Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (9) TMI 508 - AT - Income TaxAllowances paid to Directors relating to business u/s 40(b)/40(ba) – Held that:- On the basis of the Auditor’s report, the AO has made disallowance of payment as Director’s allowance - the assessee is a Co-operative Bank Ltd. registered under the Societies Act - The AO though was required to examine the claim of the assessee in the light of the legal provisions of the Act, but he has made disallowance relying upon the Auditor’s report - the AO was required to examine the claim of the assessee on merit also, but it was not done and the claim was disallowed on the basis of the Auditor’s report - the AO is required to assess the income as per law in the right hands - the objection raised by the Auditor in this regard is not in accordance with law and the disallowance was made solely on the basis of the Auditor’s objections - this issue requires to be re-adjudicated by the AO in the light of the relevant provisions of the Act and also the details of payments prepared by the assessee – thus, the matter is to be remitted back to the AO for re-examination – Decided in favour of assessee. Interest to depositors & payment to contractors – Failure to comply with permission of Chapter XVII B – Held that:- The AO has made disallowance paid as interest, having noted that TDS was not deducted on the payments in the light of the provisions of section 40(a)(ia) of the Act, which was later on confirmed by the ld. CIT(A) – relying upon ACIT vs. Visakhapatnam Cooperative Bank Ltd. [2011 (8) TMI 319 - ITAT VISAKHAPATNAM] - if the co-operative society makes payment of interest on deposits received from its members only and it was not required to deduct TDS in view of the provisions of section 194A(3)(v) of the Act - This aspect was not examined by the CIT(A) while confirming the disallowance though the assessee has contended that interest was paid only to the members of the assessee-society in the light of the fact that no other person except the members of the society can open an account with the assessee-bank - this aspect cannot be examined in the absence of relevant information, this issue requires a proper adjudication by the AO – thus, the matter is remitted back to the AO for re-adjudication – Decided in favour of assessee. Restriction of election expenses at 30% – Held that:- AO as well as CIT(A) was rightly of the view that the election expenses can only be allowed from the declaration of election process till declaration of results which is of not more than 30-40 days - disallowance of 30% of the total claim of election expenses is rightly decided as the assessee could not place the details of expenditures incurred for election purpose – Decided against assessee. Investment depreciation reserve disallowed – amount debited to P&L account – Held that:- Following the decision in NORTHERN RAILWAY PRIMARY COOPERATIVE BANK LTD Versus ACIT [2014 (2) TMI 460 - ITAT LUCKNOW] - as per advice of the RBI provision of the investment amount is possible during the first three years i.e. financial years relevant to the assessment years and thereafter its provision cannot be allowed without any further instruction of the RBI - The assessee has claimed provision during the AY without any advice of the RBI against the provisions of the Income-tax Act - CIT(A) is justified in disallowing – Decided against assessee.
|