2024 (6) TMI 378 - AT - Income Tax

Disallowance u/s 14A r.w.r.8D - Expenditure incurred on earning exempt income - HELD THAT - Since assessee has failed to furnish the details of fund utilized for making such investment whether those from loans and on its own funds before the AO as well as CIT(A). Therefore, both the lower authority has no other option but to sustain the order passed by the ld. AO on this issue. Even before us, the assessee has failed to controvert the fact by producing any supported document to prove the fact in its favour. Therefore, we do not find any infirmity in the order passed by the CIT(A) on this issue. Accordingly, the issue raised by the assessee is hereby dismissed. Disallowance u/s 40(a)(ia) - expenses incurred towards contractual payment for which TDS was not deducted - HELD THAT - DR find that when the assessee has failed to substantiate its ground before the AO as well as ld. CIT(A) on the issue involved. CIT(A) sustained the order of ld. AO, as assessee stated before the AO that due to inadvertent lapse assessee could not deduct TDS and had no objection to the proposed disallowance made by the AO. Therefore, sustaining the order of AO by ld. CIT(A) is correct and accordingly we dismiss the ground taken by the assessee on the instant issue involved. Leave encashment disallowance u/s 43B - Assessee had failed to deposit before due date of filing of return - HELD THAT - CIT(A) has no other option but to upheld the order passed by the ld. AO. Similarly, at the time of hearing before us, the assessee has failed to controvert the fact as stated by the authority below in the impugned order. Therefore, we reject the ground taken by the assessee and sustained the order passed by the ld. CIT(A) on this issue. Employees contribution of PF ESI beyond due date as prescribed under the Act - AO added an amount in the hands of assessee u/s 36(1)(va) and u/s 2(24)(x) - contention of the assessee in its ground of appeal is that the above addition was unwarranted and bad in law - HELD THAT - DR on the instant issue raised by the assessee stated that instant issue involved come to the rest by the recent verdict of the Hon ble Supreme Court in Chekmate 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 cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961. Issue decided against the assessee.

Summary

Issues involved:
The judgment involves issues related to disallowance of expenses u/s 14A r.w. rule 8D, disallowance of expenditure u/s 40(a)(ia), disallowance of expenditure u/s 43B, and disallowance of employees' contribution to PF & ESI beyond due date.

Disallowed expenses u/s 14A r.w. rule 8D:
The assessee's appeal against the disallowance of Rs. 1,82,763 u/s 14A r.w. rule 8D was rejected by both the AO and the CIT(A) as the assessee failed to provide details of funds utilized for investments. The Tribunal upheld the lower authorities' decision, stating that the disallowance was correct due to the lack of evidence from the assessee.

Expenditure disallowed u/s 40(a)(ia):
The AO disallowed Rs. 6,65,523 of expenses under u/s 40(a)(ia) as TDS was not deducted, and the assessee failed to provide a valid reason for the lapse. The CIT(A) upheld the AO's decision, and the Tribunal agreed, dismissing the appeal as the assessee did not substantiate their case.

Leave encashment disallowance u/s 43B:
The AO disallowed Rs. 4,12,988 for leave encashment not paid before the due date, which the assessee accepted as a mistake. The CIT(A) upheld this disallowance, and the Tribunal found no reason to interfere, as the assessee failed to pay the amount on time.

Employees' contribution to PF & ESI disallowance:
An amount of Rs. 4,52,353 was added by the AO u/s 36(1)(va) and u/s 2(24)(x) for delayed deposit of employees' contributions. The Tribunal referred to a recent Supreme Court verdict and decided against the assessee, upholding the disallowance based on the legal precedent.

Consequential grounds:
Grounds 5 and 6 were deemed consequential and general in nature, not requiring adjudication.

In conclusion, the Tribunal dismissed the assessee's appeal, upholding the decisions of the lower authorities on the various issues raised in the case.