TaxTMI 
TaxTMI 
2026 (9) TMI 110
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....l: 1. The order of the Appellate Commissioner is contrary to law, facts and circumstances of the case. 2. The Appellate Commissioner erred in confirming the disallowances of Rs. 57,11,074/-, being disallowance under section 36(1)(iv) of the Income Tax Act. 3. The Appellate Commissioner erred in confirming the disallowance of Rs. 10,000/- made u/s 14A read with Rule 8D 4. The Appellate Commissioner erred in confirming the disallowance of Rs. 10,43,236/-, disallowed u/s. 37(1) of the Income Tax Act. 5. Any other grounds which the assessee may urge either before OR at the time during the hearing. 3. The brief facts of the case are that the assessee company is engaged in the business of recruitmen....
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.... 5.1 The AO disallowed contribution to Welfare Fund in excess of 27% of the gross salary paid to employees in terms of Section 36(1)(iv) r.w.r.87 of the IT Rules. The Ld. Counsel for the assessee submitted that the assessee has not contributed over and above 27% as per Sec. 36(1)(iv) r.w.r.87 of the IT Rules, however, because of the method of accounting followed by the assessee, the AO computed excess amount by taking into account the salary income debited to P &L a/c and the total amount of contribution to Welfare Fund and debited to P & L a/c. However, the assessee was following a method whereby the net salary payment after all deductions including recovery towards PF & ESI has been debited to salary account and payment to PF & ESI inc....
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....(iv) r.w.r.87 of the IT Rules is correct. However, the arguments of the assessee are that because of its accounting policy for accounting net salary payment to employees under the head "salaries and contribution to Welfare Fund" including employee contribution & employer contribution separately, the total contribution to Welfare Fund when compared to salary works out to more than 27%. However, if you exclude employer contribution which is otherwise not considered u/s. 36(1)(iv) r.w.r.87 of the IT Rules and considered only employee contribution which is less than the statutory limit of 27% prescribed u/s. 36(1)(iv) r.w.r.87 of the IT Rules. The assessee has furnished reconciliation which is available in Page Nos.7 & 8 of the Ld.CIT(A)'s orde....
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....the Ld.CIT(A) submitted that the assessee has failed to file relevant details to prove the earning of exempt income and further Section 14A contemplates disallowance of expenditure relatable to exempt income which is forming part of total income under this Act and therefore, actual earning of exempt income is not necessary for invoking Sec.14A of the Act. Therefore, he submitted that the additions made by the AO should be upheld. 6.2 We have heard both the parties, perused the materials available on record and had gone through orders of the authorities below. There is no dispute with regard to the fact that the assessee has not earned any exempt income for the year under consideration. It is a well settled principle of law by the decisio....
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....vant bills, the AO ought not to have disallowed expenditure u/s. 37(1) of the Act. Therefore, he submitted that the additions made by the AO should be deleted. 7.2 The Ld.Sr.AR for the Revenue, on the other hand, supporting the order of the Ld.CIT(A) submitted that the assessee couldn't file relevant details to substantiate the claim of expenditure debited under the head "deductions" for Rs. 10,43,236/-. In the absence of relevant details, the AO has rightly disallowed the expenditure and therefore, the Ld.CIT(A) has rightly sustained the additions made by the AO and the order of the Ld.CIT(A) should be upheld. 7.3 We have heard both the parties, perused the materials available on record and had gone through orders of the authorities ....