2013 (4) TMI 140 - HC - Income Tax

Disallowance U/s 14A of the Income-tax Act, 1961 - Held that - Following this judgment CIT v. Catholic Syrian Bank Ltd.2010 (10) TMI 806 - Kerala High Court)we answer this question against the assessee and in favour of the Revenue. Assessment of excess cash - Shown under Suspense account under the head other liabilities and provisions - held that - assessee themselves conceded that the amount is excess cash with them retained for several years and there is no claimant for the same. - the appellant cannot treat it as a liability or a provision for liability. - Further, as and when a claim is made and the appellant has to make any payment, the same will be allowable as a deduction in the year in which the claim is made. - additions confirmed - decided against the assessee.

Summary

Issues: Disallowance under section 14A of the Income-tax Act, 1961; Assessment of excess cash in the custody of the assessee.

In the judgment delivered by the High Court of Kerala, the first issue addressed pertains to the disallowance under section 14A of the Income-tax Act, 1961. The court referred to a previous judgment in CIT v. Catholic Syrian Bank Ltd. and ruled against the assessee, aligning with the precedent. Moving on to the second issue, the assessment of excess cash in the custody of the assessee was discussed. The court noted that the amount in question was retained by the assessee for several years without any claimant. Despite the appellant's reliance on a Bombay High Court decision, the court differentiated the case at hand as the excess cash was not carried over for several years but was available in the immediate past year. The court concluded that the excess cash need not be treated as income but could be considered as surplus in the suspense account to meet any future liability. The court upheld the Tribunal's decision regarding the excess cash carried forward, except for a specific amount identified as excess in the previous year.