9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (8) TMI 793 - AT - Income TaxAlternative claim of deduction u/s 35(1)(iv) - expenditure incurred on construction cost of the Laboratory Building - assessee has claimed weighted deduction @ 200% u/s 35(2AB) - HELD THAT - The ld. CIT(Appeals), in our opinion, therefore, was fully justified in entertaining the claim of the assessee for deduction under section 35(1)(iv) and allowing the same on merit by following the decision of the Coordinate Bench of this Tribunal at Cochin in the case of ACIT vs.- Merchem Limited 2014 (5) TMI 1030 - ITAT COCHIN . At the time of hearing before us, even the ld. D.R. has not raised any contention to dispute this position. We, therefore, uphold the impugned order of the ld. CIT(Appeals) allowing alternative claim of the assessee for deduction u/s 35(1)(iv) and dismiss Ground No. 1 of the Revenue s appeal. Weighted deduction @ 200% u/s 35(2AB) - revenue expenditure incurred on scientific research - approval given in Form No. 3CM by the competent authority for in-house research and development facilities of the assessee for the period 1s t April, 2009 to 28t h March, 2011 only for the purpose of capital expenditure incurred on research and development facilities - HELD THAT - We find that this issue relating to the assessee s claim for weighted deduction under section 35(2AB) of the Act is squarely covered in favour of the assessee by the decision of the Hon ble Delhi High Court in the case of Sandan Vikas (India) Limited (supra), wherein it was held once a certificate by the DSIR is issued that would be sufficient to hold that the assessee fulfils the conditions laid down in the aforesaid provisions. Accordingly, we uphold the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for weighted deduction under section 35(2AB) in respect of revenue expenditure incurred on in-house research and development facility, which was duly approved by the competent authority. Grounds No. 2 to 5 of the Revenue s appeal are accordingly dismissed. Disallowance u/s 14A read with Rule 8D - assessee also made suo-moto disallowance - HELD THAT - Keeping in view all the facts of the case including especially the fact that the disallowance of ₹ 1,02,481/- offered by the assessee u/s 14A was much more than the exempt income in the form of dividend of ₹ 1,850/- only earned by the assessee during the year under consideration, we are of the view that the further disallowance of ₹ 4,19,614/- made by the AO u/s 14A by applying Rule 8D was not sustainable and the ld. CIT(Appeals) was fully justified in deleting the same. We accordingly uphold the impugned order of the ld. CIT(Appeals) on this issue and dismiss Ground No. 6 of the Revenue s appeal. Disallowance of belated payment of employees contribution to P.F and ESI - HELD THAT - We find that this issue is squarely covered in favour of the assessee by the decision of the Hon ble Calcutta High Court in the case of CIT vs.- Vijay Shree Limited 2011 (9) TMI 30 - CALCUTTA HIGH COURT , wherein it was held that the due date of deposit should be considered as due date of filing of return u/s 139(1). Since the payments in question towards employees contribution to P.F. and ESI were made by the assessee before the due date of filing of its return of income u/s 139(1), we respectfully follow the decision of the Hon ble Jurisdictional High Court (supra) and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the AO on account of belated payment of employees contribution to P.F. and ESI. Ground No. 7 of the Revenue s appeal is accordingly dismissed Disallowance of Club expenses - HELD THAT - As rightly held by the ld. CIT(Appeals), the nexus of the expenditure incurred at Clubs with its business was established by the assessee and in the absence of any tenable or cogent material to rebut or controvert the same, the disallowance made by the AO on account of Club expenses was not tenable. Judicial pronouncements relied upon by the ld. CIT(Appeals) in CIT VERSUS SUNDARAM INDUSTRIES LTD. 1999 (4) TMI 50 - MADRAS HIGH COURT also support the case of the assessee on this issue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appals) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No. 8 of the Revenue s appeal for A.Y. 2011-12. Disallowance of short-term capital loss by applying the provisions of sections 94(7) and 94(8) - it had incurred capital loss of ₹ 10,19,224/- and the same was set off against the capital gain arising on the sale of securities wherein AO taxed it as income from other sources - HELD THAT - We find that the impugned addition was made by the AO without giving any sound or cogent reason and the amount of capital gain was treated by him as income from other sources on the basis of mere conjectures and surmises. On the other hand, the relevant facts pertaining to this issue were properly explained by the assessee before the ld. CIT(Appeals) and after having satisfied with the claim of the assessee, relief was allowed by the ld. CIT(Appeals) to the assessee on this issue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss Grounds No. 2 3 of the Revenue s appeal for A.Y. 2010-11.
