TaxTMI 
TaxTMI 
2026 (2) TMI 628
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....d advisory services. For the assessment years under consideration, namely A.Ys. 2017-18, 2018-19, 2022-23 and 2023-24, the assessee filed its returns of income electronically declaring income under the normal provisions of the Act. The returns were initially processed under section 143(1) of the Act. Subsequently, the cases of the assessee were selected for scrutiny through Computer Aided Scrutiny Selection (CASS).Statutory notices under section 143(2) were issued and served upon the assessee. Thereafter, notices under section 142(1) along with questionnaires were issued calling for details and explanations in respect of the issues selected for scrutiny. The assessee furnished replies, explanations and supporting documents through the ITBA/e-filing portal. 3. After examining the material placed on record, the Assessing Officer completed the assessments under section 143(3) of the Act for A.Y. 2017-18 and under section 143(3) read with section 144B of the Act for A.Ys. 2018-19, 2022-23 and 2023-24. In the course of assessment proceedings, the Assessing Officer examined the allowability of deduction claimed under section 80G in respect of CSR related payments, employees' contribut....
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....mited relief only in respect of short grant of TDS credit by directing verification. Interest under sections 234B and 234C was treated as consequential. 7. In A.Y. 2018-19, the Assessing Officer disallowed deduction claimed under section 80G in respect of CSR expenditure amounting to Rs. 2,53,96,666/-, disallowed employees' contribution to provident fund amounting to Rs. 41,05,801/-, and made disallowance under section 40(a)(ia) amounting to Rs. 50,49,586/-. The CIT(A) confirmed all the above disallowances following the appellate order for the preceding year and granted limited relief in respect of TDS credit, while treating interest grounds as consequential. 8. In A.Y. 2022-23, no independent addition or disallowance was made in the regular assessment order passed under section 143(3) read with section 144B of the Act. The CIT(A) recorded that only the income as processed under section 143(1) had been adopted in the assessment order and, accordingly, dismissed the appeal. 9. In A.Y. 2023-24, the Assessing Officer made an addition of Rs. 13,46,813/- on account of short-term capital gains on equity shares. The CIT(A) upheld the said addition and rejected the contention that....
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....es of case and in law, CIT(A) erred in upholding the action of the AO in not granting the Dividend distribution tax paid by the Appellant amounting to Rs. 10,17,96,378/- in the computation sheet and in not granting refund of excess DDT paid amounting to Rs. 81,10,486/-. 2. The Appellant prays that the AO be directed to grant the full credit of DDT amounting to Rs. 10,17,96,378/- and to allow refund of excess DDT paid of Rs. 81,10,486/-. GROUND NO. VI: LEVY OF INTEREST U/S 115P OF THE ACT AMOUNTING TO Rs. 2,99,79,485/- 1. On the facts and circumstances of the case and in law, CIT(A) erred in upholding the action of the AO in levying interest u/s 115P of the Act amounting to Rs. 2,99,79,485/-. 2. The Appellant prays that the AO be directed to delete the interest levied u/s 115P of the Act amounting to Rs. 2,99,79,485/-. GENERAL The Appellant craves leave to add, amend, modify, rescind, supplement or alter any of the Grounds stated hereinabove, either before or at the time of hearing of this appeal. For the Assessment year 2017-18, the assessee has raised following additional grounds of appeal: 1. ADDITIONAL GROUN....
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....unting to Rs. 50,49,586/- u/s 40(a) of the Act. GROUND NO. IV: DISALLOWANCE U/S 43B OF THE ACT AMOUNTING TO Rs. 9,076/- 1. On the facts and in the circumstances of the case and in law, CIT(A) has erred in confirming the action of the AO in disallowing a sum of Rs. 9,076/- u/s 43B of the Act on account of unpaid liability of professional tax incurred in the captioned previous year. 2. The Appellant prays that the AO be directed to allow the claim u/s 43B of the Act amounting to Rs. 9,076/- while computing the total income of the Appellant. GROUND NO. V: INCORRECT COMPUTATION OF GROSS TOTAL INCOME CHARGEABLE TO TAX 1. On the facts and circumstances of case and in law, the AO erred in computing incorrect amount of gross total income chargeable to tax amounting to Rs. 4,20,47,45,483/- instead of Rs. 4,20,47,33,978/-. 2. The Appellant prays that the AO be directed to correctly compute the gross total income chargeable to tax at Rs. 4,20,47,33,978/-. GROUND NO. VI: SHORT GRANT OF TAX DEDUCTED AT SOURCE ("TDS") CREDIT AMOUNTING TO Rs. 3,09,621/- 1. On the facts and circumstances of case and in law, CIT(A) erred in con....
