9911796707
TMI Blog2019 (12) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... hat if the interest bearing fund would have not utilised for investment purpose, the interest payment expense would have been reduced in accordance with the taxable income of the assessee. AO was right in invoking the provisions of section 14A r.w. rule 8D of I.T.Rules. However, the ld CIT(A) after accepting the alternate plea of the assessee and the computation made thereto by the AO, restricted the disallowance to the amount of ₹ 48,17,000/- under Rule 8D. After carefully considering the orders of lower authorities we are of the view that the CIT(A) was right in restricting and confirming the addition. We, accordingly uphold the findings of the CIT(A) and dismiss the ground of appeal of the assessee. Addition u/s.2(24)(x) - Delayed contribution to EPF was deposited by the assessee - HELD THAT:- In the instant case, it is not in dispute that the contribution to EPF was deposited by the assessee before due date of filing the return of income u/s.139(1) - In view of above findings of Hon ble Delhi High Court in the case of CIT vs. Bharat Hotels Ltd. [2018 (9) TMI 798 - DELHI HIGH COURT ] the issue is restored to the file of the Assessing Officer to examine the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on substantial question of law. Ld counsel further explained that subsequently, ITAT, Cuttack Bench in assessee s appeal in ITA No.230/CTK/2017 for assessment year 2007-08 order dated 10.8.2018 has restored the issue to the file of the AO on filing of Form No.8 regarding declaration by the assessee Indian Metals and Ferro Alloys Ltd u/s.158A of the Act claiming that identical question of law is pending before the Hon ble High Court. Therefore, the issue may kindly be restored to the file of the AO to reconsider the issue based on the final outcome of the assessee s appeal pending before the Hon ble High Court for the assessment year 2009-2010. 4. Replying to above, ld CIT DR strongly supported the assessment and first appellate order. However, he did not controvert that the Hon ble Jurisdictional High Court has in ITA No.20/2014 vide order dated 8.2.2017 admitted the Income tax appeal of the assessee against the order of the ITAT Cuttack Bench dated 13.6.2014.(supra). Ld CIT DR, in all fairness, submitted that the grievance of the assessee in these grounds may be restored to the file of the AO in the manner as has been done by the ITAT Cuttack in order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er four weeks after. The Registry is directed to call for the L.C.R. from the Tribunal in the meantime . We considering the declaration filed by the assessee in Form No.8 and the observations of the Hon ble High Court and the provisions of law, restore this issue to the file of Assessing Officer to consider based on the final outcome of the assessee s appeal in identical issue pending before the Hon ble High Court for the assessment ear 2009-2010 as mentioned in the Form No.8. Accordingly, this ground of appeal is allowed 6. Respectfully following the order of Co-ordinate Bench of this Tribunal and considering the declaration filed by the assessee in Form No.8 and observation of Hon ble High Court in the order dated 8.2.2016, this issue is restored to the file of the AO for a fresh consideration as per the final outcome of assessee s appeal in ITA No.20/2014 pending before the Hon ble High Court for the assessment year 2009-2010. Accordingly, Ground Nos.1 to 1.2 of the appeal are allowed for statistical purposes. 7. Ground No.2 to 2.3 read as follows: 2. That on facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable in holding that the satisfaction of the AO is discernible in the assessment order and in confirming the findings of the AO that interest bearing or mixed funds have been diverted for generating exempt income without appreciating that no material or evidence has been brought on record by the AO to support that the funds have been diverted. 9. Replying to above, ld CIT DR vehemently supported the assessment order and submitted that the AO in para 7 of the assessment order has made detailed enquiry regarding the relevant facts and explanation of the assessee, which constitute the proper satisfaction as per the requirements of mandate of section 14A r.w. 8D of the I.T.Rules. Ld CIT DR further submitted that the assessee has diverted the borrowed business funds to the investment activities and interest on borrowed funds diverted from business claimed as interest is not allowable from the profits of the assessee, which was used for the purpose of earning exempt income. Ld CIT DR vehemently pointed out that even if mixed funds were diverted, interest u/s.36(1)(iii) of the Act is not allowable by virtue of the onus being on the assessee who is in the special knowle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31.03.2010. Though there is increase in share capital, reserve and surplus from ₹ 458.33 crore as on 01.04.2009 to ₹ 606.63 crore as on 31.03.2010 but there is also increase in fixed assets from ₹ 449.60 crore as on 01.04.2009 to ₹ 635.69 crores as on 31.3.2010. There is CWIP at the end of year to the tune of ₹ 272.I0 crore as on 31.3.2010. Looking to the source of fund and its utilization it is clear that the assessee has no such huge surplus fund which is utilized for investment purpose. Vide questionnaire dated 27.11.2012, assessee was asked to furnish reply regarding disallowance u/s.I4A of the Act for which assessee in its reply dated 28.01.2013 submitted as under. We would like to inform your honour that during die year under consideration the company has not traded any share resulting any capital gain/loss. Disallowance of any expenditure u/s.I4A of Income Tax Act, 1961 is therefore does not arise. Though there may not be trading activities in shares or securities during the year but it is fact that in die balance sheet, the investment in shares has been increased. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Further from para 5.2 of the CIT(A) order, we observe that the ld CIT(A) after considering the submission and contention of the assessee confirmed the addition with the following observations and findings: I have considered the matter. I find some merit in the submission of the appellant in so far as computation of disallowance under Rule 8D r.w.s. 14A is concerned. The appellant's submission that the AO has not recorded his satisfaction for resorting to the disallowance under Rule 8D r.w.s. 14A is not supported with any material or evidence. Even otherwise, the satisfaction of the AO Is discernible in the assessment order itself when the AO has given a finding that interest bearing funds or mixed funds have been diverted for investment activities generating exempt income. However,-the computation of disallowance by the AO suffers from serious flaws since the AC, while computing the disallowance u/s,14A, has considered even the interest on long term loans taken earlier and for specific purposes. The AO has wrongly taken all investments for computing the disallowance under Rule 8D instead of taking only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and business activities has its separate nature in principle and no expenditure is allowable on investment activities, which brings exempt dividend income of the assessee. The AO went up to the extent to observe that if the interest bearing fund would have not utilised for investment purpose, the interest payment expense would have been reduced in accordance with the taxable income of the assessee. 13. In this scenario, we are inclined to hold that the AO was right in invoking the provisions of section 14A r.w. rule 8D of I.T.Rules. However, the ld CIT(A) after accepting the alternate plea of the assessee and the computation made thereto by the AO, restricted the disallowance to the amount of ₹ 48,17,000/- under Rule 8D. After carefully considering the orders of lower authorities, especially para 5.2 of the CIT(A) order, we are of the view that the CIT(A) was right in restricting and confirming the addition to the tune of ₹ 48,17,000/-. We, accordingly uphold the findings of the CIT(A) and dismiss the ground of appeal of the assessee. ITA No.512/CTK/2014- Revenue s appeal 14. In Ground No.1 of appeal, the griev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1952 and the Employees State Insurance Act, 1948 was that in respect of the EPF Scheme contributions the deductions were to be deposited within 15 days of the succeeding wage period with a grace period of 5 days; for ESI contributions the deposit with the concerned statutory authority had to be made within three weeks of the succeeding wage month/period. The CIT in this case confirmed the additions - made by the AO based on the entire amounts that were disallowed. The ITAT however granted complete relief. 8. Having regard to the specific provisions of the Employees‟ Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT‟s decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace period in terms of the extent notification). As far as the amounts constituting deductions ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
