2020 (6) TMI 470 - ITAT CHENNAI

Disallowance u/s. 14A r.w.r 8D - Whether disallowance cannot be made in the absence of exempt income earned during a year? - disallowance on first appeal filed by assessee with learned CIT(A) stood deleted by learned CIT(A) on the ground that the assessee has not received any exempt income during the year under consideration - HELD THAT:- Hon’ble Delhi High Court in the case of M/s.Cheminvest Ltd., v. C.I.T [2015 (9) TMI 238 - DELHI HIGH COURT] had held that no disallowance of expenditure is warranted by invoking provisions of section 14A of the Act when no exempt income is received by the taxpayer during the year under consideration. Thus, on this short reasoning alone that no disallowance of expenditure incurred can be made by invoking provisions of Section 14A of the 1961 Act whence the tax-payer has not received any exempt income during the year under consideration, we dismiss the grounds raised by Revenue w.r.t. disallowances made u/s 14A of the 1961 Act and uphold decision of learned CIT(A) in deleting disallowance of expenditure. The Revenue fails on this issue.

Deduction u/s. 36(1)(viii) disallowed - AO observed that the assessee has claimed deduction to the tune of 20% of total business income instead of profits derived from providing long term finance for construction or purchase of houses in India for residential purposes - HELD THAT:- Some of the incomes such as notice period salary, other income, interest on car/personal loan, interest on conveyance loans, PEMI on personal loans, penal interest on personal loans have no direct and immediate nexus with profits derived from loans granted for construction or purchase of house in India for residential purposes, while for other components of income, we are remitting the matter back to AO to decide the above in light of Hon’ble Supreme Court decisions in the case of Pandian Chemicals [2003 (4) TMI 3 - SUPREME COURT], Sterling Foods [1999 (4) TMI 1 - SUPREME COURT], Cambay Electricity [1978 (4) TMI 1 - SUPREME COURT] and Bacha F Guzdar [1954 (10) TMI 2 - SUPREME COURT] and if it is found that there is direct and immediate nexus of the said income with grant of loans for construction or purchase of houses in India for residential purposes, the same shall be included for computing deduction u/s 36(1)(viii) of the 1961 Act. The onus is on the assessee to prove that it is eligible for deduction u/s 36(1)(viii) of the 1961 Act and claim of the assessee for grant of deduction u/s 36(1)(viii) is to be strictly construed. etc.

Delay in employee contribution to P.F. - Disallowance u/s 36(1)(va) read with section 2(24)(x) - HELD THAT:- Hon’ble Madras High Court in the case of Industrial Security and Intelligence India Private Limited [2015 (7) TMI 1063 - MADRAS HIGH COURT] after considering and interpreting the decision of Hon’ble Supreme Court in the case of Alom Extrusion [2009 (11) TMI 27 - SUPREME COURT] andAimil Limited [2009 (12) TMI 38 - DELHI HIGH COURT] held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI, but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1961 Act - we allow the claim of the assessee for deduction towards employees contribution to PF which was deposited late beyond due date as prescribed under relevant statute governing PF, but the same stood deposited to the credit of employees with relevant fund before the due date for filing of return of income as prescribed u/s 139(1) - Decided against revenue.