2010 (11) TMI 1085 - AT - Income Tax

Summary

Issues Involved:
1. Allowability of gratuity premium provisions payment u/s 43B vs. 40A(7)(b)
2. Treatment of loss generated out of joint venture in Qatar
3. Taxability of interest receivable from UPSEB
4. Claim of prior period expenses
5. Allowability of interest on term loan - Applicability of provisions of sec. 43B(e)
6. Claims of Provident Fund
7. Payments of Sub-contractors - Applicability of provisions of sec. 40(a)(ia)
8. Interest u/s 234B & 234D

Summary:

1. Allowability of gratuity premium - provision for payment u/s 43B vs. 40A(7)(b) of the Act:
The Tribunal found that the provisions of sec. 40A(7)(b) are applicable to the assessee's claim as the fund in question is an approved one. The issue was covered by the Tribunal's findings for A.Y 2003-04, and the claim was allowed in favor of the assessee.

2. Treatment of loss generated out of joint venture in Qatar:
The Tribunal noted the lack of detailed examination by the Revenue regarding the bonafides, nature, and quantum of the expenditure and receipts. The issue was remanded back to the A.O for a de novo assessment after granting reasonable opportunity of being heard.

3. Taxability of interest receivable from UPSEB:
The Tribunal referred to its previous decision for A.Y 2003-04, where it was held that the interest income did not accrue due to the ongoing legal dispute. The decision was in favor of the assessee, and the relevant grounds of the appeals were allowed.

4. Claim of prior period expenses:
The Tribunal found insufficient information regarding the nature and timing of the expenses. The issue was remanded back to the A.O for a fresh decision after giving the assessee a reasonable opportunity to present the necessary evidence.

5. Allowability of interest on term loan - Applicability of provisions of sec. 43B(e):
The Tribunal noted the need to examine the applicability of the amended provisions of sec. 43B(e) regarding term loans. The issue was remanded back to the A.O for a fresh decision in light of the relevant facts and law.

6. Claims of Provident Fund:
The Tribunal allowed the claim based on the Supreme Court decision in Alom Extrusions Ltd., which held that P.F contributions paid before the due date for filing the return of income should be allowed.

7. Payments of Sub-contractors - Applicability of provisions of sec. 40(a)(ia):
The Tribunal agreed with the DR's argument that the issue should be examined in light of the Jaipur Bench decision, which held that only amounts "payable" are covered by sec. 40(a)(ia). The issue was remanded back to the A.O for a fresh decision.

8. Interest u/s 234B & 234D:
The Tribunal upheld the CIT(A)'s decision that the charging of interest is consequential. The A.O was directed to give effect to the charging of interest as per the changes in figures and existing law.

Conclusion:
All four appeals of the assessee were partly allowed, with several issues remanded back to the A.O for fresh consideration. The order was pronounced on 30th November, 2010.