2009 (1) TMI 298 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance under Section 14A of the IT Act, 1961.
2. Addition under Section 41(1) of the IT Act, 1961.
3. Disallowance under Section 43B of the IT Act, 1961.
4. Applicability of Section 145A of the IT Act, 1961.
5. Additional grounds regarding the applicability of Section 115JB of the IT Act, 1961.
6. Levy of interest under Sections 234B and 234C of the IT Act, 1961.

Detailed Analysis:

1. Disallowance under Section 14A:
- Issue: The assessee contested the disallowance of Rs. 2,37,000 under Section 14A of the IT Act, 1961.
- Judgment: This ground was not pressed by the assessee and was dismissed as not pressed.

2. Addition under Section 41(1):
- Issue: The assessee challenged the addition of Rs. 23,98,000 under Section 41(1) of the IT Act, 1961, arguing that the amount had not been allowed as a deduction in any assessment year.
- Judgment: The Tribunal upheld the CIT(A)'s decision, noting that the assessee had included the amount as part of fixed assets and claimed depreciation and other allowances. Therefore, the addition was justified under Section 41(1).

3. Disallowance under Section 43B:
- Issue: The assessee disputed the disallowance of Rs. 1,49,20,224 under Section 43B, arguing that the payments were made before the due date for filing the return of income.
- Judgment: The Tribunal restored the issue to the AO, directing them to examine the claim in light of the Hon'ble Madras High Court's decision in CIT vs. Shri Ganapathy Mills Co. Ltd., which allows deductions if payments are made within the grace period under the relevant Act.

4. Applicability of Section 145A:
- Issue: The assessee argued that Section 145A was not applicable as their accounting method for purchases was on a net basis.
- Judgment: The Tribunal noted that due to a rectification order passed by the AO, these grounds did not arise and were dismissed as not pressed.

5. Additional Grounds Regarding Section 115JB:
- Issue: The assessee raised additional grounds challenging the applicability of Section 115JB, arguing that since there was no income-tax payable on the total income computed under the Act, Section 115JB should not be applicable.
- Judgment: The Tribunal admitted the additional grounds, referring to the Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT. However, after detailed analysis, it dismissed the additional grounds, ruling that Section 115JB is a deeming provision and applies to zero-tax companies as well.

6. Levy of Interest under Sections 234B and 234C:
- Issue: The assessee contested the levy of interest under Sections 234B and 234C.
- Judgment: The Tribunal noted that this issue was contingent on the applicability of Section 115JB. Since the additional grounds regarding Section 115JB were dismissed, the levy of interest under Sections 234B and 234C was upheld.

Conclusion:
- The appeal was partly allowed for statistical purposes, with the Tribunal providing specific directions for re-examination of certain issues by the AO while upholding the CIT(A)'s decisions on other matters.