2017 (12) TMI 910 - AT - Income Tax

Addition on employee s contribution to PF - sum deposited beyond the prescribed time limit - Held that - As the amount has been deposited by the assessee before the due date of filing the return of income and therefore the matter is covered by the decision of Hon ble Jurisdiction High Court in case of CIT vs. SBBJ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT as well as in assessee s own case for the A.Y. 2011-12 2017 (11) TMI 573 - RAJASTHAN HIGH COURT - Decided in favour of assessee. Disallowance u/s 14A r.w. Rule 8D - Held that - Neither the Revenue nor the assessee has filed any material on record before us to give a conclusive finding on the availability of the assessee s own fund to meet the requirements of the fresh investment made by the assessee during the year as well as the expenditure claimed by the assessee which can be attributable to earning the exempt income. Since there is fresh investment during the year to the tune of more than 14 crores therefore the decision for the earlier years cannot be applied without considering the relevant facts. Hence in the interest of justice we set aside this issue to the record of the Assessing Officer for fresh adjudication in light of the above observation. Needless to say the assessee be given an opportunity of hearing before passing the fresh order.

Summary

Issues:
1. Disallowance of employee's contribution to PF deposited beyond prescribed time limit.
2. Disallowance under section 14A of the I.T. Act, 1961 r.w. Rule 8D.

Issue 1:
The first issue revolved around the disallowance of the employee's contribution to PF deposited beyond the prescribed time limit. The Assessing Officer disallowed the amount, but the ld. CIT(A) deleted the addition based on the timely deposit before the income tax return due date. The decision was supported by the Hon'ble Jurisdiction High Court's ruling in a similar case. The Tribunal found no error in the ld. CIT(A)'s order, as it aligned with previous judicial decisions, ultimately ruling in favor of the assessee.

Issue 2:
The second issue concerned the disallowance under section 14A of the I.T. Act, 1961 r.w. Rule 8D. The Assessing Officer disallowed certain expenses, which the ld. CIT(A) overturned based on the sufficiency of the assessee's own funds for investments generating exempt income. The Tribunal referred to past decisions and a Supreme Court ruling to emphasize the necessity of examining fresh investments, expenditure, and fund sources for each assessment year. Noting the lack of detailed examination by the authorities below, the Tribunal set aside the issue for fresh adjudication by the Assessing Officer, emphasizing the need for a thorough analysis of relevant facts before making a disallowance decision. The assessee was to be given a hearing opportunity before a new decision was reached. Consequently, the appeal of the Revenue was partly allowed for statistical purposes, highlighting the importance of factual examination and consistency in income tax proceedings.