2019 (8) TMI 330 - AT - Income Tax

Disallowance u/s.14A - HELD THAT - We find from the balance sheet of the assessee that own funds of the assessee in the form of share capital and reserves and surplus as on 31/03/2014 was ₹ 85.03 Crores (as on 31/03/2003 it was ₹ 84.02 Crores), as against the total investments made by the assessee as on 31/03/2014 in the sum of ₹ 6.33 Crores (as on 31/03/2013 it was ₹ 9.37 Crores.) This goes to prove that assessee is having sufficient own funds in his kitty to make investment thereon. We find that the ld. CIT(A) by placing records on CIT vs Reliance Power and Utilities Ltd. 2009 (1) TMI 4 - BOMBAY HIGH COURT and CIT vs. HDFC Bank Ltd. 2016 (3) TMI 755 - BOMBAY HIGH COURT had deleted the disallowance of interest made under second limb of rule 8D (2) of the rules. We do not find any infirmity in the said action of the ld. CIT(A). Disallowance u/s.36(1)(va) r.w.s. 2(24)(x) - delayed payment of provident fund and ESI dues beyond the due dates specified under the respective acts - HELD THAT - We find that the date of remittance of PF and ESI dues for each month is duly tabulated in pages 8 9 of the order of CIT(A) and from which it is seen that the entire dues were duly remitted by the assessee on or before the due date of filing of return of income and hence, by respectfully following the decision of Hon ble Jurisdictional High Court in the case of CIT vs. Ghatge Patel Transport Ltd 2014 (10) TMI 402 - BOMBAY HIGH COURT , CIT vs. Hindustan Organic Chemicals Ltd. 2014 (7) TMI 477 - BOMBAY HIGH COURT and DCIT vs Hind Filter Ltd., 2017 (12) TMI 810 - BOMBAY HIGH COURT CIT(A) had deleted the disallowance made u/s. u/s.36(1)(va) r.w.s. 2(24)(x) of the Act which does not call any interference. Accordingly, ground No.2 raised by the revenue is dismissed. Adhoc disallowance towards travelling and conveyance - HELD THAT - No ad hoc disallowance of travel expenses @5% in the sum of ₹ 26,90,802/- is warranted in the facts and circumstances of the case. However, we find that this Tribunal for A.Y.2012-13 in assessee s own case on the impugned issue had remanded the matter back to the file of the ld. AO for fresh examination in pages 11 12 of its order which are not reiterated for the sake of brevity. Respectfully following the said decision, we deem it fit to remand this issue to the file of the ld. AO with the similar directions prevailing as in A.Y.2012-13 supra. Accordingly, ground raised by the revenue is allowed for statistical purposes.

Summary

Issues:
1. Disallowance under section 14A of the Income Tax Act.
2. Disallowance under section 36(1)(va) read with section 2(24)(x) of the Act.
3. Disallowance of expenses towards travelling and conveyance.

Analysis:
1. The first issue pertains to the disallowance made under section 14A of the Income Tax Act. The Assessing Officer (AO) disallowed the interest under the second limb of rule 8D, which was further contested by the assessee before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) noted that the assessee had sufficient own funds to make investments and relied on relevant case laws to delete the disallowance. The Income Tax Appellate Tribunal (ITAT) upheld the decision of the CIT(A) based on the facts presented, dismissing the revenue's appeal.

2. The second issue revolves around the disallowance under section 36(1)(va) read with section 2(24)(x) of the Act concerning delayed payment of provident fund and ESI dues. The CIT(A) reviewed the remittance dates of PF and ESI dues and found that all dues were paid before the due date of filing the return of income. Citing precedent cases, the CIT(A) deleted the disallowance, which was upheld by the ITAT, dismissing the revenue's appeal on this ground.

3. The final issue concerns the ad hoc disallowance of a percentage of total travelling and conveyance expenses made by the AO. The assessee provided detailed explanations and documentary evidence to support the business purpose of these expenses. The CIT(A) considered the nature of the expenses and the evidence submitted, concluding that the ad hoc disallowance was not justified. The ITAT, however, referred to a previous decision related to the same issue for a different assessment year and remanded the matter back to the AO for fresh examination. The revenue's appeal on this issue was allowed for statistical purposes.

In conclusion, the ITAT partially allowed the revenue's appeal for statistical purposes, maintaining the decisions of the CIT(A) on the disallowances under sections 14A and 36(1)(va) read with section 2(24)(x) while remanding the issue of ad hoc disallowance of travel expenses back to the AO for further examination.