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2015 (10) TMI 19 - AT - Income TaxInterest due to the assessee u/s. 244A denied - time taken for curing the defects in TDS certificate - Held that - The undisputed facts are that the TDS certificates were submitted with the return of income. It is also a fact that the TDS certificate has been issued by Reserve Bank of India and various other Government agencies therefore any defect in the TDS certificate cannot be attributed to the assessee. Further, the tax deducted at source by the deductors have been deposited to the credit of the Government, therefore assessee cannot be denied interest u/s. 244A of the Act when the tax was deducted and deposited in the exchequer in time, section 244A(2) is not attracted. We draw support from the decision of the Hon ble High Court of Bombay in the case of Larsen & Toubro (2010 (6) TMI 54 - BOMBAY HIGH COURT ). We, accordingly set aside the findings of the Ld. CIT(A) and direct the AO to allow the interest for the period 1.4.1991 to 31.3.1998.- Decided in favour of assessee. Disallowance of payment of MICR charges - non deduction of tds u/s. 194J - whether the bank was not required to deduct tax from the payments made to SBI and therefore provisions of Sec. 40(a)(ia) are not attracted? - CIT(A) allowed the claim - Held that - We have carefully perused the orders of the authorities below. We have also the benefit of the order made u/s. 201 (1) & 201(1A) of the Act dated 23.3.2011. We have also the benefit of the copy of notification No. 56/2012(F.No. 275/53/2012-IT(B) dated 31.3.2012 wherein the CBDT has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments being clearance charges (MICR charges). In our considered opinion, since it has been admittedly proved that the recipient of the MICR charges i.e. State Bank of India has included the sum while making tax payment by it. The ratio laid down by the Hon ble Supreme Court in the case of Hindustan Coco Cola (2007 (8) TMI 12 - SUPREME COURT OF INDIA) squarely apply. Considering the facts in totality as mentioned above, we decline to interfere with the findings of the Ld. CIT(A). - Decided in favour of assessee. Disallowance u/s 14A - CIT(A) confirming the expenditure u/s. 14A being the amount of interest allocated on a proportionate basis - Held that - Undoubtedly, in the first round of litigation, the Tribunal has clearly held that Rule 8D is not applicable for the year under consideration, therefore, directed the AO to make some reasonable disallowance. However, we find that the AO has once again computed the disallowance as per the formula given in Rule 8D. We also find that the interest free funds available with the assessee is ₹ 1357.84 crores whereas average investments in assets earning tax free income is at ₹ 815.76 crores. This clearly shows that the assessee is having sufficient interest free funds for making the investments. The ratio laid down in the case of Reliance Utilities and Power Ltd 2009 (1) TMI 4 - HIGH COURT BOMBAY squarely apply which has been followed by in the case of HDFC Bank (2014 (8) TMI 119 - BOMBAY HIGH COURT) which has been followed by the Tribunal in assessee s own case in A.Y. 2002-03 to 2004- 05. Thus we direct the AO to delete the impugned disallowance made u/s. 14A of the Act.- Decided in favour of assessee. Deduction u/s. 36(1)(viia) - CIT(A) allowed claim - Held that - The assessee had not made any provision in the books of account for the assessment year 1985-86 by making supplementary entries and by revising its balance-sheet. The provision had been made in the books of the subsequent year. Therefore since the assessee had made a provision for bad and doubtful debts, its claim for deduction under section 36(1)(viia) had to be restricted to that amount. See State Bank of Patiala case 2004 (5) TMI 12 - PUNJAB AND HARYANA High Court - we set aside the findings of the Ld. CIT(A) and confirm that of the AO - Decided against assessee. Provisions of Sec. 115JB are not applicable in the case of the assessee and accordingly ground taken by the assessee is allowed.
Issues Involved:
1. Denial of interest under Section 244A for the period of delay in curing TDS certificate defects. 2. Allowability of MICR charges without TDS deduction under Section 194J. 3. Reopening of assessment. 4. Disallowance of expenditure under Section 14A. 5. Deduction under Section 36(1)(viia) based on provision for bad and doubtful debts. 6. Applicability of Section 115JB to the assessee. Detailed Analysis: 1. Denial of Interest under Section 244A: The assessee's appeal concerned the denial of interest under Section 244A for the period from April 1991 to March 1998 due to delay in curing defects in the TDS certificate. The CIT(A) denied the interest, attributing the delay to the assessee. However, the Tribunal found that the defects in the TDS certificate, issued by the Reserve Bank of India and other government agencies, were not attributable to the assessee. Since the tax was deducted and deposited timely, Section 244A(2) did not apply. The Tribunal directed the AO to allow the interest for the specified period, thus allowing the assessee's appeal. 2. Allowability of MICR Charges: The Revenue's appeal challenged the CIT(A)'s decision to allow payment of MICR charges without TDS deduction under Section 194J. The AO had disallowed the payment, but the CIT(A) deleted the disallowance, relying on the Supreme Court's decision in Hindustan Coca Cola and confirmation from SBI that the charges were accounted for in its tax computation. The Tribunal upheld the CIT(A)'s decision, noting that the CBDT notification exempted such charges from TDS, and dismissed the Revenue's appeal. 3. Reopening of Assessment: The assessee's cross-appeal contested the reopening of the assessment. However, since the Tribunal dismissed the Revenue's appeal on merits, it found it unnecessary to decide on the legal point of reopening the assessment. 4. Disallowance of Expenditure under Section 14A: The assessee's appeal for A.Y. 2005-06 contested the disallowance of Rs. 26.13 crores under Section 14A. The Tribunal noted that the AO had incorrectly applied Rule 8D despite the Tribunal's earlier direction to use a reasonable basis. The Tribunal found that the assessee had sufficient interest-free funds for investments, applying the Bombay High Court's rulings in HDFC Bank and Reliance Utilities. The Tribunal directed the AO to delete the disallowance, allowing the assessee's appeal. 5. Deduction under Section 36(1)(viia): The Revenue's appeal for A.Y. 2005-06 contested the CIT(A)'s allowance of the deduction under Section 36(1)(viia). The Tribunal referred to its earlier decision for A.Y. 2007-08, which allowed the deduction based on a percentage of total income and advances. However, the Tribunal noted the Punjab & Haryana High Court's decision in State Bank of Patiala, which required a provision in the books equal to the claimed deduction. Respectfully following this decision, the Tribunal set aside the CIT(A)'s findings and upheld the AO's restriction of the deduction to the provision made in the books, partly allowing the Revenue's appeal. 6. Applicability of Section 115JB: The Revenue's appeal also contested the CIT(A)'s decision that Section 115JB did not apply to the assessee. The Tribunal referred to its decision for A.Y. 2007-08, which held that Section 115JB was not applicable. Following this precedent, the Tribunal dismissed the Revenue's ground. Conclusion: The Tribunal allowed the assessee's appeals regarding interest under Section 244A and disallowance under Section 14A, while dismissing the Revenue's appeal on MICR charges and partly allowing it on the deduction under Section 36(1)(viia). The Tribunal upheld the non-applicability of Section 115JB to the assessee, following its earlier decisions.
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