2017 (4) TMI 112 - HC - Income Tax

Applicability of 40(ba)- Held that - The Revenue, when it originally filed its appeal, had not made any grievances with regard to the Tribunal holding that Section 40(ba) of Income Tax Act, 1961 (the Act) is inapplicable. This is apparent not only from the fact that the questions as framed in the appeal when filed but also further evidenced by the fact that there is no ground specifying any grievances with regard to the impugned order s finding in respect of Section 40(ba) of the Act. The residuary ground in the appeal memo has also proceeded on the basis that the order is not sustainable for the grounds mentioned earlier, which in turn are all related to Section 40(a) (ia) of the Act. In view of the objections raised by Mr. Padvekar, Mr. Ahuja, learned Counsel for the Revenue seeks time to consider the objections and respond to the same, including taking appropriate action, if so necessary.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal for Assessment Year 2008-09 regarding deletion of additions for salaries and administrative expenses under sections 40(ba) and 40(a)(ia) of the Income Tax Act, 1961.

Salaries Disallowance Issue:
The appeal challenges the Tribunal's deletion of the addition of ?4,99,19,593 for salaries disallowance under section 40(ba). The Counsel for the Revenue reframed the question of law, questioning the Tribunal's decision. The Respondent Assessee argued that the reframed question was new and not part of the original appeal. The original appeal focused on Section 40(a)(ia) disallowance, not Section 40(ba). The Counsel for the Revenue requested time to consider the objections raised by the Respondent.

Administrative Expenses Disallowance Issue:
The appeal also contests the deletion of the addition of ?2,39,64,463 for administrative expenses disallowance under section 40(a)(ia). The Counsel for the Revenue sought to challenge this deletion, but the Respondent argued that the original appeal did not raise any grievances regarding Section 40(ba) applicability. The Counsel for the Revenue requested time to address the objections raised by the Respondent.

Conclusion:
The High Court of Bombay is set to further deliberate on the issues raised in the appeal regarding the deletion of additions for salaries and administrative expenses under sections 40(ba) and 40(a)(ia) of the Income Tax Act, 1961. The Court adjourned the appeal to allow the Counsel for the Revenue to consider the objections raised by the Respondent and respond accordingly.