2022 (2) TMI 869 - AT - Income Tax

Disallowance of interest income earned by staff advance claimed to be eligible for deduction u/s 80P - HELD THAT - As decided in own case 2020 (12) TMI 1313 - ITAT CHENNAI Assessee s Society has existed only for the members of the Telecom Employees Co-operative Society and not for the benefit of the staff of the Telecom Employees Co-operative Society. The Telecom Employees Cooperative Society is an altogether different from the staff of the Assessee. Therefore, the claim made by the Assessee u/s.80P of the Income Tax Act, 1961 is not an eligible claim and therefore the Assessing Officer as well as the learned Commissioner of Income Tax (Appeals) rightly denied the claim of the Assessee u/s.80P. Disallowance of interest income earned from FDs and Trusts, which was treated as income from other sources - HELD THAT - As decided in own case 2020 (12) TMI 1313 - ITAT CHENNAI case of the Assessee is that the Assessing Officer has treated the interest income earned by the Assessee has income from other sources and estimated the expenditure only. In the Assessment Order, the Assessing Officer has not properly considered the expenditure incurred by the Assessee to earn the interest income and simply estimated the interest expenditure. In our view, it is not correct. Thus we set aside the order passed by the learned Commissioner of Income Tax (Appeals) on this count and remit back the matter back to the Assessing Officer to adjudicate the issue afresh in accordance with law de novo. Disallowance of depreciation - AO has noted that the assessee has claimed depreciation on certain items of additions made to the fixed assets like furniture and fittings and computers - since the assessee was not able to produce any evidence in respect of additions to the fixed assets, the Assessing Officer disallowed the claim of depreciation - CIT(A) confirmed the disallowance on the ground that the assessee has not furnished any evidence even during the course of appellate proceedings - HELD THAT - Before us also, the assessee has not produced any evidence in respect of the items of additions made to the fixed assets like furniture and fittings and computers. In view of the above, the disallowance of depreciation confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee is dismissed. Disallowance of repair and maintenance - Assessee was not able to produce any proof in respect of repair and maintenance expenses - HELD THAT - Before us also, the assessee has not produced any evidence in respect of the expenses towards repair and maintenance claimed to have incurred. In view of the above, the disallowance of repair and maintenance charges confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee is dismissed. Disallowance u/s 40a(ia) - TDS on professional and technical services - HELD THAT - As assessee has not produced any documentary evidence in respect of the TDS deduction made towards payment of professional and technical services as well as payment to contractors. In view of the above, the disallowance made under section 40a(ia) of the Act and confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee is dismissed. Disallowance of land tax as business expenditure - HELD THAT - Before us, the ld. Counsel for the assessee was unable to establish that the expenses was incurred wholly and exclusively for the purpose of business of the assessee. In view of the above, we find no infirmity in the order passed by the ld. CIT(A). Assessee appeal partly allowed,

Summary

Issues Involved:
1. Disallowance of interest income under section 80P of the Income Tax Act, 1961.
2. Disallowance of interest income earned from FDs and Trusts.
3. Disallowance of depreciation.
4. Disallowance of repair and maintenance charges.
5. Disallowance made under section 40a(ia) of the Act.
6. Disallowance of business expenses.

Analysis:

1. Disallowance of Interest Income under Section 80P:
The Tribunal considered the issue of disallowance of interest income earned by staff advance claimed for deduction under section 80P of the Income Tax Act. The Tribunal referred to a previous case where a similar issue was decided against the assessee. Following the precedent, the Tribunal dismissed the ground raised by the assessee for all the assessment years under appeal.

2. Disallowance of Interest Income from FDs and Trusts:
The Tribunal examined the disallowance of interest income earned from FDs and Trusts treated as income from other sources. The Tribunal noted that the interest income was not secured by loans and was independent of deposits collected from members or loans borrowed from banks. Following a similar case precedent, the Tribunal remitted the matter back to the Assessing Officer for fresh adjudication.

3. Disallowance of Depreciation:
The Tribunal upheld the disallowance of depreciation as the assessee failed to produce evidence regarding additions made to fixed assets like furniture and computers. The disallowance was confirmed as the assessee did not provide any evidence during the appellate proceedings.

4. Disallowance of Repair and Maintenance Charges:
The Tribunal confirmed the disallowance of repair and maintenance charges as the assessee could not provide proof of incurring the expenses. The disallowance was sustained as the assessee failed to furnish any evidence during the appellate proceedings.

5. Disallowance Made under Section 40a(ia) of the Act:
The Tribunal upheld the disallowance under section 40a(ia) of the Act related to non-deduction of tax. The disallowance was confirmed as the assessee did not provide documentary evidence during the proceedings.

6. Disallowance of Business Expenses:
The Tribunal confirmed the disallowance of business expenses related to land tax as the expenditure was found to be towards activities other than business. The Tribunal dismissed the ground raised by the assessee as the expenses were not established to be wholly and exclusively for the purpose of business.

In conclusion, the Tribunal partly allowed all the appeals filed by the assessee, addressing various issues related to disallowances and deductions under the Income Tax Act, 1961.

Judges:
- Shri V. Durga Rao, Judicial Member
- Shri Manoj Kumar Aggarwal, Accountant Member