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.... On the facts and in the circumstances of the case and in law, CIT(A) erred in confirming the action of the AO in making addition of short-term capital gains u/s 111A of the Act amounting to Rs. 13,46,813/-. 2. The Appellant prays that the AO be directed to delete the addition of short-term capital gains amounting to Rs. 13,46,813/-. GROUND NO. II: SHORT GRANT OF CREDIT OF TAX DEDUCTED AT SOURCE ("TDS") AMOUNTING TO Rs. 15,76,346/- 1. On the facts and in the circumstances of the case and in law, CIT(A) erred in upholding the action of the AO in granting total credit of TDS of Rs. 1,16,95,21,997/- instead of total credit of TDS of Rs. 1,17,10,98,343/- as claimed by the Appellant in the ROI filed for the captioned assessment year. 2. The Appellant prays that the AO be directed to grant the balance TDS credit of Rs. 15,76,346/-. GROUND NO. III: EXCESS LEVY OF INTEREST U/S 234B OF THE ACT AMOUNTING TO Rs. 3,31,027/- 1. On the facts and circumstances of the case and in law, CIT(A) erred in confirming the action of the AO in levying excess interest u/s 234B of the Act amounting to Rs. 3,31,027/-. 2. The Appellant prays that t....
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....er, in view of the smallness of the amount involved, the learned AR submitted that this ground is not pressed. 16. In view of the above submission, this ground is dismissed as not pressed. Ground No. III: Disallowance of provision for leave encashment amounting to Rs. 57,63,634/- 17. During the assessment proceedings, the Assessing Officer noticed that the assessee had made a provision for leave encashment amounting to Rs. 57,63,634/-. Though the assessee explained that the provision was made on actuarial valuation in accordance with AS-15 and under the mercantile system of accounting, the Assessing Officer held that the liability had not crystallised during the year. He treated the provision as an unascertained liability, further observing that the provision was reversed in the subsequent year. Holding that mere provision in the books is not allowable under the Act, the Assessing Officer disallowed the said amount and added it to the total income of the assessee. 18. The ld. CIT(A) upheld the disallowance. He held that, notwithstanding the actuarial basis of the provision, deduction for leave encashment is governed by section 43B(f) of the Act and is allowable only on ....
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....t a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 23. The aforesaid principle has been consistently followed by the co-ordinate Benches in the assessee's group cases, as listed above, wherein it has been uniformly held that provision for leave encashment computed on actuarial valuation represents an ascertained liability and is allowable as deduction, and that the bar under section 43B(f) is not attracted to deny such claim where the liability is accrued and quantified on scientific basis. 24. In the present case, it is an admitted position that the assessee has created provision for leave encashment on the basis of actuarial valuation. The Assessing Officer disallowed the same by treating it as unascertained liability, and the Ld. CIT(A) sustained the disallowance by invoking section 43B(f). In view of the binding ratio of the Hon'ble Supreme Court in Bharat Earth Movers (supra) and the consistent view taken by the co-ordinate Benches in the assessee's group cases on identical facts, we hold that the provision fo....
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.... to eligible donations was not accepted. Relying on Explanation 2 to section 37(1), the Assessing Officer withdrew the deduction claimed under section 80G. 28. Before the ld. CIT(A), the assessee reiterated that there was no double deduction, as the CSR expenditure was not claimed under section 37(1) and the claim under section 80G was confined to donations made to institutions approved under section 80G. The ld. CIT(A), however, upheld the action of the Assessing Officer by holding that, in view of the amendment to section 37(1) by the Finance Act, 2014, CSR or donation expenditure is not allowable and, consequently, deduction under section 80G in respect of such payments was not in accordance with the provisions of the Act. The ld. CIT(A) thus confirmed the withdrawal of deduction of Rs. 92,31,072/- claimed under section 80G. 29. The learned AR submitted that the issue raised in this ground is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench in the assessee's own case in Aditya Birla Sun Life AMC Private Limited v. ACIT (ITA Nos. 494 & 792/Mum/2025) for A.Y. 2020-21 on identical facts and circumstances. 30. It was submitted that the ass....
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....evenue has not alleged that the assessee made the donations with an intention to obtain any tangible benefit in return. The genuineness of the donations, the identity of the donees and the fact that the payments were made through banking channels are also not in dispute. 34. Respectfully following the ratio laid down by the co-ordinate Bench in Aditya Birla Sun Life AMC Private Limited v. ACIT (supra), and applying the principles enunciated in paras 18 to 25 thereof to the facts of the present case, we hold that the assessee is entitled to deduction under section 80G of the Act in respect of the impugned amount of Rs. 92,31,072/-. 35. Accordingly, we set aside the order of the Ld. CIT(A) on this issue and direct the Assessing Officer to allow the deduction claimed under section 80G amounting to Rs. 92,31,072/-. This ground of appeal is allowed. Additional Grounds 36. Now we deal with additional grounds of appeal raised by the assessee before us. The assessee has raised additional grounds before the Tribunal relating to (i) non-granting of credit or refund of Dividend Distribution Tax (DDT) amounting to Rs. 10,17,96,378/-, and (ii) levy of interest under section 115P of ....
