2013 (12) TMI 525 - AT - Income Tax

Disallowance u/s 14A Held that - Following Godrej Boyce Mfg Co 2010 (8) TMI 77 - BOMBAY HIGH COURT - The provisions of Rule 8D are not applicable to facts of the present case - The Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record The issue was restored for fresh decision. Disallowance u/s 36(1)(va) - Employee s contribution towards PF and ESI Held that - Following assessee s own case for A.Y. 2005-06 - Payment held within grace period are allowable under section 43B Decided in favour of assessee.

Summary

Issues: Appeal against the order of Ld. CIT(A)-13, Mumbai for assessment year 2006-07 regarding disallowance under section 14A of the Income Tax Act, disallowance of belated payments made within grace period for PF and ESIC, and interest charged under sections 234C and 220(2) of the Income Tax Act, 1961.

Analysis:

1. Disallowance under Section 14A of the Income Tax Act:
The appellant contested the disallowance directed by the Ld. CIT(A) under section 14A. The Tribunal referred to a previous decision related to assessment year 2005-06 where it was decided to restore the issue to the Assessing Officer for fresh examination. The Tribunal directed the Assessing Officer to determine if there was any exempt income and calculate a reasonable amount for disallowance under section 14A. The Tribunal allowed this ground in favor of the appellant, following the facts and law. The issue was considered as allowed, and the appeal was partly allowed for statistical purposes.

2. Disallowance of Belated Payments within Grace Period for PF and ESIC:
The issue of disallowance of employees' contributions towards Provident Fund and ESIC paid within the grace period was raised. The Tribunal noted that the Ld. CIT(A) confirmed the disallowance but did not allow the amount paid within the grace period. Citing a judgment by the Jurisdictional High Court, the Tribunal directed the Assessing Officer to permit the amount paid within the grace period. Consequently, the ground was considered as allowed, and the appeal was partly allowed for statistical purposes.

3. Interest Charged under Sections 234C and 220(2) of the Income Tax Act, 1961:
The appellant contested the interest charged under sections 234C and 220(2) of the Income Tax Act, claiming it was a liability denied by them. However, the Tribunal noted that Ground No.6 was not pressed by the appellant, and hence, it was dismissed. The appeal was considered to be partly allowed for statistical purposes.

In conclusion, the Tribunal allowed the appeal partly for statistical purposes, directing the Assessing Officer to re-examine the disallowances under section 14A and to permit the belated payments made within the grace period for PF and ESIC. The interest charged issue was dismissed as it was not pressed by the appellant.