIT(A), while allowing this item of provision and therefore, the ground of appeal No.2 of Revenue is dismissed. 31.3 In the result, ground of appeal No.3 of Revenue is dismissed. 32. Grounds of appeal No.4 challenges the decision of ld. CIT(A) allowing the advance salary of Rs. 676.34 lakhs paid to his employees on account of proposed pay revision. The factual background of this issue is that the pay revision was due for supervision employees from 01.01.2007 for want of necessary approvals and notification of revised pay scale from the Government. The assessee-company had decided to pay adhoc tow....
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....ing the issue. The relevant paras of ld. CIT(A) is extracted below: "10.2 I have carefully considered the facts of the case and the submission made by the id.AR. I have also gone through the decisions relied on by the Id.AR. The Id.AR has stated that the appellant has not incurred expenditure in earning the dividend indome including any interest expenditure. The Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company Limited v. DCIT 328 ITR 81 (Born) has held that provisions of rule 8D are applicable with effect from A.Y. 2008-09 and subsequent years. hence rule 80 is applicable to the appellant. The lci.AR has explained that the appellant is a government company and has not incurred any expenditure in earning dividend income. The impugned investment was out of own funds and was not out of any borrowed fund. The AO has not established any nexus between the exempt income and the expenditure incurred by the appellant. The ld.AR, therefore, claimed that own fund was used for investments and that too more than 15 years ago. I find substance in the argument of the Id. AR. The Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd (221 CT....
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....d this issue to the file of AO for fresh adjudication on the touch stone of commercial expediency. Similarly, this issue for the year under consideration also, we remit this issue to the file of AO for fresh adjudication on the similar directions. 34.1 In the result, ground of appeal No.5 of Revenue is partly allowed for statistical purposes. 35. Ground of appeal No.7 challenges the order of ld. CIT(A) allowing the contribution made by the assessee towards conduct of tennis tournament. This issue was also dealt by us in the Revenue's appeal in ITA No.309/Chny/2014 for AY 2007-08, wherein we decided this issue against the assessee-company for the detailed reasons mentioned therein. Hence, this ground of appeal filed by the Revenue is allowed. 35.1 In the result, ground of appeal No.7 of Revenue is allowed. 36. In the result, appeal filed by the Revenue in ITA No.1982/Chny/2011 for AY 2008-09 is partly allowed for statistical purposes. ITA NOs.689/Chny/2013 & 854/Chny/2013 for assessment year 200910 (Cross Appeals): 37. The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of refinery of petroleum and ....
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....nt has not incurred any expenditure for earning the dividend income. 2.2 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that the Hon'ble Punjab & Haryana High Court in the case of CIT Vs M/s. Hero Cycles Limited - reported in 323 ITR 518 has held that "Disallowance u/s.14Arequires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance u/s.14A cannot stand." 2.3 It is submitted that the Delhi Tribunal in the case of ACIT Vs Sun Investments reported in 8 ITR (Tn) 33 have held that unless the assessing officer established that specific expenditure has been incurred by the assessee for earning exempt income there can be no disallowance under Section 14A. 3. The Commissioner of Income tax (Appeals), LTU erred in confirming the disallowance of Rs. 61,23,06,0541- u/s 40(a)(i) as the appellant had not deducted TDS from the payments made to Hardy Exploration and Production India Inc u/s 195. 3.1 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that payment made to HEPI was for the purchase of crude oil and hence payment is not sub....
