9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 722 - AT - Income TaxDisallowance u/s 14A made under Rule 8D(2)(ii) and 8D(2)(iii) of the Rules - HELD THAT - For Assessment Year 2013-14, we notice that the accumulated interest free funds as on 31/03/2013 are more than investments -Similar is the situation for the remaining assessment years wherein also the interest free funds available with the assessee company in the form of shareholder funds is almost 9 to 10 times of the investments held by the assessee in the equity shares. It is an admitted fact that there is no finding of the revenue authorities at any stage indicating specifically that interest bearing funds have been applied for the purpose of making investments. In absence of any such finding, we find that the judgement of Reliance Utilities Power Ltd. 2009 (1) TMI 4 - BOMBAY HIGH COURT are squarely applicable on the facts of the present case and, therefore, on account of sufficient availability of interest free funds, we find no merit in the finding of the ld. AO making interest disallowance under Rule 8D(2)(ii) of the Rules. Thus, the finding of the ld. CIT(A) is set aside and disallowance made under Rule 8D(2)(ii) for the impugned assessment years are hereby deleted. Remaining disallowance u/r 8D(2)(iii) assessee has not challenged the said disallowance of Rs. 2,22,977/- and, therefore, the same is confirmed. So far as Assessment Year 2014-15, is concerned, we notice that AO has made a disallowance under Rule 8D(2)(iii) at Rs. 5,01,386/- and the same has been calculated taking the average investment figure at Rs. 10.03 Crores, whereas as per the details filed in the paper book, the correct figure is Rs. 5,93,89,491/- which is the investment fetching exempt income and taking this correct figure, the disallowance under Rule 8D(2)(iii) will work out to Rs. 2,96,947/- and the same is hereby confirmed. For Assessment Year 2016-17, we notice that the ld. Assessing Officer has calculated the sum @ 0.5% of the average investment at Rs. 10.23 Crores, whereas the actual average value of investment is Rs. 4,41,09,065/- and, therefore, the correct amount of disallowance shall work out to Rs. 2,20,545/- and the same is hereby confirmed. For Assessment Year 2017-18, AO made total disallowance of Rs. 1,40,266/- whereas assessee has suo-moto disallowed a sum of Rs. 4,45,692/- and has mentioned in the audit report and AO has failed to take note of the said disallowance. It means that the ld. AO has not complied with the provisions of Section 14A of the Act of recording satisfaction before applying Rule 8D of the Rules. On this ground itself the disallowance made under section 14A r.w.r. 8D, for Assessment Year 2017-18 is deleted. Deemed dividend u/s 2(22)(e) - sum received by the assessee company from another group company - HELD THAT - As respectfully following the ratio laid down in the decisions and judgments of Bhaumik Colour Pvt. Ltd. 2008 (11) TMI 273 - ITAT BOMBAY-E , DCIT 1(1)(2), Mumbai Vs Gilbarco Veeder Root India (P) Ltd. 2018 (8) TMI 437 - ITAT MUMBAI as well as CIT Vs. Vatika Township (P) Ltd. 2014 (9) TMI 576 - SUPREME COURT since undisputedly the assessee is not a shareholder in Apeejay Tea Ltd., which has given loan/advance to assessee, therefore, the assessee does not fall under any of the limbs provided under section 2(22)(e) of the Act, and the same cannot be invoked in the hands of the assessee. We, thus set-aside the finding of the ld. CIT(A) and delete the addition made under section 2(22)(e) of the Act and allow these common grounds of appeal raised by the assessee against the addition made u/s 2(22)(e) of the Act. Disallowance u/s 2(24)(x) - delayed deposit of employees contribution to PF/ESI i.e. after the due date as provided under the respective welfare enactments - HELD THAT - This issue is no more res integra in view of the judgment of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF/ESI cannot be claimed even though deposited within the due date of filing of return of income read with Section 43B of the Income-tax Act, 1961. Therefore, the amounts are liable to be added as income in the hands of the assessee, the disallowance so made are confirmed and the grounds raised by the assessee are dismissed. Disallowance on account of interest on delay deposit of TDS and interest of delay payment of service tax - HELD THAT - We notice that the issue of interest on delay deposit of TDS has been extensively dealt in the case of M/s Premier Irrigation Adritec (P) Ltd. 2023 (1) TMI 1124 - ITAT KOLKATA wherein the Tribunal has held that interest payment on delayed deposit of income tax, whether TDS or otherwise is not an allowable expenditure. Respectfully following the decision of the Tribunal, the disallowance of interest on delayed deposit of TDS stands confirmed. So far as the interest on delayed payment of Service tax is concerned, we notice that the same is allowable in view of the ratio laid down in the case of Lachmandas Mathuradas 1997 (12) TMI 16 - SUPREME COURT Since the bifurcation of the alleged disallowance is not available on record, we direct the Assessing Officer to carry out the necessary exercise for which the assessee shall provide the related documents and then shall confirm the disallowance for the interest on delay in deposit of TDS and allow the interest paid on delay in deposit of service tax. Accordingly, this issue raised for AY 2016-17 and 2017-18, is partly allowed for statistical purposes.
