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2019 (7) TMI 2002 - AT - Income TaxDeduction u/s 80IA - losses of eligible unit of years earlier to the initial year opted - HELD THAT - As decided in own case A.Y. 2012-13 and also the decision of Velayudhaswamy Spinning Mills (P) Ltd. 2010 (3) TMI 860 - MADRAS HIGH COURT as held that the claim of the appellant for deduction is well within the spirit of the law and accordingly hereby direct the AO to allow the claim for deduction made by the appellant company U/s.80IA(4) - Decided in favour of assessee. Disallowance u/s 14A r.w.r.8D - Sufficiency of own funds - AO had noted that the assessee has claimed interest expenses which includes general interest remaining interest / bank interest considered as directly related to the export / import and assessee did not make any disallowance u/s.14A - HELD THAT - We find from the order that the ld.CIT(A) that the assessee is having a owned funds to the extent of 436 crores as on 31.03.2013 investments made by the assessee to generate the exempt income only to the extent of 8.05 crores. Therefore the ld.CIT(A) reasonable presumed that assessee has invested only own funds no borrowed funds. By considering the facts and circumstances of the case we find that there is no error passed in the order passed by ld.CIT(A) in deleting addition - Decided in favour of assessee. Disallowance of commission in respect of turnover of earlier years - assessee has explained before the Assessing Officer that the commission expenditure accounted for as and when debit note is raised by the broker - HELD THAT - On appeal the ld.CIT(A) gave a finding that the expenses incurred by the AO is not doubted by the AO and only case of the AO is that these expenses relates to earlier years not related to current year. We find that the ld.CIT(A) after considering the detailed explanation given by the assessee and also observations made by the Assessing Officer gave a find that these expenses are genuine and has to allowed even in current year also. We find no reason to interfere with the order passed by the ld.CIT(A) therefore this ground raised by the Revenue is dismissed. Disallowance of welfare expenses - AO noted that the assessee has not fully vouched and some of the expenses were supported by the handmade vouchers not having complete address and names of the recipient - CIT(A) restricted the disallowance to 50% - HELD THAT - As CIT(A) partly granted the relief to the assessee we find no reason to interfere with the orders of passed by the ld.CIT(A) therefore this ground of appeal raised by the Revenue is dismissed. Allowability of expenses related to conveyance and traveling motor car expenses telephone expenses membership fee expenses - CIT(A) restricted from 15% to 10% granted relief to the assessee - HELD THAT - We find that the relief granted by the ld.CIT(A) by restricting disallowance from 15 % to 10% is reasonable and justified and no interference is called for. Therefore ground raised by the Revenue is dismissed. Allowable business expenditure - Interest paid on delayed payment of service tax is in penal nature - HELD THAT - We find that the expenditure incurred to the assessee during the course of the business and therefore which has to allowed as a business expenditure. In view of the above we find no reason to interfere with the orders passed by the ld.CIT(A) therefore ground raised by the Revenue is dismissed. Disallowance of staff welfare expenses - HELD THAT - CIT(A) by considering the entire business carried by the assessee and also by considering the nature of the expenses and also considering the expenses incurred in various places restricted the allowance to 50% granted - We find that no reason to interfere with the order passed by the ld.CIT(A). Disallowance on account of office expenses - HELD THAT - We find that the claim of the assessee is that he had incurred office expenses in respect of three office at Surat Delhi and Mumbai and four divisions of factories. Most expenses incurred by the assessee has submitted by the ld.Counsel for the assessee incurred by the cheque whenever payment made by cash the same is supported by the vouchers. The ld.CIT(A) by considering all the facts and examine the details he has restricted the disallowance we find no reason to interfere with the order passed by the ld.CIT(A) therefore ground raised by the Revenue is dismissed.
Issues Involved:
1. Deduction under Section 80IA. 2. Disallowance under Section 14A. 3. Disallowance of commission expenses. 4. Disallowance of staff welfare expenses. 5. Disallowance of conveyance, traveling, motor car, telephone, and membership fee expenses. 6. Disallowance of interest on late payment of service tax. 7. Disallowance of office expenses. Detailed Analysis: 1. Deduction under Section 80IA: The primary issue was whether the deduction under Section 80IA should be allowed without considering the losses of eligible units from earlier years. The Assessing Officer (AO) invoked Section 80IA(5) to disallow the deduction of Rs. 1,92,34,634/-. The CIT(A) followed the decision in the assessee's own case for A.Y. 2012-13 and directed the AO to allow the deduction. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's dismissal of the Revenue's SLP in the case of ACIT vs. Velayudhaswamy Spinning Mills (P) Ltd. 2. Disallowance under Section 14A: The AO disallowed Rs. 5,01,943/- under Section 14A r.w. Rule 8D, arguing that the assessee did not disallow any amount despite having significant interest expenses. The CIT(A) found that the assessee had sufficient own funds and directed the deletion of the disallowance, citing precedents from the jurisdictional High Court. The Tribunal upheld the CIT(A)'s decision, noting no error in the reasoning. 3. Disallowance of Commission Expenses: The AO disallowed Rs. 12,52,434/- as it related to turnover of earlier years. The CIT(A) allowed the expenditure, stating it was genuine and incurred in the current year. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere. 4. Disallowance of Staff Welfare Expenses: The AO made an ad-hoc disallowance of 15% of staff welfare expenses due to incomplete vouchers. The CIT(A) restricted the disallowance to 50%, granting partial relief. The Tribunal upheld this decision, finding the CIT(A)'s restriction reasonable. 5. Disallowance of Conveyance, Traveling, Motor Car, Telephone, and Membership Fee Expenses: The AO disallowed 15% of these expenses due to incomplete vouchers and personal nature of some expenses. The CIT(A) reduced the disallowance to 10%, granting partial relief. The Tribunal found the CIT(A)'s restriction reasonable and upheld the decision. 6. Disallowance of Interest on Late Payment of Service Tax: The AO disallowed the interest as penal in nature. The CIT(A) allowed the expenditure, considering it compensatory and incurred in the course of business. The Tribunal upheld the CIT(A)'s decision, agreeing with the reasoning. 7. Disallowance of Office Expenses: The AO disallowed 15% of office expenses due to incomplete vouchers. The CIT(A) restricted the disallowance to 50%, granting partial relief. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere. Conclusion: The Tribunal dismissed all grounds of appeal raised by the Revenue for both A.Y. 2013-14 and A.Y. 2014-15, upholding the CIT(A)'s decisions on all issues. The judgments were pronounced on July 12, 2019.
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