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2016 (12) TMI 1787 - AT - Income TaxAdditions in assessments u/s 153A - as alleged absence of incriminating materials found in the course of search relatable to unabated assessments in the facts and circumstances of the case - HELD THAT - We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to those concluded years the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon as finality had already been reached thereon and those proceedings were not pending on the date of search to get themselves abated. As relying on RAHEE TRACK TECHNOLOGIES PVT. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX 2016 (10) TMI 969 - ITAT KOLKATA the additions made in the assessments framed u/s 153A of the Act for the Asst Years 2007-08 and 2008-09 in the absence of incriminating materials found in the course of search relatable to those assessment years deserve to be deleted. Disallowance made u/s 36(1)(va) of the Act in respect of Employees Contribution to Provident Fund - delayed remittances - HELD THAT - The said provident fund dues for July 2008 was remitted by the assessee on 16.8.2008 as against the due date of 15.8.2008 and since 15th August happened to be a bank holiday the same was remitted on the immediately succeeding working day. Hence the same is allowable as deduction. He also argued that since the same was remitted before the end of the previous year the same is allowable as deduction in the light of decision of the Hon ble Jurisdictional High Court in the case of CIT vs Coal India Ltd 2015 (8) TMI 1451 - CALCUTTA HIGH COURT Disallowance u/s 14A read with Rule 8D - HELD THAT - This tribunal had already held in the case of REI Agro Ltd vs DCIT 2013 (9) TMI 156 - ITAT KOLKATA confirmed by HC 2014 (4) TMI 713 - CALCUTTA HIGH COURT wherein it was held that only dividend bearing investments are to be considered for computing disallowance u/s 14A of the Act read with Rule 8D of the Rules. We find that the Circular of CBDT relied upon by the ld DR is binding only on the revenue authorities and not on the courts. We find that the decision relied upon by the ld DR on the special bench of Delhi Tribunal had been reversed by the Hon ble Delhi High Court in the case of Cheminvest Ltd vs CIT 2009 (8) TMI 126 - ITAT DELHI-B . Accordingly we hold that the disallowance should be restricted only to Rs. 1, 235/- and we direct the ld AO accordingly.
Issues Involved:
1. Justification of additions in assessments framed under Section 153A of the Income Tax Act in the absence of incriminating materials. 2. Disallowance of Employees' Contribution to Provident Fund under Section 36(1)(va) of the Act. 3. Disallowance under Section 14A of the Act read with Rule 8D. Detailed Analysis: 1. Justification of Additions in Assessments Framed Under Section 153A: The primary issue is whether the Assessing Officer (AO) is justified in making additions in assessments framed under Section 153A of the Income Tax Act in the absence of incriminating materials found during the search, especially for unabated assessments. - Facts: A search was conducted on 6.10.2010, leading to assessments under Section 153A for AYs 2007-08 to 2009-10. The AO made disallowances despite no incriminating materials being found for the assessment years in question. - Assessee's Argument: The original assessments for AYs 2007-08 and 2008-09 were completed under Section 143(1), and the time limit for issuing notice under Section 143(2) had expired. Therefore, these years should be considered concluded, and no additions should be made without incriminating materials. - Revenue's Argument: The term 'incriminating material' is not found in the Act, and search assessments can be framed irrespective of incriminating materials as per Section 153A. - Tribunal's Decision: The tribunal held that for unabated assessments, the AO cannot disturb the concluded assessments unless incriminating material is found during the search. The tribunal cited the case of Rahee Track Technologies Pvt Ltd vs DCIT and other relevant judgments to support this view. Consequently, the additions made for AYs 2007-08 and 2008-09 were deleted. 2. Disallowance of Employees' Contribution to Provident Fund: The issue concerns the disallowance of Employees' Contribution to Provident Fund under Section 36(1)(va) due to delayed payment. - Facts: The AO disallowed the employees' contribution to the provident fund for July 2008, amounting to Rs. 2,13,129/-, as it was remitted after the due date. - Assessee's Argument: The payment was made on 16.8.2008, the next working day after the due date (15.8.2008), which was a bank holiday. The assessee cited the jurisdictional High Court's decision in CIT vs Coal India Ltd, which allows such deductions if paid before the end of the previous year. - Tribunal's Decision: The tribunal allowed the deduction, following the jurisdictional High Court's decision in CIT vs Coal India Ltd, which permits deductions for contributions paid before the due date of filing the return under Section 139(1). 3. Disallowance Under Section 14A Read with Rule 8D: The issue is whether the disallowance under Section 14A read with Rule 8D was justified, especially when no dividend income was earned during the year. - Facts: The AO made a disallowance of Rs. 3,25,700/- under Section 14A read with Rule 8D, despite the assessee voluntarily disallowing Rs. 16,391/- as dividend income. - Assessee's Argument: Only dividend-bearing investments amounting to Rs. 2,47,000/- should be considered for disallowance, not the entire investment of Rs. 6,72,79,000/-. The assessee cited the jurisdictional High Court's decision in REI Agro Ltd. - Revenue's Argument: The revenue relied on the Special Bench decision in Cheminvest Ltd vs ITO, which considers the entire investment for disallowance under Section 14A. - Tribunal's Decision: The tribunal restricted the disallowance to Rs. 1,235/-, following the jurisdictional High Court's decision in REI Agro Ltd, which only considers dividend-bearing investments for disallowance under Section 14A. Conclusion: - The appeals for AYs 2007-08 and 2008-09 were allowed, deleting the additions made under Section 153A. - The disallowance of Employees' Contribution to Provident Fund for AY 2009-10 was deleted. - The disallowance under Section 14A for AY 2009-10 was restricted to Rs. 1,235/-. The order was pronounced in the open court on 02.12.2016.
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