TaxTMI 
TaxTMI 
2023 (4) TMI 936
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....ssment year and the amount involved and therefore, the submissions made by him while arguing the grounds in one year would be applicable to other years also. He further submitted that in all these appeals assessee is challenging the disallowance made u/s 43B(f) of the Act and the other grounds raised in the appeals under Section 14A of the Act are being not pressed on account of smallness of amount. Learned DR did not controvert the aforesaid submissions made by Learned AR. In view of the aforesaid facts, we proceed to dispose of the appeals for A.Ys. 2014-15, 2015-16 & 2016-17 together but however refers to the facts for A.Y. 2014-15. 3. The relevant facts as culled from the material on records are as under : 4. Assessee is a company stated to be engaged in the business of publishing and trading of books, magazines etc. Assessee electronically filed its original return of income for A.Y. 2014-15 on 30.11.2014 declaring loss of Rs.26,97,44,787/- under normal provision and loss of Rs.21,15,30,908/- u/s 115JB of the Act. The case of the assessee was selected for scrutiny and thereafter the assessment was framed u/s 143(3) r.w.s 144C of the Act vide order dated 30.12.2017 and th....
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....espect to the disallowance made u/s 43B(f) of the Act. 7. During the course of assessment proceedings, assessee was asked to furnish the details of leave encashment payable and paid with regard to disallowance u/s 43B of the Act. On perusing Form 3CD, AO noticed that assessee has shown leave encashment payable of Rs.42,44,760/- but had not disallowed the same in its computation of income. When the assessee was asked to showcause as to why the provision for leave encashment not be disallowed, assessee inter alia relying on the decision of Hon'ble Calcutta High Court in the case of CIT vs. Exide Industries Ltd. 292 ITR 470 submitted that it had claimed leave encashment/compensated absence on accrual basis and therefore since it was out of the purview of provisions of Section 43B, no disallowance was warranted. The submissions made by assessee was not found acceptable to AO. AO noted that s. 43B(f) was inserted by the Finance Act, 2001 w.e.f 01.04.2022 to provide that any sum payable by the assessee as employer in lieu of any leave at the credit of his employee shall be allowed as a deduction only in year of actual payment. AO further noted that though Hon'ble Calcutta High Court i....
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....n made in subsequent years and therefore if the payment is disallowed in the year under consideration, it be allowed as deduction in the year of payment. We find that identical issue arose in the case of group concern of the assessee in the case of TV Today Network Ltd. (supra) for A.Y. 2012-13 before the Co-ordinate Bench of Tribunal. The Co-ordinate Bench of Tribunal by following the order of Co-ordinate Bench in ITA No.7287/Del/2018 decided the issue by observing as under: "19. We have carefully perused the orders of this Tribunal in ITA No. 3356/DEL/2017 for A.Y 2012 -13. The relevant findings of the co-ordinate bench read as under: "7. We have heard both the parties and perused the material available on record. As regards Ground No. 1, 1.1 & 1.2, the same is covered against the assessee, hence, dismissed. As regards Ground No.2, 2.1, 2.2 & 2.3 relating to disallowance towards leave encashment in lieu of provisions of Section 43B (f) of the Income Tax Act, 1961, the Hon'ble Apex Court in case of Exide Industries (Supra) held that the claim with regard to leave encashment has to be allowed on cash basis i.e. actual payment basis and not on accrual basis. It is ....
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....43,615/-. 18. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 27.02.2019 in Appeal No.Del/CIT(A)-5/0022/2015-16 granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now before the Tribunal and has raised the following grounds: 1. That the learned CIT (Appeals) has erred in law and on facts in sustaining a disallowance of a sum of Rs. 55, 87, 882/- under section 14A of the Act, whereas, as per the revised working furnished by the assessee - appellant relying on latest judicial pronouncements of jurisdictional high court, the disallowance should have been Rs.13,03,214/- and thus, the disallowance so sustained is unjustified and untenable in law and thus, should be deleted. as such. 1.1 That in doing so, the learned CIT (Appeals) has failed to appreciate the basic fact that the disallowance so made is without pointing out any deficiency or discrepancy in the explanation/ claim of the assessee - appellant, more over the learned CIT (Appeals) has failed to appreciate the fact that learned AO has failed in recording any objective/ cogent satisfaction while working out the said disallowance ....
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.... that the disallowance be restricted to Rs.55,87,882/-, being the suo moto disallowance made by assessee. Aggrieved by the order of CIT(A), Assessee is now before us. 22. Before us, Learned AR reiterated the submissions made before lower authorities and further submitted that where the assessee has own funds as well as borrowed funds, a presumption can be made that the advances for non-business purposes have been made out of the own funds and that the borrowed funds have not been used for this purpose and accordingly, the disallowance of interest on the borrowed funds under Rule 8D(2)(ii) is not called for. He submitted that in the computation of income filed along with the return of income, assessee had worked out the disallowance at Rs.55,87,882/- u/s 14A of the Act and while calculating the disallowance, assessee had considered the entire investment. After the filing of the return of income, assessee came across various decisions of Hon'ble High Court wherein it was held that only those investments on which exempt income has been received during the year should be considered for the purpose of calculating disallowance under section 14A of the Act. Accordingly the assessee bef....
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....Crores (rounded off). Thus the total investments as on 31st March 2012 is Rs. 104.31 crores as against the aggregate interest free shareholders fund of Rs. 36.20 crores. In such a situation the proposition that the investments are presumed to have been made out of interest free funds and not borrowed funds would not be applicable and therefore we find no reason to interfere with the order of CIT(A) wherein he has upheld the disallowance u/s 14A r.w.r 8D(2)(ii) made by AO. 25. As far as the disallowance u/s 14A r.w.r 8D(2)(iii) of the administrative expenses is concerned, it is the contention of the Ld. AR that for working out the average investments on which the disallowance of 0.5% is made, Assessee had considered the total investments (which included the investments which yielded tax free income and also investments which did not yield tax free income). The aforesaid contention of the Ld. AR has not been controverted by Ld. DR. 26. We find that Hon'ble Delhi High Court in the case of Cargo Motors (P.) Ltd vs. DCIT [2022] 145 taxmann.com 641 (Delhi) has held that for purpose of making disallowance of expenses under section 14A as per Rule 8D, only those investments were to b....