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....2,99,79,485/- 42. The learned AR submitted that these grounds were raised by way of additional grounds. It was submitted that the issue is purely factual in nature inasmuch as the computation sheet pursuant to the order passed under section 143(3) did not grant credit of Dividend Distribution Tax paid and also did not grant refund of excess DDT. 43. Reference was made to the Tax Audit Report placed at page 12 of the factual paper book and to Form 26AS, wherein such DDT was reflected. It was submitted that relevant supporting documents were enclosed as Annexure 2. 44. The learned AR, therefore, prayed that appropriate directions be issued to the Assessing Officer to verify the said documents and to grant credit of DDT, refund of excess DDT and to delete the consequential demand of interest under section 115P, in accordance with law. 45. The grievance of the assessee is that while giving effect to the assessment order, the Assessing Officer did not grant credit of Dividend Distribution Tax paid by the assessee and did not grant refund of excess DDT, and consequently levied interest under section 115P of the Act. 46. The learned AR submitted that the issue is purely fac....
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....fficer noticed that the assessee had created a year-end provision on ad hoc basis in respect of certain expenses and had claimed deduction thereof. Since tax was not deducted at source on the said provision, the Assessing Officer invoked the provisions of section 40(a) of the Act and disallowed 30 per cent of the provisioned amount, resulting in a disallowance of Rs. 50,49,586/-. The Assessing Officer treated the said amount as not allowable in view of the alleged non-compliance with the tax deduction at source provisions. 52. In appeal, the assessee contended that the provision in respect of which the disallowance was made was only a year-end provision and that the entire provision had been reversed in the subsequent year when no invoices were received. It was submitted that the corresponding amount had already been offered to tax by way of reduction in the computation of income and, therefore, no further disallowance was warranted. 53. The Ld. CIT(A), however, did not accept the explanation of the assessee and upheld the action of the Assessing Officer. The CIT(A) held that since tax had not been deducted at source on the provisioned amount, the provisions of section 40(a) ....
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....ssessing Officer was justified in making the disallowance. 58. The learned AR submitted that this ground is not pressed. In view of the above submission, this ground is dismissed as not pressed. OTHER GROUNDS Ground No. V - Incorrect computation of Gross Total Income 59. The Assessing Officer, while passing the assessment order, computed the gross total income at Rs. 4,20,47,45,483/- instead of Rs. 4,20,47,33,978/- as claimed by the assessee, resulting in an arithmetical difference in the computation of income. The CIT(A) did not grant any relief on this issue and upheld the computation made by the Assessing Officer, without accepting the assessee's contention that there was an error in computation of the gross total income. Ground No. VI - Short grant of TDS credit - Rs. 3,09,621/- 60. The Assessing Officer allowed TDS credit of Rs. 1,11,26,00,781/- as against the TDS of Rs. 1,11,29,10,402/- claimed by the assessee in the return of income, thereby granting short credit of Rs. 3,09,621/-.The CIT(A) confirmed the action of the Assessing Officer. He held that the TDS credit was allowed on the basis of Form 26AS and, in absence of reconciliation to his satisfaction, ....
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....adjustment under section 143(1) was carried out. The reply of the assessee was noted, but it was stated that the issue was left to the jurisdictional Assessing Officer and subject to physical verification. Subsequently, the assessment was completed under section 143(3) read with section 144B of the Act. In the assessment order, no independent addition was made on this issue; instead, the income as determined under section 143(1) was adopted, and the adjustment relating to employees' contribution to Provident Fund as made in the intimation under section 143(1) continued to form part of the assessed income. 65. Before the ld. CIT(A), the assessee challenged the sustained disallowance of Rs. 54,93,734/- and submitted that: * The employees' contribution to Provident Fund for the month of June 2021 was deposited on July 04, 2021, i.e., before the due date of July 15, 2021 prescribed under the relevant Provident Fund Act. * In clause 20(b) of Form 3CD, the date of payment was inadvertently mentioned as July 04, 2020 instead of July 04, 2021, which resulted in the erroneous adjustment under section 143(1). * Documentary evidence in the form of payment challan....
