2022 (2) TMI 72 - AT - Income Tax

Additions on account of employees contribution to PF u/s 36(1)(va) - HELD THAT - Admittedly the issue has been decided against the assessee by the Hon ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation 2014 (1) TMI 502 - GUJARAT HIGH COURT We do not find any reason which could lead us to pass a conditional order depending on the situation would arise out of the disposal in the matter of GSRTC (supra) pending before the Hon ble Apex Court. According to us such liberty of making an application is not required to be given by us for the particular reason that at the present moment the issue has already been decided by the Jurisdictional High Court against the assessee - Decided against assessee. Addition on deferred revenue expenditure - AO was of the opinion that the assessee has not given any justification for such claim of the expenses under Section 35D of the Act and therefore, the same was not allowable - HELD THAT - As relying on assessee s own case for A.Y. 2010-11 2021 (8) TMI 365 - ITAT AHMEDABAD we allow this ground of appeal by directing the Ld. AO to verify the same in the light of the decision given by the Coordinate Bench in the A.Y. 2010-11and to allow the claim accordingly upon giving a reasonable opportunity of being heard to the assessee. This ground of appeal is, therefore, allowed for statistical purposes. TDS u/s 195 - Addition in respect of the assessee s foreign Commission payment - HELD THAT - In the absence of any changed facts and circumstances of the matter in assessee s own case for A.Y. 2010-11 2021 (8) TMI 365 - ITAT AHMEDABAD we set-aside the issue to the file of the Ld. AO to verify the details of services obtained from the commission agents by the assessee and to pass order accordingly upon giving an opportunity of being heard to the assessee and upon considering the evidence which the assessee may choose to file at the time of hearing of the matter. Thus, this ground of appeal is allowed for statistical purposes. Addition u/s 14A - Disallowing applied Rule 8D being interest and administrative expenditure @ 0.5% of the average investments - CIT-A deleted the addition - HELD THAT - Factually the assessee has not claimed for exemption of any income for the payment of tax and of his own made disallowance. Hence, further disallowance is not justified which has rightly been taken care by the Ld. CIT(A) without any ambiguity so as to warrant interference. Hence, the ground of appeal filed by the Revenue is found to be devoid of any merit and, thus, dismissed.

Summary

Issues Involved:
1. Addition on account of employees' contribution to PF under Section 36(1)(va) of the Income Tax Act.
2. Addition on deferred revenue expenditure.
3. Disallowance of foreign commission payment.
4. Deletion of addition under Section 14A of the Income Tax Act.

Detailed Analysis:

1. Addition on Account of Employees' Contribution to PF:
The first issue pertains to the addition of ?53,83,721/- on account of employees' contribution to PF under Section 36(1)(va). The assessee's counsel admitted that the issue had been decided against the assessee by the Hon’ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC), reported in 366 ITR 170 (Gujarat). The counsel requested a conditional order similar to the one in the case of Deco Mica Ltd. vs. DCIT, where the appeal could be revived if the Supreme Court reversed the GSRTC judgment. However, the Tribunal did not find any reason to pass a conditional order and dismissed this ground of appeal, following the Jurisdictional High Court's decision against the assessee.

2. Addition on Deferred Revenue Expenditure:
The second issue involves the addition of ?1,05,03,034/- on deferred revenue expenditure. The AO disallowed the claim as the assessee did not justify the expenses under Section 35D of the Act. The CIT(A) confirmed this addition, following a precedent in the assessee’s own case for previous assessment years. The Tribunal, however, referred to a Coordinate Bench decision in the assessee’s case for A.Y. 2010-11, which directed the AO to verify if these expenses were treated as deferred revenue expenditure in earlier years and accepted in assessments framed under Section 143(3). The Tribunal allowed this ground of appeal for statistical purposes, directing the AO to verify and allow the claim accordingly.

3. Disallowance of Foreign Commission Payment:
The Revenue's appeal included the disallowance of ?2,03,22,569/- for foreign commission payments. The Tribunal noted that this issue was covered in the assessee’s own case for A.Y. 2010-11, where it was held that if the commission was paid for services rendered outside India and the agents had no PE in India, the income would not be taxable in India. The Tribunal directed the AO to verify the nature of services obtained from the commission agents and to pass an order accordingly, allowing this ground of appeal for statistical purposes.

4. Deletion of Addition under Section 14A:
The final issue was the deletion of an addition of ?1,53,436/- under Section 14A, which the AO had applied as interest and administrative expenditure. The CIT(A) deleted this addition, noting that the assessee had not claimed any exempt income and had already made a suo moto disallowance of ?42,96,550/-. The Tribunal upheld the CIT(A)'s decision, referencing the judgment of the Hon'ble Gujarat High Court in CIT vs. Corrtech and the Delhi High Court in IL&FS Energy Development Co. Ltd., affirming that no further disallowance was warranted. This ground of appeal by the Revenue was dismissed.

Conclusion:
In conclusion, the appeal by the assessee was allowed for statistical purposes regarding the deferred revenue expenditure and foreign commission payment, while the appeal by the Revenue was partly allowed, dismissing the disallowance under Section 14A and directing verification for the foreign commission payment. The Tribunal followed precedents and provided detailed directions for verification and compliance.