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2021 (8) TMI 940 - AT - Income TaxDisallowances being CSR expenditure incurred by the assessee and claimed as deductible expenditure - HELD THAT - Assessee claimed that these are incurred for the business activity of the company. The facts shows that the assessee is machine manufacturer and the expenditure incurred in Odisha has not been shown before the lower authorities that same are incurred for the purpose of the business. In view of this, it does not satisfy the conditions prescribed u/s 37(1) of the Act. Further, it not the case that the expenditure is otherwise allowable to the assessee u/s 37(1) of the Act and because explanation added by Financial Act 2018 applicable from AY 2015-16 the disallowances is made. Therefore, it is imperative that even before the assessment year 2015-16 to get the deduction u/s 37(1) of the act of the corporate social responsibility expenditure assessee must satisfy the conditions envisaged u/s 37(1) - No infirmity in the order of the ld CIT(A) in confirming the disallowances. - Decided against assessee. Disallowances on account of interest paid for late deposit of TDS - HELD THAT - As relying on CHENNAI PROPERTIES AND INVESTMENTS LIMITED 1998 (4) TMI 89 - MADRAS HIGH COURT we confirm the action of the lower authorities in disallowing the interest expenditure for late deposit of TDS. - Decided against assessee.
Issues Involved:
1. The legality of the order passed by the Commissioner of Income Tax (Appeals). 2. Disallowance of ?4,74,192/- as periphery expenses (Corporate Social Responsibility expenditure). 3. Disallowance of ?1,28,233/- as interest payment for late deposit of TDS. 4. Non-adjudication of grounds related to interest charge under sections 234B and 234C of the Income Tax Act, 1961. Detailed Analysis: 1. The legality of the order passed by the Commissioner of Income Tax (Appeals): The first issue raised by the assessee was that the order of the learned Commissioner of Income Tax (Appeals) is bad in law and against the facts and circumstances of the case. This ground was deemed general in nature and was dismissed by the Tribunal without further deliberation. 2. Disallowance of ?4,74,192/- as periphery expenses (Corporate Social Responsibility expenditure): The assessee incurred ?4,74,192/- as CSR expenditure at the instance of the Government of Odisha. The Assessing Officer (AO) disallowed this expenditure, stating it was not related to the business activities of the assessee, a company engaged in manufacturing and sale of machinery. The CIT(A) upheld the disallowance, noting that the expenditure did not meet the conditions prescribed under section 37(1) of the Income Tax Act. The Tribunal agreed with the lower authorities, stating that the expenditure did not satisfy the criteria under section 37(1) and was not allowable. Consequently, the appeal on this ground was dismissed. 3. Disallowance of ?1,28,233/- as interest payment for late deposit of TDS: The AO disallowed ?1,28,233/- paid as interest on late deposit of TDS, which was upheld by the CIT(A). The Tribunal referenced the decision of the Hon’ble Madras High Court in Commissioner Of Income-Tax vs Chennai Properties, which held that interest paid under section 201(1A) of the Income-tax Act is not deductible as business expenditure under section 37. The Tribunal confirmed the lower authorities' action, dismissing the appeal on this ground. 4. Non-adjudication of grounds related to interest charge under sections 234B and 234C of the Income Tax Act, 1961: The assessee contended that the CIT(A) erred in not adjudicating grounds related to the charge of interest under sections 234B and 234C. The Tribunal noted that these charges are consequential in nature and dismissed this ground of appeal as well. Conclusion: The Tribunal dismissed the appeal filed by the assessee, upholding the disallowances made by the AO and confirmed by the CIT(A). The order was pronounced in the open court on 03/08/2021.
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