Issues Involved:
1. Disallowance under Section 14A read with Rule 8D. 2. Addition towards deemed dividend under Section 2(22)(e). 3. Disallowance for delayed deposit of employees' contribution to PF/ESI under Section 2(24)(x) read with Section 36(1)(va). 4. Disallowance of interest on delayed deposit of TDS and service tax. Summary: 1. Disallowance under Section 14A read with Rule 8D: The Tribunal addressed the disallowance under Section 14A of the Income-tax Act, 1961, made under Rule 8D(2)(ii) and 8D(2)(iii) of the Income Tax Rules, 1962. The Tribunal found that the assessee had sufficient interest-free funds for making investments in equity shares, citing the judgment of the Bombay High Court in CIT vs. Reliance Utilities & Power Ltd. Thus, the interest disallowance under Rule 8D(2)(ii) was deleted. For the disallowance under Rule 8D(2)(iii), the Tribunal confirmed the amounts for AY 2013-14 and 2017-18 and recalculated the disallowances for AY 2014-15 and 2016-17 based on correct average investment values. 2. Addition towards deemed dividend under Section 2(22)(e): The Tribunal examined whether the addition for deemed dividend under Section 2(22)(e) was justified. It was noted that the assessee company was not a shareholder of the lending company, Apeejay Tea Ltd., and vice versa. The Tribunal relied on the Special Bench decision in ACIT vs. Bhaumik Colour Pvt. Ltd., which held that deemed dividend can only be assessed in the hands of the shareholder of the lender company. The Tribunal also noted that the transaction was part of regular business with interest paid on the loan. Consequently, the additions for deemed dividend for AY 2013-14, 2014-15, 2016-17, and 2017-18 were deleted. 3. Disallowance for delayed deposit of employees' contribution to PF/ESI under Section 2(24)(x) read with Section 36(1)(va): The Tribunal upheld the disallowance for delayed deposit of employees' contribution to PF/ESI, referencing the Supreme Court judgment in Checkmate Services Pvt. Ltd. Vs. CIT, which held that such deductions cannot be claimed even if deposited within the due date for filing the return of income. The disallowances for AY 2014-15 and 2016-17 were confirmed. 4. Disallowance of interest on delayed deposit of TDS and service tax: The Tribunal confirmed the disallowance of interest on delayed deposit of TDS, following the decision in M/s Premier Irrigation Adritec (P) Ltd. vs. ACIT. However, it allowed the interest on delayed payment of service tax, citing the Supreme Court decision in Lachmandas Mathuradas v. Commissioner of Income-tax. The Tribunal directed the Assessing Officer to bifurcate the disallowed amounts accordingly for AY 2016-17 and 2017-18. Conclusion: The appeals for AY 2013-14 and 2014-15 were partly allowed, and the appeals for AY 2016-17 and 2017-18 were partly allowed for statistical purposes.
|
