2023 (1) TMI 1270 - AT - Income Tax

Disallowance being payment towards administrative expenses - HELD THAT - From the debit notes placed in the paper-book, it is observed, the cost incurred by M/s. Ballarpur Industries Ltd. for other companies, including assessee includes, car lease rent, traveling expenses, printing and stationary, professional expenses, office maintenance expenses, electricity and water expenses, corporate expenses like salary etc., computer maintenance expenses, telephone expenses etc. Thus, from the materials available on record it is noticeable that the assessee, in fact, has availed certain facilities and service for which, payments have been made. From the history of such payments made, it is further evident that beginning from 2007-08, the expenditure claimed has been allowed in all assessment years, past and future, except, the impugned assessment year. It is relevant to observe, in assessment years 2007-08 and 2010-11, Commissioner (Appeals) has allowed such expenses. Thus, we are of the view that the assessee having incurred the expenses for its business, is entitled to claim deduction. Accordingly, we delete the disallowance. Disallowance of miscellaneous expenses - no supporting evidence for incurring of the expenditure was furnished - HELD THAT - Expenses are incurred under various heads, such as, market development expenditure, professional fee, gardening and housekeeping charges, head office reimbursement, reimbursement of top managements, directors expenses, office maintenance, factory maintenance, security charges, wastages and disposals, computer maintenance, printing and stationary etc. However, no supporting evidence, even sample copies of vouchers and bills have been submitted by the assessee, at any stage. It is also relevant to observe, on perusal of agreement with M/s. Ballarpur Industries Ltd. for availing certain services and facilities, it is observed that some of the expenditure claimed as miscellaneous expenses are common to the expenses/payments made for availing certain facilities and services. Therefore, the burden is on the assessee to establish the claim through authentic evidence. No material has been placed on record by the assessee to establish such claim. - Decided against assessee. Disallowance representing employees contribution to Provident Fund (PF) - case of the assessee that the payment having been made within the due date of filing of return of income, it has to be allowed - HELD THAT - As in a recent decision in case of Checkmate Services Pvt ltd 2022 (10) TMI 617 - SUPREME COURT has laid down the ratio that unless employee s contribution to PF is remitted within the due date prescribed under section 36(1)(va) of the Act, no deduction can be allowed - we remit the issue to the AO to factually verify the actual date of payment by the assessee and thereafter decide the issue in the light of the ratio laid down in case of Checkmate Services Pvt. ltd. (supra). Ground is allowed for statistical purposes.

Summary

Issues:
1. Disallowance of payment made towards administrative expenses.
2. Disallowance of miscellaneous expenses.
3. Disallowance of employees' contribution to Provident Fund.

Issue 1: Disallowance of Payment Made Towards Administrative Expenses
The appeal challenged the disallowance of Rs. 75,37,408/- paid to M/s. Ballarpur Industries Ltd. for administrative expenses. The Assessing Officer rejected the claim as no evidence was provided of services rendered. However, the appellant argued that details were furnished during assessment proceedings and presented an agreement showing services received. The Tribunal noted that M/s. Ballarpur Industries Ltd. provided various services and facilities to the appellant, as evidenced by agreements and debit notes. The Tribunal allowed the deduction, considering the nature of services provided and past allowance of similar expenses in other assessment years.

Issue 2: Disallowance of Miscellaneous Expenses
The Assessing Officer disallowed Rs. 56,31,745/- claimed as miscellaneous expenses due to lack of supporting evidence. The appellant failed to provide bills or vouchers to substantiate the expenses. The Tribunal observed that the burden was on the appellant to establish the claim with authentic evidence. As no supporting material was submitted, the Tribunal upheld the disallowance, noting that some claimed expenses overlapped with payments made for services from M/s. Ballarpur Industries Ltd.

Issue 3: Disallowance of Employees' Contribution to Provident Fund
The appellant challenged the disallowance of Rs. 19,44,344/- representing employees' contribution to Provident Fund, arguing that the payment was made within the due date. However, citing a recent Supreme Court decision, the Tribunal remitted the issue to the Assessing Officer to verify the payment date and apply the ruling. The Tribunal allowed the ground for statistical purposes.

In conclusion, the Tribunal partly allowed the appeal, overturning the disallowance of administrative expenses but upholding the disallowance of miscellaneous expenses. The issue regarding employees' contribution to Provident Fund was remitted for factual verification.