2019 (6) TMI 744 - AT - Income Tax

Addition u/s 14A r.w.r. 8D(2) - voluntary disallowance of administrative expenses already made by the appellant - own interest free fund available - HELD THAT - We find no infirmity in the order of the CIT(A) and it is justified - Decided against revenue Addition made on account of Employees Contribution towards provident fund - HELD THAT - As placing reliance in the case of CIT vs. M/s. Vijay Shree Limited 2011 (9) TMI 30 - CALCUTTA HIGH COURT CIT-A correctly deleted the addition by observing that the disallowance made by the Assessing Officer is not maintainable as the assessee deposited the said contribution before due date of filing return of income - Decided against revenue Disallowance on account of foreign tour allowance and foreign tour expenses - CIT(A) held that in absence of any specific findings or rejection of books of accounts disallowance made thereon is not in accordance with law - HELD THAT - The facts remain admitted that there was no evidence before the CIT(A) which clearly shows that no reference whatsoever made by him in the impugned order regarding any specific evidence showing details of foreign tour allowance and identity and purpose of visits relating to foreign tour expenditure. Therefore when there is no evidence relating to the issue on hand before all the authorities including this Tribunal we find the impugned order passed by the CIT(A) is not justified and it is set aside. Therefore we restore the order of Assessing Officer in disallowing the expenses under the head foreign tour allowance and foreign tour expenses - Decided in favour of revenue.

Summary

Issues involved:
1. Deletion of addition made under section 14A read with Rule 8D(2) of the Income Tax Rules.
2. Deletion of addition made on account of Employees' Contribution towards provident fund.
3. Deletion of disallowance on account of foreign tour allowance and foreign tour expenses.

Issue 1: Deletion of addition made under section 14A read with Rule 8D(2) of the Income Tax Rules:
The appeal by the Revenue was against the order passed by the Commissioner of Income Tax (Appeals) for Assessment Year 2013-14. The Assessing Officer disallowed certain expenditures in relation to dividend income earned by the assessee. The CIT(A) deleted the addition made under Rule 8D(2)(ii) but upheld the addition under Rule 8D(2)(iii) to a certain extent. The CIT(A) considered various legal precedents and decided to restrict the disallowance under Rule 8D(2)(iii) after taking into account voluntary disallowances made by the appellant. The ITAT Kolkata found no infirmity in the CIT(A)'s order and dismissed Ground No.1 raised by the Revenue.

Issue 2: Deletion of addition made on account of Employees' Contribution towards provident fund:
The Assessing Officer disallowed an amount for not depositing the employer's contribution towards provident fund before the due date. However, the CIT(A) referred to legal precedents and ruled in favor of the assessee, stating that the contribution was made within the due dates of filing the return of income. The ITAT Kolkata found the CIT(A)'s decision justified and dismissed Ground No.2 raised by the Revenue.

Issue 3: Deletion of disallowance on account of foreign tour allowance and foreign tour expenses:
The Assessing Officer disallowed expenses related to foreign tour allowance and foreign tour expenses as the assessee failed to provide sufficient details and evidence regarding the business nature of these expenses. The CIT(A) deleted the disallowance made by the Assessing Officer, but the ITAT Kolkata disagreed with the CIT(A)'s decision. The ITAT Kolkata found that the assessee did not provide proper evidence to substantiate the business nature of these expenses, and therefore, the disallowance was justified. Consequently, Ground No.3 raised by the Revenue was allowed.

In conclusion, the ITAT Kolkata partially allowed the appeal of the Revenue based on the detailed analysis and findings related to the three issues raised in the judgment.