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2014 (7) TMI 996 - AT - Income TaxComputation of disallowance u/s 14A r.w. Rule 8D Tax free income from dividend Held that - Assessee had earned tax free income in the form of dividend - assessee has submitted that the interest free funds available with the Assessee are in excess of investments relying upon CIT vs. Amod Stamping P. Ltd. 2014 (7) TMI 753 - GUJARAT HIGH COURT - when Assessee was having interest free funds far in excess of investment it can be said that the investments are made out of interest free funds - the provisions of Rule 8D are not applicable as per GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER 2010 (8) TMI 77 - BOMBAY HIGH COURT - the Assessee has suo moto disallowed u/s. 14A - no further disallowance over and above then what is made by the Assessee u/s. 14A read with Rule 8D is called for Decided in favour of Assessee. Disallowance u/s 43B Employees contribution to ESIC paid beyond prescribed dates Held that - The amount of employees contribution towards ESIC has been deposited beyond the due dates prescribed under the relevant Act Relying upon COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION 2014 (1) TMI 502 - GUJARAT HIGH COURT - employees share of contribution of ESIC was paid after the prescribed due date, there was no reason to interfere with the order of CIT(A) Decided against Assessee.
Issues:
1. Disallowance under section 14A of the Income Tax Act. 2. Disallowance under section 43B of the Income Tax Act. Issue 1: Disallowance under section 14A of the Income Tax Act: The appeal was filed against the CIT(A)'s order confirming the disallowance made by the Assessing Officer (AO) under section 14A of the Income Tax Act. The AO had disallowed expenses related to exempt income as per Rule 8D, resulting in a disallowance of &8377; 2,72,587. The CIT(A) upheld this disallowance, stating that expenses related to earning exempt income needed to be disallowed. The Assessee argued that Rule 8D was not applicable for the year under consideration and that no disallowance was warranted as they had sufficient interest-free funds. The ITAT, considering the available funds and the non-applicability of Rule 8D for the relevant year, allowed the Assessee's appeal, stating that no further disallowance was necessary beyond what the Assessee had already disallowed. Issue 2: Disallowance under section 43B of the Income Tax Act: The Assessee contested the disallowance of &8377; 47,403 made by the AO under section 43B of the Income Tax Act due to a delay in payment of Employees' share of Contribution to ESIC. The Assessee relied on a decision of the Hon'ble Gujarat High Court, but ultimately, the ITAT dismissed this ground of the Assessee's appeal, citing that the employees' contribution to ESIC was paid after the prescribed due date, which led to the disallowance. The ITAT upheld the CIT(A)'s decision on this issue, resulting in the dismissal of this ground of the Assessee's appeal. In conclusion, the ITAT allowed the Assessee's appeal regarding the disallowance under section 14A of the Income Tax Act but dismissed the appeal concerning the disallowance under section 43B of the Income Tax Act. The judgment provided detailed reasoning for each issue, considering the applicable laws, precedents, and factual circumstances presented during the proceedings.
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