2021 (12) TMI 441

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....peals) has erred in law and on facts in sustaining a disallowance of a sum of Rs. 1, 03, 15, 922/- under section 40(a)(ia) of the Act on account of non deduction of TDS on interest payable to Prasar Bharti. 1.1 That in doing so, the learned Commissioner of Income Tax (Appeals) has overlooked the basic fact that as per the provisions of section 196 of the Act, no tax is required to be deducted on the payments being made to a "Corporation" and M/s Prasar Bharti is a corporation created under a statute enacted by Central Government and as such, the said disallowance so made is wholly unwarranted in law and ought to be deleted. 1.2 That further, the Learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact....

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....cts by only giving relief of a sum of Rs. 9,90,264/- under section 14A read with Rule 8D of the Act, as was the disallowance made by AO over and above the disallowance so made by assessee of a sum of Rs. 29, 04, 491/- in its return of income. The learned CIT (A) ought to have deleted the entire disallowance including the disallowance so made by assessee - appellant suo moto, as the judicial pronouncements of jurisdictional high court which came subsequent to the filing of Return of Income by assessee - appellant have laid down the law that "if no exempt income is earned by assessee, then there is no need to make any disallowance under section 14A of the Act", thus, entire disallowance (even the disallowance made by assessee suo moto) made u....

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.... UOI reported in 292 ITR 470. However, the said judgment has been reversed by Hon'ble Apex Court vide judgment dated 24.04.2020 in the case of UOI vs Exide Industries Ltd. 116 taxmann.com 378, wherein, it has been held that the claim with regards to "leave encashment" has to be allowed on cash basis i.e. actual payment basis and not on accrual basis. Thus, in principal, the issue at hand has been decided against the assessee by Hon'ble Apex Court, however, at this juncture, the assessee seeks to place reliance on the interim order so passed by Hon'ble Apex Court, wherein, it has been held as follows: "We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay tax if section 43B(f) is on the stat....

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.... income. In such a scenario and in view of the subsequent judgments of Hon'ble jurisdictional High Court, the Ld. AR prayed that disallowance under Section 14A cannot exceed the exempt income and as such, disallowance so made by assessee and also sustained by the CIT (A) cannot exceed the exempt income. Without prejudice to the above, the Ld. AR further submitted that, there was no need to make any disallowance under Section 14A read with Rule 8D(2)(ii), as the assessee had sufficient surplus funds for making investments in the preceding assessment years, since no investment was made in the impugned assessment year, rather the investments with regards to mutual funds were liquidated during the impugned assessment year. The Ld. AR further re....