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2021 (10) TMI 22 - AT - Income TaxDisallowance u/s 14A r.w.r.8D - HELD THAT - On careful consideration of the rival contentions we find that as there is no exempt income earned by the assessee there cannot be any disallowance u/s 14A - Decided in favour of assessee. Suo Moto disallowance u/s 14A - HELD THAT - As the assessee has offered suo moto disallowance of ₹ 2 lakhs, failed to give any breakup of such expenditure, itself said that it has not incurred any expenditure in relation to exempt income, we do not find any infirmity in the order of the learned CIT A in retention of disallowance of ₹ 2 lakhs. Thus, ground numbers 2 4 of the appeal of the assessee are also dismissed. Disallowance of corporate social responsibility claimed as a business expenditure eligible u/s 37 (1) - deduction u/s 80 G of the act of the above expenditure - HELD THAT - We find that assessee has given donation to three organizations. Assessee has failed to establish that how these expenditure has been incurred by the assessee wholly and exclusively for the purposes of the business. Therefore, we do not find any infirmity in the order of the lower authorities in denying the deduction of the above expenditure u/s 37 (1) - as assessee has obtained donation receipt from all these three organization, which are registered u/s 80G of the income tax act, we direct the learned assessing officer to grant the deduction of the above donation under the above Section. Accordingly, ground number six of the appeal of the assessee is allowed. Disallowance on account of sales tax liability additionally imposed by the sense tax department Mumbai for the period 1/4/1971 31/3/1992 - HELD THAT - Merely because the assessee has been granted a refund arising out of the above appellate order on 19th of March 2009 of ₹ 223,019 it cannot be said that liability for payment of the sum of ₹ 720,081 arose in assessment year 2010 11. Therefore, the claim of the assessee is undoubtedly allowable for assessment year 2009-10 and correctly disallowable for assessment year 2010 11. Therefore, we confirm the disallowance made by the assessing officer for assessment year 2010 11 in case of the assessee. Thus we do not find any infirmity in the order of the learned CIT A. Allowability of the above claim of the assessee in assessment year 2009-10, AR has referred to the special bench decision of joint Commissioner of income tax versus Mukand Ltd 2007 (2) TMI 358 - ITAT MUMBAI as well as the decision of the coordinate bench in case of Perfect equipments 2001 (11) TMI 214 - ITAT AHMEDABAD-A it has been held that the provisions of Section 153 (3) gives the power to the appellate authority lifting the bar of the time limitation for giving effect to the finding or direction contained in the order of the tribunal regarding bringing to tax the escaped income as well as the claim allowable in different year, we, respectfully following the above judicial precedents, direct the learned assessing officer to grant the above deduction in assessment year 2009 10. Appeal of the assessee is dismissed subject to allowing the above claim in assessment year 2009 10. Disallowance paid towards statutory taxes - HELD THAT - CIT - A considered the claim of the assessee in paragraph number 30.4 by considering the claim of the assessee for deduction of ₹ 125,100 allowing the balance claim but retaining the addition at ₹ 83,755/ the assessee is aggrieved with that. The above amount comprises of two different sums (1) payment of ₹ 67,725 was relating to assessment year 2007 08, (2) a sum of ₹ 16,030 sales tax demands for assessment year 2003 04. We find that assessee has paid both the sums during the year and claimed as deduction. As the assessee has paid the above sum during the year and there is no finding that such sum were incurred in another year but paid during the year, we direct the learned assessing officer to delete the above disallowance and allow the claim of the assessee.
Issues Involved:
1. Deletion of disallowance under Section 14A of the Income Tax Act. 2. Confirmation of certain disallowances by CIT(A). 3. Disallowance of expenses related to Corporate Social Responsibility (CSR). 4. Disallowance of sales tax demand. 5. Disallowance of statutory taxes. Detailed Analysis: 1. Deletion of Disallowance under Section 14A: The primary issue concerns the deletion of a disallowance of ?10,86,07,784/- under Section 14A of the Income Tax Act by the CIT(A). The Assessing Officer (AO) was aggrieved by this deletion, while the assessee challenged the retention of ?2,00,000/- disallowed by the CIT(A). The AO noted that the assessee had investments amounting to ?2,729.09 million but had only made an ad hoc disallowance of ?2,00,000/- in the computation of income. The AO made a disallowance of ?10,86,07,784/- under Rule 8D after reducing the ad hoc disallowance. The CIT(A) deleted the disallowance based on the Delhi High Court's decision in Cheminvest Ltd. vs. ITO, which held that no disallowance under Section 14A can be made if no exempt income is earned. The tribunal upheld this view, dismissing the AO's appeal and retaining the ?2,00,000/- disallowance as the assessee had failed to provide a breakup of such expenditure. 2. Confirmation of Certain Disallowances by CIT(A): The assessee contested the confirmation of various disallowances by the CIT(A). Ground number 1, being general in nature, was dismissed as no arguments were advanced. Ground number 5 related to a disallowance of ?5,57,500/- incurred on CSR activities, which was claimed as a business expenditure under Section 37(1). The CIT(A) and the tribunal found no basis for allowing this expenditure under Section 37(1) but directed the AO to grant a deduction under Section 80G as the donations were made to organizations registered under Section 80G. 3. Disallowance of Expenses Related to Corporate Social Responsibility (CSR): The tribunal confirmed the disallowance of ?5,57,500/- under Section 37(1) but allowed the deduction under Section 80G for the same amount. The assessee had provided donation receipts from three organizations registered under Section 80G, justifying the allowance under this section. 4. Disallowance of Sales Tax Demand: The tribunal addressed the disallowance of ?7,20,081/- out of ?9,50,000/- related to a sales tax demand for the financial year 1971-72. The demand crystallized during the year under reference upon disposal of an appeal. The tribunal found that the liability arose in the financial year 2008-09, making it allowable for the assessment year 2009-10, not 2010-11. The tribunal directed the AO to grant the deduction in the assessment year 2009-10, confirming the disallowance for 2010-11. 5. Disallowance of Statutory Taxes: The tribunal considered the disallowance of ?83,755/- out of ?1,25,100/- paid towards statutory taxes. The CIT(A) had allowed part of the claim but retained ?83,755/-. The tribunal found that the assessee had paid the amounts during the year and directed the AO to delete the disallowance, allowing the claim for the full amount. Consequently, the alternative ground number 9 became infructuous. Conclusion: The tribunal dismissed the AO's appeal and partly allowed the assessee's appeal, providing relief on several grounds while confirming disallowances where justified. The order was pronounced in open court on 29/09/2021.
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