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....come tax (Appeals), LTU erred in confirming without adjudicating the disallowance of Rs. 28,41,000/- the (ease rent paid to Chennai Metro Water Supply and Sewerage Board for non-deduction of tax u/s 40 (a(ia). 5.1 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that the recipient has offered this amount as their income, and arranged for payment of tax by which there can be no disallowance in the hands of the Appellant .The Appellant relies on the decision in the case of Hindustan Coca Cola Beverage P Ltd Vs CIT - 293 ITR 226 (SC). 6. The Appellant craves leave to file additional grounds at the time of hearing." 38. Grounds of appeal No.1 & 6 are general in natural and do not require any adjudication. 38.1 Ground of appeal No.2 challenges the decision of ld. CIT(A) confirming the addition of Rs. 5,91,700/- under clause (iii) of Rule 8D of the Rules. From the perusal of the ld. CIT(A) order, it is clear that the order of ld. CIT(A) is based on the appreciation of law and facts and we do not find any reason to interfere with the order of ld. CIT(A). Hence, this ground of appeal filed by the assessee is dismissed. 38.2 In the result, g....
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....n of the assessee-company that the sum paid is not chargeable to tax in India, therefore, there was no need to deduct tax in the light of the decision of Hon'ble Supreme Court in the case of GE Technology Center (supra) cannot be accepted as there is embedded element of income even in the case of transaction of purchase. The Hon'ble Supermen Court in the case of Transmission Corporation of Assessing Officer Ltd. v. CIT 105 Taxman 742 (SC) clearly laid down that any sum paid to a non-resident may be income or income hidden or otherwise embedded therein. Therefore, the tax is required to be deducted on the said sum. What would be the income is to be computed on the basis various provisions of the Act including the provisions for computation of income if the payment is a trade receipt. However, we find merit in the submission of the assessee that in the light of second proviso to s. 40(a)(ia) of the Act, the matter requires remission to the AO to examine applicability of second proviso to s. 40(a)(ia) of the Act, which is inserted by the Finance Act, 2012 w.e.f. 01.04.2013 held to be retrospective by the Hon'ble High Court of Delhi. Accordingly, we remit this issue to the file of ....
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.... is submitted that the decision of the 1TAT on a similar issue in assessee's own case for the A.Y. 2005-06 in 1TA NO. 439 / Mds / 2009 dt 25.07.2012 haw not been accepted by the department and appeal to the High Court has been filed. 3.1 The CIT(A) erred in deleting the disallowance of expenditure incurred towards Chennai Open Tennis Tournament. 3.2 The C1T(A) failed to appreciated the fact that the assessee has made the contribution as the founder member of the consortium of sponsors for the conduct of the tournament 3.3 The CIT(A) ought not to have accepted the contention of the assessee that the expenditure is in the nature of advertisement expenses for promoting the cause of the company, since the assessee company's products are exclusively marketed by public sector oil marketing companies. 3.4 The C1T(A) failed to appreciate that the case laws relied upon by the assessee are distinguishable from the facts of the current case since in the case of DCM Ltd. and Sarada Plywood Industries, the assessee's were carrying out their marketing themselves. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed t....
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.... for Retirement benefits as per DPE guidelines disallowed as being contingent (para 6) 17,00,05,000 47.1 Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order partly allowed the appeal. Being aggrieved, the appellant is in appeal before us in the present appeal. 47.2 The assessee raised the following grounds of appeal: "1. The order of the Commissioner of Income Tax (appeals), LTU is contrary to law, facts and circumstances of the case. 2. The Commissioner of Income tax (Appeals), LTU erred in confirming the disallowance of Rs. 11,56,000/- under Section 14A by appLying Rule 8D. 2.1 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that u/s.14A only the actual expenditure incurred for the purpose of earning exempt income should be disaLlowed. All the investments have been made by assesee's own fund and the appeLlant has not incurred any expenditure for earning the dividend income. 2.2 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that the Hon'bLe Punjab & Haryana High Court in the case of CIT Vs M/s. Hero Cycles Limited - reported in 323 ITR 518 has heLd t....
