2011 (1) TMI 1526 - AT - Income Tax

Summary

Issues involved:
The judgment involves challenges to various additions made by the revenue in the assessment for the year 2005-06, including cooperative development expenses, payment to an individual attending village groups, cash expenses exceeding the limit, and belated payment of provident fund.

Cooperative Development Expenses:
The revenue challenged the deletion of an addition of Rs. 33,88,893 made on account of cooperative development expenses. The AO disallowed the claim as the assessee could not establish a business connection for the expenses reimbursed to Vasudhara Trust. However, the CIT(A) noted that the expenses were vouched, subject to audit, and beneficial to the assessee's business activities. The Tribunal upheld the CIT(A)'s decision based on previous rulings and collaboration resolutions, dismissing the revenue's appeal.

Payment to Individual for Village Groups:
The revenue challenged the deletion of an addition of Rs. 40,772 under section 37(1) of the IT Act, paid in cash to an individual for attending village groups. The payment was made in court expenses without deducting TDS, supported by challans for each case. The CIT(A) accepted the claim, considering the expenses necessary for the business activities, and the Tribunal upheld this decision, dismissing the revenue's appeal.

Cash Expenses Exceeding Limit:
The revenue challenged the deletion of an addition of Rs. 2,640 disallowed under section 40A(3) of the IT Act. The AO disallowed 20% of cash expenses exceeding Rs. 20,000, but the assessee provided details showing the expenses were within limits for each voucher. The CIT(A) sustained a partial disallowance, and the Tribunal agreed, dismissing the revenue's appeal.

Belated Payment of Provident Fund:
The revenue challenged the deletion of an addition of Rs. 75,938 due to belated payment of provident fund. The AO disallowed the payment made during the grace period, but the CIT(A) noted the payments were within the grace period and deleted the addition. Citing amended provisions of section 43B, the Tribunal upheld the CIT(A)'s decision, supported by relevant case law, and dismissed the revenue's appeal.

Conclusion:
The Tribunal dismissed the departmental appeal, upholding the CIT(A)'s decisions on all challenged additions for the assessment year 2005-06. The judgment was pronounced on 07-01-2011.