Issues Involved:
1. Condonation of delay in filing appeal. 2. Deduction under section 35(1)(iv) and section 35(2AB) of the Income Tax Act, 1961. 3. Disallowance under section 14A read with Rule 8D. 4. Disallowance on account of belated payment of employees' contribution to PF and ESI. 5. Disallowance of club expenses. 6. Deletion of addition by disallowing short-term capital loss under sections 94(7) and 94(8). Detailed Analysis: 1. Condonation of Delay in Filing Appeal: The Tribunal noted a delay of 22 days in filing the appeal by the Revenue. The Revenue filed an application seeking condonation of the delay, citing sufficient cause. The Tribunal, satisfied with the reasons, condoned the delay, and the appeal was disposed of on merit. 2. Deduction under Section 35(1)(iv) and Section 35(2AB): * Grounds No. 1 to 5: - The assessee, a company engaged in manufacturing, export, and import of silk fabrics, claimed weighted deduction under section 35(2AB) for capital and revenue expenditure on scientific research. - The Assessing Officer disallowed the claim for weighted deduction on capital expenditure incurred on the construction of a Laboratory Building, citing specific provisions in section 35(2AB) and the approval in Form No. 3CM, which excluded land and building expenses. - The alternative claim for deduction under section 35(1)(iv) was also disallowed as it was not made in the original or revised return, relying on the Supreme Court decision in Goetze (India) Limited. - The CIT(A) allowed the alternative claim under section 35(1)(iv) and the revised claim under section 35(2AB) for revenue expenditure, citing the Gujarat High Court decision in Claris Life Science Ltd. - The Tribunal upheld the CIT(A)'s order, agreeing that the appellate authority can entertain new claims and that the approval by DSIR suffices for weighted deduction on all eligible expenditures. 3. Disallowance under Section 14A read with Rule 8D: * Ground No. 6: - The assessee earned a dividend income of ?1,850, claimed exempt from tax, and offered a disallowance of ?1,02,481 under section 14A. - The Assessing Officer applied Rule 8D, resulting in a further disallowance of ?4,19,614. - The CIT(A) deleted the additional disallowance, noting that the offered disallowance was more than the exempt income. - The Tribunal upheld the CIT(A)'s decision, finding the further disallowance unsustainable. 4. Disallowance on Account of Belated Payment of Employees' Contribution to PF and ESI: * Ground No. 7: - The Assessing Officer disallowed ?2,31,562 for belated payment of employees' contribution to PF and ESI. - The CIT(A) deleted the disallowance, citing the Calcutta High Court decision in CIT vs. Vijay Shree Limited, which considers the due date as the filing date of the return under section 139(1). - The Tribunal upheld the CIT(A)'s order, following the jurisdictional High Court's decision. 5. Disallowance of Club Expenses: * Ground No. 8: - The Assessing Officer disallowed ?1,54,645, considering club expenses as personal and not business-related. - The CIT(A) deleted the disallowance, establishing the business nexus of the expenditure and relying on judicial precedents. - The Tribunal upheld the CIT(A)'s decision, agreeing that the business expediency was established and not rebutted by the Assessing Officer. 6. Deletion of Addition by Disallowing Short-Term Capital Loss under Sections 94(7) and 94(8): * Grounds No. 2 & 3 (A.Y. 2010-11): - The Assessing Officer treated ?10,19,224 as income from other sources due to the lack of details on capital gains. - The CIT(A) found the assessee had incurred a capital loss and set it off against capital gains, thus deleting the addition. - The Tribunal upheld the CIT(A)'s decision, finding no justification for the Assessing Officer's addition based on conjectures. Conclusion: The Tribunal dismissed both appeals of the Revenue, upholding the CIT(A)'s decisions on all grounds. The judgment emphasized the proper application of legal provisions and reliance on judicial precedents to resolve the issues.
|