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....s no infirmity in the approach of the Assessing Officer in adopting the income as per the intimation under section 143(1), declined to adjudicate the issue on merits, and dismissed the grounds raised by the assessee. Consequently, the appeal was dismissed. 68. The learned AR reiterated the facts and submitted that the issue is purely factual in nature, supported by documentary evidence on record, and the lower authorities failed to appreciate the correct factual position. The ld. AR, therefore, prayed that the disallowance be deleted. 69. We have carefully considered the rival submissions, perused the material available on record, and examined the reasoning adopted by the lower authorities. 70. At the outset, it is an undisputed fact that the impugned disallowance of Rs. 54,93,734/- on account of employees' contribution to Provident Fund was made at the stage of processing of return under section 143(1) of the Act, based on the date of payment as reflected in clause 20(b) of Form 3CD. It is also not in dispute that during the course of processing under section 143(1), the assessee had furnished a detailed reply dated 30.01.2024 along with documentary evidence in the form o....
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....g that the employees' contribution to Provident Fund had been deposited within the due date prescribed under the relevant Act. The adjustment under section 143(1) itself was based on an apparent factual error in the tax audit report, which was specifically brought to the notice of the Assessing Officer. Despite this, the Assessing Officer chose not to examine the issue on merits during the scrutiny assessment and mechanically carried forward the adjustment made under section 143(1). 75. In our considered view, the reliance placed by the ld. CIT(A) on the decision in M/s Areca Trust (supra) is misplaced in the facts of the present case. The said decision deals with the doctrine of merger and the maintainability of an appeal against an assessment order under section 143(3) in respect of an adjustment made under section 143(1), without the issue having been examined in scrutiny proceedings. However, it does not lay down that the Assessing Officer, while completing an assessment under section 143(3), is absolved of the responsibility to adjudicate an issue on merits when the same is brought to his notice along with supporting evidence. 76. The scope of section 143(3) is materiall....
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....terest under section 244A of the Act 81. This ground relates to the grievance of the assessee that the Assessing Officer has granted short interest under section 244A of the Act, and the assessee has prayed for a direction to compute and grant correct consequential interest in accordance with law. 82. At the outset, it is observed that interest under section 244A of the Act is statutory in nature and arises automatically when any refund becomes due to the assessee under the provisions of the Act. The quantum of interest under section 244A is not an independent or standalone issue, but is purely consequential to the determination of the correct amount of tax, refund, or reduction of tax liability arising from the assessment or appellate proceedings. 83. Since in the present appeal we have granted relief to the assessee on the substantive grounds, the computation of refund and the interest payable thereon under section 244A would necessarily undergo a change. Accordingly, this ground is allowed for statistical purposes, with a direction to the Assessing Officer to recompute and grant the correct consequential interest under section 244A of the Act, as may be due to the asses....
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.... no penalty proceedings be initiated. 89. The Assessing Officer did not accept the explanation. He recorded that unless the error had been identified by the computerized system, it would have gone unchecked. He treated the case as one of under-reporting of income. Accordingly, the Assessing Officer made an addition of Rs. 13,46,813/- as short-term capital gains taxable under section 111A of the Act and initiated penalty proceedings for under-reporting of income under section 270A of the Act. 90. Before the ld. CIT(A), the assessee assailed the impugned addition by filing detailed written submissions. It was contended that during the relevant previous year, the assessee had sold a total of 35,00,000 units of Aditya Birla Sun Life Nifty 50 ETF. Out of the said units, the gains arising from 30,00,000 units were duly offered to tax as short-term capital gains taxable under section 111A of the Act, while the gains arising from the balance 5,00,000 units were already offered to tax as long-term capital gains under section 112A of the Act at the time of filing the return of income. It was thus submitted that the gains arising from the entire 35,00,000 units had already been subjecte....
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....sion, the Assessing Officer treated the amount as short-term capital gains under section 111A. 95. The learned AR submitted that the admission was factually incorrect and that, on proper verification of the return of income and computation thereof, it would be evident that the gains had already been subjected to tax. It was contended that the impugned addition has resulted in double taxation of the same income. An explanatory note on capital gains, setting out the factual details and manner of computation, was stated to have been filed before the appellate authority. The learned AR, therefore, prayed that the Assessing Officer be directed to re-verify the facts on record and delete the impugned addition. 96. We have carefully considered the facts on record, the assessment order, the impugned order of the ld. CIT(A), and the submissions of the learned AR. 97. The addition of Rs. 13,46,813/- has been made by the Assessing Officer solely on the basis of an inadvertent admission made by the assessee during the course of assessment proceedings, without undertaking a holistic verification of the return of income, computation of capital gains, and the supporting records already a....