2019 (3) TMI 587 - HC - Income Tax

Disallowance u/s 14A - HELD THAT - CIT(A) restricted such disallowance to ₹ 1.12 crore upon which the issue reached the Tribunal. The Tribunal confirmed the order of the CIT(A). This was inter alia on the ground that the Assessing Officer had not stated why he did not agree with the assessee s accounts for allocation of expenditure and further that the assessee had sufficient interest free funds to make such investments. This issue is squarely covered by the decision of this Court in the case of HDFC Bank Ltd Vs. Deputy CIT 2016 (3) TMI 755 - BOMBAY HIGH COURT . No question of law, therefore, arises. Disallowance of foreign travelling expenses - expenditure of foreign travel of the wife of the chairman and claimed it as allowable expenditure - HELD THAT - Revenue s objection to the respondent assessee company bearing the expenditure of foreign travel of the wife of the chairman and claimed it as allowable expenditure. The Tribunal, while confirming the deletion made by the CIT(A), noted that the chairman in question was aged about 80 years and that he needed to be accompanied by family member for his medical ground. It was also noted that the wife herself was a director of the assessee company. Such being the facts, we do not find any error in the view of the Tribunal. Non deposit of employee s contribution to provident fund before the due date - HELD THAT - This issue is covered by the judgment of this Court in the case of CIT Vs. Ghatge Patil Transports Ltd. 2014 (10) TMI 402 - BOMBAY HIGH COURT .

Summary

Issues:
1. Disallowance of expenditure under Section 14A of the Income Tax Act, 1961.
2. Allowability of foreign travel expenses of the chairman's wife as a business expenditure.
3. Disallowance of employee's contribution to provident fund for non-deposit before the due date.

Issue 1: Disallowance under Section 14A:
The appeal challenges the Tribunal's judgment on the disallowance of expenditure under Section 14A of the Income Tax Act, 1961. The Assessing Officer made the disallowance, which was later restricted by the CIT(A) to a certain amount. The Tribunal upheld the CIT(A)'s decision, citing reasons such as the lack of explanation by the Assessing Officer for not agreeing with the assessee's accounts and the availability of interest-free funds for investments. The Tribunal found no error in the decision, relying on the precedent set by the High Court in HDFC Bank Ltd Vs. Deputy CIT. Consequently, no question of law arose, leading to the dismissal of this issue.

Issue 2: Foreign Travel Expenses:
The second issue involves the Revenue's objection to the respondent assessee company claiming the expenditure of foreign travel for the chairman's wife as a business expense. The Tribunal upheld the deletion of this disallowance by the CIT(A), considering the chairman's age and medical condition, which necessitated the accompaniment of a family member. Furthermore, as the wife was also a director of the company, the Tribunal found no fault in allowing the expenditure. No legal question arose in this regard, resulting in the dismissal of this issue.

Issue 3: Non-Deposit of Employee's Contribution to Provident Fund:
The final issue concerns the disallowance made by the Assessing Officer due to the non-deposit of employee's contributions to the provident fund before the due date. This issue finds precedent in the High Court judgment in the case of CIT Vs. Ghatge Patil Transports Ltd. The Court's decision in this matter supports the disallowance, leading to the dismissal of this appeal based on the established legal principles. Consequently, the appeal was dismissed, affirming the Tribunal's decision on all three issues raised in the case.