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....roviding service Like asphalt and wax filling and Loading, management of Labour, canteen, attending semi-skilled and unskilled jobs at various plants, plumbing and carpentry etc., the appellant has reimbursed the expenses of the Society. As it was only mere reimbursement of expenses and hence no tax need to be deducted on the same. 4.3 Without prejudice to the same, as the recipient. has filed the return of income including the amount received and has been arranged for payment of tax there can be no disallowance in the hands of the appellant. The Appellant relies on the decision in the case of Hindustan Coca Cola Beverage P Ltd Vs CIT - 293 ITR 226 (SC). Disallowance u/s 40(a)(ia) can be made only in respect of amounts outstanding and payable as on 3l' march and not the amounts which have been paid during the previous year. Merilyn Shipping and Transports V. ACIT, reported in 16 ITRTrib) I (Vis)(SB). Vector Shipping 85 CCH 201 (All. H.C). 5. The Commissioner of Income tax (Appeals), LTU erred in confirming the disallowance of Rs. 24,71,39,263/- u/s 40(a)(i)for nondeduction TDS from the payments made to Hardy Exploration and Production India Inc u/s 195. 5....
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....f tax issued u/s197 shall be valid for such period of the previous year as specified in the certificate. Appellant relies on the decision in the case of ITO(TDS) Vs.Jet Airways (India) Ltd.(ITAT Mumbai -ITA No7441/Mum/2010). 6.4 Without prejudice, only the profit accruing to M/s. NIKO (Neco) Ltd on production and sale of crude to the Appellant is taxable in India. Hence the entire payment can not be disallowed u/s 40(a)(ia). 6.5 Without prejudice disallowance u/s 40(a)(ia) can be made only in respect of amounts outstanding and payable as on 3l march and not the amounts which have been paid during the previous year. Mentyn Shipping and Transports V. ACIT, reported in 16 ITR (Trib) 1 (Vis)(SB). Vector Shipping 85 CCH 201 (Alt. H.C). 7. The Commissioner of Income tax (Appeals), LTU erred in confirming the disallowance of the provision of Rs. 17,00,05,000I- made for Retirement benefits of supervisory and non-supervisory employees as per DPE guidelines as being contingent liability and added to the total income of the appellant. 7.1 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that As per the Department of Public Enterprises....
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....wn case in ITA No. 688/Chny/2013 for AY 2007-08, wherein the issue was remitted to the file of AO for limited purpose of verification of applicability of the second proviso to s. 40(a)(ia) of the Act for the detailed reasons mentioned therein. Hence, this ground of appeal filed by the Assessee is restored to the file of AO for denovo adjudication applicability of second proviso to s. 40(a)(ia) of the Act after due verification. 49.1 In the result, ground of appeal No.4 of assessee is partly allowed for statistical purpose. 50. Ground of appeal No.5 challenges the confirmation of disallowance on account of lease rent paid to CMWSSB. This identical issue was dealt by us in assessee's own case in ITA No. 688/Chny/2013 for AY 2007-08, wherein the issue was remitted back to the file of AO for fresh adjudication for the detailed reasons mentioned therein. Similarly, this issue for the year under consideration also, we remit this issue to the file of AO for fresh adjudication on the similar directions. Hence, this ground of appeal filed by the Assessee is partly allowed for statistical purpose. 50.1 In the result, ground of appeal No.5 of assessee is partly allowed for statistica....
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..../-. 2.1. The Commissioner of Income tax (Appeals) ought to have appreciated that Under explanation to Section 140A(1), it is stipulated where the amount paid by an assessee under selfassessment falls short of the aggregate amount of tax and interest aforesaid, the amount paid shall first be adjusted towards the interest payable and the balance, if any, shall be adjusted towards the tax payable. 2.2 The Commissioner of Income tax (Appeals) ought to have appreciated that on the above principle, when Revenue defaults and makes part payment of the amount refundable, there is no other provision under the Act under which an Assessing Officer/Revenue can be made Liable to pay interest when part payment is made and the entire amount, which is refundable is not paid to the assessee. 2.3 Interest under section 244A is payable on the amount of determined as refundable (inclusive of interest upto that date) for the period for which there was a delay in payment of the amount to be refunded. 2.4 The Commissioner of Income tax (Appeals) ought to have appreciated that otherwise the Assessing Officer/Revenue can refund the principal amount and not pay the interes....