2021 (9) TMI 1496 - HC - Income Tax

Disallowance u/s 40 a i - Tribunal directing to exclude those amounts which were actually paid and did not remain payable as on the last day of the previous year while making disallowance - HELD THAT - Substantial question of law no.1 is covered by the decision of the Hon ble Apex Court in the case of Palam Gas Service 2017 (5) TMI 242 - SUPREME COURT wherein the said question of law has been answered by the Hon ble Apex Court in favour of the revenue and against the assessee. Deduction u/s 10A - disallowance on account of non deduction of tax under Section 195 in violation of a specific provisions of the Act - HELD THAT - Question of law has been answered in the case M/S. GEM PLUS JEWELLERY INDIA LTD. 2010 (6) TMI 65 - BOMBAY HIGH COURT in favour of the assessee and the same has been accepted by the Board in circular No.36/2017 dated 02.11.2016. Computation under Section 10A - Exclude the leased line expenses both from the export turnover as well as the total turnover in computing deduction u/s 10A - HELD THAT - These questions are answered in favour of the assessee by case of Commissioner of Income - tax Central-III Vs. HCL Technologies Ltd. 2018 (5) TMI 357 - SUPREME COURT Delayed employees contribution to PF/ESI - whether provisions of Section 43B are not relevant to the issue and not applicable to the facts of the case? - HELD THAT - These questions are answered in favour of the assessee by the Hon ble High Court of Karnataka in the case of Essae Teraoka (P.) Ltd. 2014 (3) TMI 386 - KARNATAKA HIGH COURT

Summary

Issues:
1. Disallowance under section 40[a][i] for amounts actually paid but not remaining payable.
2. Deduction under Section 10A on income increased by disallowance under section 40[a][i].
3. Exclusion of leased line expenses from export turnover under section 10A.
4. Relief in computation under Section 10A following a specific court decision.
5. Treatment of certain amounts as income under Section 2[24][x] and section 36[1][va].
6. Relief to assessee for belated payments of employees' PF contributions.
7. Applicability of Section 43B to employees' PF contributions.

1. Disallowance under section 40[a][i]: The Tribunal directed to exclude amounts actually paid but not remaining payable, relying on a specific decision. The question raised was whether this direction was justified considering conflicting decisions from different High Courts. The High Court referred to relevant judgments, including one from the Apex Court, and ruled in favor of the assessee, following the Apex Court's decision.

2. Deduction under Section 10A: The Tribunal allowed deduction under Section 10A on income increased by disallowance under section 40[a][i]. The issue was whether this deduction should be granted when the disallowance was due to non-deduction of tax under Section 195. The High Court ruled in favor of the assessee, considering the specific provisions of the Act.

3. Exclusion of leased line expenses: The Tribunal directed to exclude leased line expenses from both export turnover and total turnover under section 10A. The question was whether this exclusion should be limited only to export turnover. The High Court found no provision in section 10A restricting the exclusion and ruled in favor of the assessee.

4. Relief in computation under Section 10A: The Tribunal provided relief in computation under Section 10A based on a specific court decision, despite it being challenged before the Apex Court. The High Court upheld the relief, following the previous court decision.

5. Treatment of certain amounts as income: The Tribunal granted relief to the assessee, considering certain amounts as income under Section 2[24][x] and section 36[1][va]. The High Court ruled in favor of the assessee, stating that the provisions of Section 43B were not relevant to the issue.

6. Relief for belated payments of employees' PF contributions: The Tribunal provided relief to the assessee for belated payments of employees' PF contributions, arguing that Section 43B was not applicable. The High Court upheld this relief, considering relevant court decisions.

7. Applicability of Section 43B to employees' PF contributions: The Tribunal's decision not to apply Section 43B to employees' PF contributions was challenged. The High Court supported the Tribunal's decision, citing specific court judgments and clarifications, ultimately ruling in favor of the assessee.

In conclusion, the High Court addressed various issues related to income tax assessments, disallowances, deductions under Section 10A, treatment of specific amounts as income, and the applicability of Section 43B. The judgments were based on interpretations of relevant legal provisions, court decisions, and specific circumstances of the case, ultimately providing relief to the assessee in most instances.