2016 (11) TMI 1594 - AT - Income Tax

Disallowance of interest u/s 14A r.w.r. 8D - Held that - we find that the only disallowance of interest under section 14A read with rule 8D of the IT Rules, the assessee had share of Girdharilal Sugar & Allied Ind Ltd. costing ₹ 88 lacs and as per rule 8D the interest disallowance can be made 050% of average investment which comes to ₹ 44,006/-. Accordingly, we allow the appeals of the assessee for the assessment years 2007-08, 2008-09 and 2009-10 because the same investment of ₹ 88 lacs is coming out from the assessment year 2006-07, 2007-08, 2008-09 and 2009-10 Disallowance u/s 40(a)(ia) - Non deduction of tds on printing and stationary expenses - amount already paid during the year or amount shown payable as on 31st March of every year - Held that - After the amendment in section 40(a)(ia) of the Act with effect from 1.4.2015 it was held that disallowance u/s 40(a)(ia) of the Act should be restricted to 30% of the amount of interest paid - Respectfully following the judgment of this Bench in the case of ACIT, Circle-4, Jaipur vs. Shri Girdhari Lal Bargoti 2015 (11) TMI 746 - ITAT JAIPUR , the disallowance made by the A.O. u/s 40(a)(ia) of the Act as raised in the grounds of appeal is deleted. Thus, the solitary ground of the assessee is allowed. Restrict the disallowance u/s 40(a)(ia) of the Act to 30% which comes to ₹ 11,400/- in the assessment year 2008- 09 and ₹ 12,161/- in the assessment year 2009-10

Summary

Issues:
1. Disallowance of interest under section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules.
2. Disallowance under section 40(a)(ia) of the Income Tax Act for printing and stationary expenses.

Issue 1 - Disallowance of interest under section 14A:
The appeal was filed against the disallowance of interest under section 14A of the Act read with Rule 8D. The assessee had invested in shares for earning dividends, and the interest on the investment was disallowed. The Tribunal found that the disallowance should be 50% of the average investment, amounting to ?44,006. The appeals for the assessment years 2007-08, 2008-09, and 2009-10 were allowed based on this calculation.

Issue 2 - Disallowance under section 40(a)(ia) for printing and stationary expenses:
In the assessment year 2008-09, the Assessing Officer disallowed an amount under section 40(a)(ia) for printing and stationary expenses due to non-deduction of TDS. The disallowance was challenged in appeal, where it was restricted to 30% based on the decision of the ITAT, Jaipur Bench. The disallowance was calculated to be ?11,400 for 2008-09 and ?12,161 for 2009-10. The appeals were partly allowed in this regard.

The Tribunal referred to previous decisions and legal interpretations to make its judgment, ensuring adherence to the provisions of the Income Tax Act. The orders were pronounced on 7th November 2016, with detailed reasoning provided for each issue raised by the parties. The Tribunal considered the facts and circumstances of each case to arrive at a fair and just decision, providing relief to the assessee in both issues based on legal interpretations and calculations presented during the proceedings.