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2019 (11) TMI 1574 - ITAT AHMEDABADDisallowance u/s 43B - delay in deposit of employees provident fund. - unpaid employees contribution to PF and being unpaid employees contribution to ESI - HELD THAT:- Assessee fairly accepted that this issue stands squarely covered against the assessee by the judgment of Hon'ble jurisdictional High Court in the case of CIT V/s Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] - Decided in favour of revenue. Disallowance u/s. 14A r.w.r. 8D - Disallowance of of expenses in the nature of administrative expenses for the earning of exempt income - HELD THAT:- The interest income received during the year is more than the interest paid by the assessee for all the three assessment years. Further from perusal of the audited financial statements it emerges that the interest free funds available with the assessee in the form of share capital and accumulated reserve and surplus is much more than the alleged investments. In these given facts we observe that Ld. CIT(A) has rightly deleted the impugned disallowance for interest under Rule 8(2)(ii) of the I.T Rules following the decision of Coordinate Bench, Ahmedabad in the case of ITO V/s Karnavati Petrochem Pvt. Ltd. [2014 (1) TMI 920 - ITAT AHMEDABAD]. Hon’ble Punjab & Haryana High Court in the case of CIT V/s Hero Cycles Ltd. [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] after considering the facts that the assessee had earned net interest income during the year held that the disallowance u/s 14A of the Act is uncalled for/ Thus since the assessee had earned net interest income during the year and also possess sufficient interest free funds to cover up the alleged investments, Ld. CIT(A) has rightly deleted the proportionate interest disallowance made by the Ld. A.O applying Rule 8D(2)(ii) of the I.T. rules. Administrative expenses disallowed u/s 14A - Rule 8D(2)(iii) of the I.T. Rules has been specially enacted to compute the administrative disallowance since it is practically not possible to bifurcate the administrative expenses specifically incurred for managing the investment portfolios. But certainly assessee should not be burdened with abnormal disallowance of administrative expenses just because of application of Rule 8D and should be considered with reference to the investment portfolio of the assessee unless until Ld. A.O makes proper satisfaction with evidence and factual finding. Considering the investment portfolio of the assessee and being fair to both the parties sustained the disallowance of administrative expenses under Rule 8D(2)(iii) of I.T. Rules accordingly for Assessment Years 2010-11, 2011-12 and 2012-13 respectively. These respective grounds No.2 of the assessee’s appeal are partly allowed. Depreciation on computer software - @ 25% OR 60% - HELD THAT:- As relying on Zydus Infrastructure Pvt. Ltd [2016 (8) TMI 696 - ITAT AHMEDABAD] treatment of the software by the A. O. as intangible asset and allowing interest @ 25% is not justified as the computer software has been grouped as eligible to rate of depreciation @ 60% and, therefore, A. O. should have allowed the depreciation @ 60% in place of 25% allowed by him. Gain/ loss from transactions of sale of shares and securities - capital gain or business income - HELD THAT:- There remains thin line but then such thin line has to be checked by the revenue authorities from necessary details including contract note, separate demat account statements. From perusal of the record we find that no such effort has been made by the revenue authorities and only general remark has been given that “since the assessee in the business of share trading and frequent transactions have taken place it should be treated as business income”. Certainly this could not be a bench mark to bifurcate the transaction being held for long term purposes as investor or as a trader. This claim has been consistently made for so many years. Transactions have been separately accounted for in the books. Equity shares purchased for Long Term purposes are held as Investment valued at “cost price” and equity shares held as stock in trade are shown under the head Inventories valued at “cost or market price whichever is less”. Gain/Loss as it is incurred has been disclosed in the financial statements and computation of income. Since no adverse material is brought on record by the revenue authorities in any of the years under dispute, we are of the considered view that the claim of the assessee of showing the gain from sale of equity shares under the head Long Term and Short Term Capital Gain needs to be accepted. Disallowance of depreciation and insurance of motor cars in the name of Directors - HELD THAT:- As decided i Swagat Infrastructure Ltd [2014 (1) TMI 881 - ITAT AHMEDABAD] assessee has made submission that the cars were purchased in the name of the Director and such cars are utilized for the purposes of its business. Therefore the assessee is entitled for depreciation and the interest expenditure. We are of the considered opinion that the assessee would be entitled for the allowance depreciation as well as interest expenditure if the assessee is able to prove that the vehicles were under the dominion control of the assessee-company and were utilized for its business purpose. The contention of the assessee is that the vehicles were utilized for business purpose and the assessee-company has shown it in block of assets. We find that this contention of the assessee is not considered by the authorities below in the light of the ratio laid by Hon'ble Supreme Court rendered in the case of Mysore Minerals Ltd. [1999 (9) TMI 1 - SUPREME COURT] we allow this ground of assessee's appeal and direct the Assessing Officer to delete the addition. Disallowance of bad debts claimed by the assessee allowing it as trading loss - HELD THAT:- As facts are similar to those for Assessment Years 2010-11,2011-12 and 2012-13, find no reason to interfere in the finding of Ld. CIT(A) deleting the disallowance of bad debts (treating loss) . Addition u/s 40(a)(ia) of the Act made on payment of V-Sat charges/ lease line charges/NSDL charges - HELD THAT:- We find that similar issue was adjudicated by the Coordinate Bench in assessee’s own case for Assessment Year 2009-10 and has been decided in favour of the assessee TDS u/s 194H - Disallowance u/s 40(a)(ia) of the Act on sub-brokerage/commission - HELD THAT:- In the present case, admittedly the assessee was agent of post office schemes, PPF, RBI Bonds, LIC, Mutual Funds etc. and, therefore, the commission paid by it to other persons whose services were taken for earning commission was also outside the purview of provisions of section 194H. The definition uses the term "in relation to" which clearly implies that whenever any commission or brokerage is paid in relation to securities then it would be outside the ambit of section 194H. Admittedly, the assessee had paid sub-brokerage in relation to securities (mutual fund) and, therefore, it was outside the ambit of section 194H. See Mittal Investment & Co [2012 (12) TMI 1059 - ITAT DELHI]. Disallowance u/s 14A addition to the book profit for the purpose of computing tax u/s 115JB - HELD THAT:- We observe that the issued raised before us is squarely covered against the revenue and in favour of the assessee by the decision of the Ahmedabad Bench in the case of DCIT V/s Torrent Cable Limited [2018 (6) TMI 743 - ITAT AHMEDABAD] which has followed judgment of Special Bench in the case of ACIT V/s Vineet Investment (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI] as well as Arvind Ltd V/s DCIT [2015 (7) TMI 118 - ITAT AHMEDABAD]. Addition to the book profit of the Short Term and Long Term Capital Gains earned from sale of shares of Adani Enterprises - CIT(A) has directed the Ld. A.O to verify the claim - HELD THAT:- We fail to find any error in the finding of Ld. CIT(A) since the assessee’s claim needs to be verified before making any addition to the book profit. We accordingly restore this issue to the file of Ld. A.O who shall verify the contentions of the assessee that the alleged gain of ₹ 1.11 crores forms part of the income shown in the Profit & Loss Account. Assessee is directed to make necessary submission before the Ld. A.O with the ledger account of the capital gain account for sale of shares in order to satisfy the Ld. A.O. Ground of revenue allowed for statistical purposes.
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