2021 (8) TMI 1181 - AT - Income Tax

Disallowance u/s 80IA - reasoning of the Assessing Officer to make the disallowance was that the assessee had incurred expenditure like managerial remuneration, audit fee, staff welfare expenses, legal and professional expenses, etc. and the same have to be apportioned between 80IA units and non 80IA units - HELD THAT - As relying on own case 2020 (9) TMI 1206 - ITAT BANGALORE we direct the CIT(A) to consider the issue afresh. It is ordered accordingly. Addition of total income interest received on refund u/s 244A - HELD THAT - Admittedly, the Income Tax Department had issued interest u/s 244A on Income-tax refund for assessment year 2012-2013 amounting to ₹ 1,53,504 on 08,07.2013. Since the assessee had received a sum of ₹ 1,53,504 during the relevant assessment year, the same has to be brought to tax as income from other sources, in view of the judicial pronouncements cited by the Assessing Officer at para 8.1 of the impugned assessment order. Therefore, the ground relating to interest income received on refund u/s 244A of the I.T.Act whether it can be taxed in the relevant assessment year, is rejected. Allowable expenditure of interest u/s 201(1A) - HELD THAT - The Hon ble Apex Court in the case of Bharat Commerce Industry v. CIT 1998 (3) TMI 2 - SUPREME COURT had held that interest for late payment of direct taxes is not a deductible expenditure. In view of the clear dictum laid down by the Hon ble Apex Court, the interest expenditure paid u/s 201(1A) of the I.T.Act cannot be allowed as a deduction.

Summary

Issues:
- Disallowance u/s 80IA (Asst.Years 2013-2014 & 2015-2016)
- Interest u/s 244A (Asst.Year 2014-2015)
- Interest of ?24,644 paid u/s 201(1A) of the I.T.Act (Asst.Year 2014-2015)

Disallowance u/s 80IA (Asst.Years 2013-2014 & 2015-2016):
The Assessing Officer disallowed the claim u/s 80IA for ?3,11,713 and ?37,82,522 for assessment years 2013-2014 and 2015-2016, respectively, due to expenses like managerial remuneration, audit fee, etc. The CIT(A) upheld the disallowance, stating the appellant failed to provide evidence of separate accounting for 80IA units. The Tribunal noted that for AY 2012-2013, the matter was remanded back to the CIT(A), directing a fresh decision. Considering identical facts, the Tribunal directed the CIT(A) to reconsider the issue, allowing the grounds for AYs 2013-2014 and 2015-2016 for statistical purposes.

Interest u/s 244A (Asst.Year 2014-2015):
The Assessing Officer added interest received on refund u/s 244A to the total income for AY 2014-2015. The CIT(A) confirmed this addition. The Tribunal upheld the decision, stating that since the interest was received during the relevant assessment year, it should be taxed as income from other sources, rejecting the appeal against the addition of ?1,53,504.

Interest of ?24,644 paid u/s 201(1A) of the I.T.Act (Asst.Year 2014-2015):
The Assessing Officer disallowed the deduction of ?24,644 paid u/s 201(1A) as interest expenditure, citing statutory obligations for tax deduction. The CIT(A) upheld this decision. The Tribunal concurred, referencing the Supreme Court's ruling that interest for late payment of direct taxes is not deductible. Consequently, the appeal against disallowance was rejected.

In conclusion, the appeals for AYs 2013-2014 and 2015-2016 were allowed for statistical purposes, while the appeal for AY 2014-2015 was dismissed.