Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 958 - ITAT KOLKATADisallowance u/s 14A read with rule 8D(2)(ii) and 8D(2)(iii) - assessee-company has suo motu offered an amount as disallowance under the said section - HELD THAT:- If there were funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption was established considering the finding of fact both by the Commissioner (Appeals) and the Tribunal. The interest was deductible. Therefore, considering the factual position and position in law explained above, we delete the disallowance under rule 8D(2)(ii) of the Income-tax Rules. Disallowance under rule 8D(2)(iii) - We note that in its computation of income, the assessee suo motu disallowed a sum under section 14A of the Act read with rule 8D(2)(iii), being 0.5 per cent. of the average investments yielding exempt income. The said computation is reproduced in the assessment order, page 3, point 5. We direct the Assessing Officer to restrict the disallowance to the tune of ₹ 91,07,352 under section 14A of the Act read with rule 8D(2)(iii), being 0.5 per cent. of the average investments yielding exempt income. In a nut shell we confirm the disallowance under rule 8D(2)(i) at ₹ 56,181 and under rule 8D(2)(iii) at ₹ 91,07,352. The same principles for computation of disallowance under section 14A read with rule 8D will be applicable to the assessee's appeal in I. T. A. No. 937/Kolkata/2018, therefore, the Assessing Officer is directed to compute the disallowance as per the precedents cited above and discussion made Disallowance of prior period expenses - CIT(Appeals) rejected the claim of the assessee holding that since the assessee followed the mercantile system of accounting and as such the impugned expenditure can only be allowed in the year to which it pertains - HELD THAT:- Since the bills were not received, it was not possible to make provisions for such expenses in the accounts of the preceding year ending on March 31, 2009. On receipt of these bills relating to earlier year, these payments were made in the current year. These prior period expenses, which were claimed in the current year, were not debited in the books of the preceding year and accordingly were not claimed by the assessee in the assessment year 2009-10. The said expenses of ₹ 4,06,487 was claimed by the assessee in the assessment year 2010-11, hence we allow the claim of the assessee. Therefore, we delete the addition Addition of notional interest - HELD THAT:- Keeping in view all these facts of the case and applying the rule of consistency, we uphold the impugned order of the learned Commis sioner of Income-tax (Appeals) deleting the disallowance made by the Assessing Officer on account of interest allegedly attributable to the interest-free loans given by the assessee-company to its subsidiary companies and dismiss ground No. 3 of the Revenue's appeal Disallowance of compensation paid to M/s. Conforms Pvt. Ltd, a related company under section 40A(2)(b) - HELD THAT:- The payment was made in respect of vacation of the property so occupied by such company. We find substance in the learned counsel's argument that the payment was made by the assessee after much negotiation and it was a separate entity and correspondences had occurred between the assessee and the said company to settle the amount. Even if the agreement was not there but the relevant correspondences duly prove that the payment was for the vacation of the impugned premises which was vacated by the said company. Hence, it is in accordance with the business of the assessee and the same is allowable. That being so, we decline to interfere with the order of the learned Commissioner of Income-tax (Appeals) in deleting the aforesaid addition. His order on this issue is, therefore, upheld and the grounds of appeal of the Revenue is dismissed. Treating the Government securities within the meaning of 'bonds' for the purpose of the third proviso to section 48 of the Act and erred in dismissing the assessee's claim for indexed loss - HELD THAT:- as per section 2(42A) expression "security" shall have meaning assigned to clause II of the Securities Contracts Regulation Act, 1956 which includes Government securities. The facts of this case are squarely applicable to the present case of the assessee. Therefore, respectfully following the judgment of the co-ordinate Bench in the case of Sundaram Finance Limited [2017 (7) TMI 661 - ITAT CHENNAI] we note that it is abundantly clear that the Government securities are entitled to indexation benefits. Therefore, we note that the Government securities are different from bond and debenture for the purpose of the third proviso to section 48 of the Act (4th proviso after amendment) and therefore the benefit of indexation should be granted to the assessee on the redemption of these Government securities. Deduction u/s 37(1) on account of education cesses paid by the assessee - HELD THAT:- Education cess being not "Income-tax" is allowable as deduction under section 37(1) of the Act. For this, we rely on the judgment of ITC Ltd. [2018 (11) TMI 1611 - ITAT KOLKATA] wherein it was held that education cess is an allowable expenditure under section 37(1) of the Act. Therefore, we direct the Assessing Officer to verify all the relevant facts and allow education cess as deduction under section 37(1) of the Act.
|