Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 768 - ITAT AHMEDABADDisallowance u/s 40A(2)(b) - diversion of income to CCCPL and from CCCPL to CCCPL’s director - HELD THAT:- It appears from the records that in spite of repeated direction issued by the authorities below the assessee has failed to justify its claim by supporting evidence so as to establish that actual research work was involved in the CCCPL. MOU further does not specify the type of research work it would undertake. Documentary proof that CCCPL is competent to carry out research work as specified by MOU has been failed to be submitted by the assessee. It was further found that no asset has been shown by the CCCPL in their balance sheet for research equipment though the MOU particularly envisaged that CCCPL would render and conduct all their health care and clinical research services and engagement at CIMS. Thus in the absence of necessary infrastructure facilities to carry out research work, the authority below has declined to accept such expenditure towards clinical research work rendered by CCCPL and, therefore, the Learned CIT(A) observed that the appellant has used this mode to reduce tax incidence in the appellant company by entering into MOU of CCCPL unequivocally. We cannot accept the submissions made by the Learned Senior Counsel appearing for the assessee. We find that the fact of the instant case is entirely different from the fact available in the judgment passed by the Jurisdictional High Court. Thus this has no manner of application to the case in hand before us. Taking into consideration the entire aspect of the matter, we find that in the absence of any expenses shown by CCCPL incurred for research work or any assets to justify services rendered as research work, the order passed by the CIT(A) is just and proper and without any ambiguity in disallowing the impugned expenditure debited by the assessee as research expenditure, paid to CCCPL, treating the same as paper entry and/or bogus. Hence, assessee’s this ground of appeal is dismissed. Disallowance made u/s 14A - HELD THAT:- We find that the infirmity in calculating the suo moto disallowance as made by the assessee has not been pointed out by the Learned AO. Neither the same has been taken into consideration by the first appellate authority. It is a clear position of law that the provision of section 14A r.w.r. 8D requires that to make the disallowance the books of accounts are to be considered. In the instant case, the books of accounts has not been referred by the authorities below and therefore it can be inferred that no satisfaction was recorded in terms of section 14A r.w.r. 8D of the Act. Hence we reverse the addition made by the Revenue and further direct the Learned AO to delete the said disallowance. In the result, assessee’s ground of appeal is allowed. Delayed PF/ESIC contribution - HELD THAT:- Since PF/ESIC contribution u/s 2(24)(x) of the Act has been paid by the assessee even beyond the grace time, prescribed by the concerned Act, the same has been disallowed by the authorities below. Disallowance of section 14A while computing book profit u/s 115JB - HELD THAT:- AO in the instant case has made the disallowance u/s 14A r.w.r. 8D of the Income Tax Rules for ₹ 35825/- while determining the income under normal computation of income. AO while determining the income under Minimum Alternate Tax (MAT) as per the provisions of section 115JB of the Act, has added the disallowance made under the normal computation of Income under section 14A r.w.r. 8D of Income Tax Rule for ₹ 35825/- in pursuance to the clause (f) of explanation 1 to section 115JB of the Act. However, we note that in the recent judgment passed in the case of ACIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB Addition u/s 40A(2)(b) - HELD THAT:- If once the income is being charged in the hands of the directors in the highest tax bracket, taxing the same in the hands of the company would amount to double taxation. In the case in hand before us the employees and/or directors has paid their tax at the highest tax bracket of 30% and therefore entire issue is revenue neutral. No justification in disallowing the income in the hands of the appellant company when it was already been taxed in the hands of the directors and employees which would tantamount to double taxation. We have further carefully considered the judgment in the matter of ITO-vs-Hemato Oncology Clinic [2018 (5) TMI 1684 - ITAT AHMEDABAD] wherein it has been held that the Assessing Officer could not challenge payments made by assessee to doctors, who are admittedly seasoned and reputed professionals in their fields, on the basis of what other doctors are being paid in that area of expertise. We find that the explanation of the assessee are quite reasonable and worth being accepted and we do not find any infirmity in the order passed by the CIT(A) in the present facts and circumstances of the case in deleting the disallowance - Decided in favour of the assessee
|