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2021 (4) TMI 912 - AT - Income Tax


Issues:
1. Disallowance under Section 43B of the Income Tax Act, 1961 for the Assessment Years 2013-14 & 2014-15.
2. Ad-hoc disallowance of expenses claimed by the assessee.
3. Claim for deduction of educational cess paid.
4. Addition of notional interest.

Analysis:

Issue 1: Disallowance under Section 43B
In the appeal for AY 2013-14, the disallowance under Section 43B was challenged by the assessee. The contention was that the service tax paid to the service provider was not payable by the assessee to the government but by the service provider. The Tribunal held that Section 43B did not apply to this payment as the service tax was part of the cost of services availed by the assessee, and the disallowance made under Section 43B was deleted.

Issue 2: Ad-hoc Disallowance of Expenses
The AO had made ad-hoc disallowances of expenses claimed by the assessee for personal purposes as the bills and vouchers were not produced. The Tribunal upheld the decision as no supporting documents were provided by the assessee, leading to the dismissal of the grounds challenging the ad-hoc disallowances.

Issue 3: Claim for Deduction of Educational Cess
The assessee raised additional grounds regarding the deduction of educational cess paid. Following relevant case laws, including a judgment of the Hon’ble Bombay High Court, the Tribunal allowed the claim for deduction of education cess and higher education cess, stating that it is allowable as a deduction.

Issue 4: Addition of Notional Interest
In the appeal for AY 2014-15, the addition of notional interest was challenged by the assessee. The Tribunal, following the decision of the Hon’ble Gauhati High Court, held that notional interest cannot be brought to tax and allowed this ground of the assessee.

In conclusion, both appeals filed by the assessee were allowed in part, with decisions made on various grounds including disallowances, deductions, and notional interest. The Tribunal provided detailed reasoning for each issue, citing relevant case laws and legal principles to support its decisions.

 

 

 

 

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