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2021 (6) TMI 661 - AT - Income TaxDisallowance u/s 14A - HELD THAT - We find that the Co ordinate Bench of the Tribunal in assessee s own case in assessment year 2015 16, has decided the issue of disallowance under section 14A of the Act 2021 (2) TMI 608 - ITAT MUMBAI wherein the issue has been decided in favour of the assessee and against the Revenue. Disallowance of payment for non-compliance with RBI norms on KYC and under Information Technology Act treating the same as falling under Explanation-l to section 37(1) - HELD THAT - We find that the Co ordinate Bench of the Tribunal in assessee s own case 2021 (2) TMI 608 - ITAT MUMBAI has decided the issue of disallowance under section 37(1) wherein issue has been decided in favour of the assessee and against the Revenue by deleting the disallowance made by the Assessing Officer. Addition of non monetary perquisite in computing book profits under section 115JB - HELD THAT - We find that the Co ordinate Bench of the Tribunal in assessee s own case 2021 (2) TMI 608 - ITAT MUMBAI decided issue in favour of the assessee and against the Revenue by deleting the disallowance made by the Assessing Officer. Education cess and higher and secondary education cess - whether taxable as the same is covered under section 40(a)(ii) of the Act and accordingly allowable as deduction in computing the income from business or profession - HELD THAT - We find that the issue raised by way of additional ground is squarely covered in favour of the assessee and against the Revenue by the decision of Sesa Goa Ltd. v/s JCIT, 2020 (3) TMI 347 - BOMBAY HIGH COURT and Chambal Fertilizers Chemicals Ltd. 2018 (10) TMI 589 - RAJASTHAN HIGH COURT . Respectfully following the aforesaid judicial pronouncements, we set aside the impugned order of the learned Commissioner (Appeals) and allow the additional ground raised by the assessee. Disallowance towards year end provision for expenses on which TDS was not deducted - HELD THAT - We find that identical issue relating to deletion of disallowance towards year end provision for expenses on which TDS was not deducted, has been decided by the Co ordinate Bench in an appeal filed by the Revenue 2021 (2) TMI 608 - ITAT MUMBAI for assessment year 2015 16, decided this issue against the Revenue and in favour of the assessee. Disallowance on account of provisions for expenses and write off - AO added the said amount both under normal provisions as well as under section 115JB - Commissioner (Appeals) observed that the Assessing Officer did not find any justification in deletion of disallowance made by the Assessing Officer and, hence, allowed the claim of the assessee - HELD THAT - We find that the assessee has debited the amount of ₹ 817,81,448, as part of other provisions for expenses amounting to ₹ 26,80,85,106 in the Profit Loss Account and in the computation of book profit, it has added back the entire amount of ₹ 26,80,81,106 and being shown as provisions and has claimed the deduction of ₹ 817,81,448/-, being in the nature of expenses. We do not find any cogent reason to disturb the findings of the learned CIT(A) in observing that the said amount of ₹ 817,81,448/- is not in the nature of provision but are in the nature of allowable expenditure relating to running of business and relatable risk involved. The write off of loss due to theft of jewellery in one of the branches and write off of various charges relating to loan recovery expenses will fall within the banking business loss / expenses. Therefore, we decline to interfere warranting any interference at the instance of the Revenue.
Issues Involved:
1. Disallowance under Rule 8D(iii) based on Section 14A of the Income Tax Act. 2. Disallowance of payment for non-compliance with RBI norms on KYC and under the Information Technology Act under Section 37(1). 3. Addition of tax on non-monetary perquisite in computing book profits under Section 115JB. 4. Taxability of education cess and higher and secondary education cess under Section 40(a)(ii). 5. Disallowance under Section 14A in Revenue’s Appeal. 6. Deletion of disallowance towards year-end provision for expenses on which TDS was not deducted. 7. Deletion of disallowance on account of provisions for expenses and write-off. Detailed Analysis: 1. Disallowance under Rule 8D(iii) based on Section 14A of the Income Tax Act: The assessee contended that the disallowance under Section 14A was incorrectly applied. The Tribunal noted that an identical issue had been decided in favor of the assessee in a previous assessment year (2015-16). The Tribunal found no reason to deviate from its earlier decision and allowed the ground raised by the assessee, thereby setting aside the order passed by the Commissioner (Appeals). 2. Disallowance of payment for non-compliance with RBI norms on KYC and under the Information Technology Act under Section 37(1): The assessee argued that the disallowance was compensatory in nature and not penal. The Tribunal observed that the same issue had been resolved in favor of the assessee in the prior assessment year (2015-16). Following the precedent, the Tribunal set aside the impugned order and allowed the ground raised by the assessee. 3. Addition of tax on non-monetary perquisite in computing book profits under Section 115JB: The assessee submitted that the tax on non-monetary perquisites should not be added while computing book profits under Section 115JB. The Tribunal noted that this issue had also been decided in favor of the assessee in the previous year. Respecting the earlier judgment, the Tribunal allowed this ground as well. 4. Taxability of education cess and higher and secondary education cess under Section 40(a)(ii): The assessee raised an additional ground regarding the non-taxability of education cess and higher and secondary education cess. The Tribunal referred to the decisions of the Hon'ble Jurisdictional High Court in Sesa Goa Ltd. v/s JCIT and the Hon'ble Rajasthan High Court in Chambal Fertilizers & Chemicals Ltd. v/s JCIT, which had ruled in favor of the assessee. Consequently, the Tribunal allowed the additional ground. 5. Disallowance under Section 14A in Revenue’s Appeal: The Revenue contested the disallowance under Section 14A. The Tribunal, referencing its decision in the assessee's appeal for the same assessment year, upheld the order of the Commissioner (Appeals) and dismissed the Revenue's ground. 6. Deletion of disallowance towards year-end provision for expenses on which TDS was not deducted: The Revenue argued that the first appellate authority ignored the decision of the Tribunal, Bangalore Bench, in IBM India Pvt. Ltd. The Tribunal noted that a similar issue had been decided in favor of the assessee in the previous year. The Tribunal found the facts of the present case distinguishable from IBM India Pvt. Ltd. and upheld the order of the Commissioner (Appeals), dismissing the Revenue's ground. 7. Deletion of disallowance on account of provisions for expenses and write-off: The Assessing Officer had disallowed an amount shown as provision for expenses. The Commissioner (Appeals) allowed the claim, noting that the expenses were actual write-offs and operational losses. The Tribunal found no reason to disturb the findings of the Commissioner (Appeals) and upheld the deletion of the disallowance, dismissing the Revenue's appeal. Conclusion: The assessee’s appeal was allowed, and the Revenue’s appeal was dismissed. The Tribunal consistently followed its previous decisions and judicial precedents to resolve the issues in favor of the assessee.
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