2013 (6) TMI 877 - AT - Income Tax

Summary

Issues Involved: Appeal against order of Commissioner of Income-tax (Appeals)-XXXIII, Kolkata regarding disallowance of expenditure to sub-contractor u/s 40(a)(ia) of the Income-tax Act, 1961 and disallowance of Puja subscription.

Disallowance of Expenditure to Sub-contractor u/s 40(a)(ia): The Revenue appealed against the CIT(A)'s deletion of the disallowance of expenditure to sub-contractor u/s 40(a)(ia) of the Act. The Assessing Officer disallowed the expenditure due to late deposit of Tax Deducted at Source (TDS). The CIT(A) deleted the disallowance based on the decision of the jurisdictional High Court in the case of CIT v. Virgin Creations, holding that the amendment in section 40(a)(ia) has retrospective effect. The CIT(A) found that the TDS was deducted and deposited before the due date of filing the return of income, thus disallowance was not warranted. The ITAT Kolkata upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

Disallowance of Puja Subscription: The Revenue also appealed against the CIT(A)'s decision to delete the disallowance of Puja subscription. The CIT(A) relied on the decision of the jurisdictional High Court in the case of CIT v. Bata India Ltd. and held that the expenses were customary and incurred for business exigency. The ITAT Kolkata found no infirmity in the CIT(A)'s order as it was in line with the decision of the High Court, and thus dismissed the Revenue's appeal.

Separate Judgement: The ITAT Kolkata, comprising Shri N.S. Saini, Accountant Member, and Shri Mahavir Singh, Judicial Member, pronounced the order on 21st June, 2013.