2013 (9) TMI 1300 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance u/s 14A of the Income-tax Act, 1961.
2. Non-grant of credit for TDS.
3. Enhancement of income by CIT(A).

Summary:

Disallowance u/s 14A:
The assessee contested the addition of Rs. 1,76,38,517/- made by the Assessing Officer by disallowing interest attributable to investments in shares of SPV companies. The assessee argued that the investments were made for business expediency and thus, provisions of Section 14A were not applicable. The CIT(A) upheld the Assessing Officer's decision. The ITAT noted that the assessee made investments from interest-free funds and had substantial reserves. The matter was remanded back to the Assessing Officer to verify if the investments were indeed made from non-interest-bearing funds and to reconsider the disallowance in light of the Supreme Court's decision in S. A. Builders Limited, 288 ITR 1.

Non-grant of Credit for TDS:
The assessee claimed that TDS of Rs. 52,54,091/- was erroneously deducted and paid to the Central Government. The Assessing Officer noted discrepancies between the TDS certificates and the declared receipts. The ITAT observed that TDS should be deducted on income paid or credited and not on advances. The matter was remanded to the Assessing Officer to verify whether TDS was deducted on income accrued/received or on advances, and to allow TDS credit in the appropriate year.

Enhancement of Income by CIT(A):
The CIT(A) enhanced the assessee's income by Rs. 6,84,24,000/- based on a proforma invoice raised for additional work and escalation costs, which was not accepted by the contractee, POHL. The ITAT found that the claim was neither acknowledged nor paid by POHL, and thus, no income accrued or was received by the assessee during the relevant year. The ITAT held that mere issuance of a proforma invoice does not result in income accrual. The enhancement was deleted, and the matter was remanded to the Assessing Officer to tax the income in the year of actual receipt if it occurs.