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2021 (3) TMI 1298 - AT - Income TaxAddition u/s. 40A(2)(b) - disallowance on accrued interest on NPA, contingent provision for standard assets and disallowance @ 50% on payment to Cosmos Foundation - HELD THAT - There was no contrary order as on today against the order of this Tribunal in assessee s own case. We note that as rightly pointed out by the ld. AR that there is no order placed on record to show that the order of this Tribunal in assessee s own case involving the issue on hand is reversed or modified by the Hon ble High Court of Bombay and the AO made 50% disallowance on payment made to Cosmos Foundation only on the ground that the appeal is pending for admission before the Hon ble High Court of Bombay. CIT(A) clearly held since there was no order from the Hon ble High Court, the order of this Tribunal is binding on the Revenue authorities involving the same issue. Therefore, we do not find any infirmity in the order of CIT(A) and it is justified. Accordingly, the ground raised by the Revenue is dismissed.
Issues:
Whether the CIT(A) was justified in deleting the addition made u/s. 40A(2)(b) of the Act in the facts and circumstances of the case. Analysis: 1. Background and Facts: - The appeal by the Revenue was against the order passed by the CIT(A) for the assessment year 2014-15. - The AO determined the total income of the assessee at a higher amount, making certain disallowances. - One of the disallowances was related to a payment of &8377; 9,77,72,665/- made by the assessee to Cosmos Foundation, a charitable trust. 2. Legal Issue: - The main issue was whether the CIT(A) was justified in deleting the addition made u/s. 40A(2)(b) of the Act concerning the payment to Cosmos Foundation. 3. AO's Position: - The AO considered the payment to Cosmos Foundation as a colorable device to divert taxable income. - The AO believed that the assessee was benefiting under section 37 of the Act by claiming the payment as a business expense, while the recipient trust was benefiting from exempt income. 4. Assessee's Argument: - The assessee argued that a similar disallowance made in earlier years was deleted by the ITAT, Pune Bench. - The CIT(A) deleted the disallowance based on the Tribunal's decision in the assessee's own case. 5. Arguments Before ITAT: - The Revenue heavily relied on the AO's order, supporting the reasons for disallowance. - The assessee's representative supported the CIT(A)'s order, highlighting that there was no contrary order against the Tribunal's decision in the assessee's case. 6. ITAT Decision: - The ITAT noted that there was no order reversing or modifying the Tribunal's decision in the assessee's case. - Since the appeal was pending before the High Court, the CIT(A) held that the Tribunal's order was binding on the Revenue authorities. - Consequently, the ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the disallowance. 7. Conclusion: - The ITAT pronounced the order on 18th March 2021, dismissing the Revenue's appeal. - The decision highlighted the importance of the Tribunal's ruling in the absence of any contrary order from the High Court, affirming the deletion of the disallowance related to the payment to Cosmos Foundation. This detailed analysis encapsulates the legal nuances and arguments presented in the judgment, emphasizing the rationale behind the decision to delete the addition made under section 40A(2)(b) of the Income Tax Act.
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