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2023 (8) TMI 722 - AT - Income TaxDisallowance u/s 14A made under Rule 8D(2)(ii) and 8D(2)(iii) of the Rules - HELD THAT:- For Assessment Year 2013-14, we notice that the accumulated interest free funds as on 31/03/2013 are more than investments -Similar is the situation for the remaining assessment years wherein also the interest free funds available with the assessee company in the form of shareholder funds is almost 9 to 10 times of the investments held by the assessee in the equity shares. It is an admitted fact that there is no finding of the revenue authorities at any stage indicating specifically that interest bearing funds have been applied for the purpose of making investments. In absence of any such finding, we find that the judgement of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] are squarely applicable on the facts of the present case and, therefore, on account of sufficient availability of interest free funds, we find no merit in the finding of the ld. AO making interest disallowance under Rule 8D(2)(ii) of the Rules. Thus, the finding of the ld. CIT(A) is set aside and disallowance made under Rule 8D(2)(ii) for the impugned assessment years are hereby deleted. Remaining disallowance u/r 8D(2)(iii) assessee has not challenged the said disallowance of Rs. 2,22,977/- and, therefore, the same is confirmed. So far as Assessment Year 2014-15, is concerned, we notice that AO has made a disallowance under Rule 8D(2)(iii) at Rs. 5,01,386/- and the same has been calculated taking the average investment figure at Rs. 10.03 Crores, whereas as per the details filed in the paper book, the correct figure is Rs. 5,93,89,491/- which is the investment fetching exempt income and taking this correct figure, the disallowance under Rule 8D(2)(iii) will work out to Rs. 2,96,947/- and the same is hereby confirmed. For Assessment Year 2016-17, we notice that the ld. Assessing Officer has calculated the sum @ 0.5% of the average investment at Rs. 10.23 Crores, whereas the actual average value of investment is Rs. 4,41,09,065/- and, therefore, the correct amount of disallowance shall work out to Rs. 2,20,545/- and the same is hereby confirmed. For Assessment Year 2017-18, AO made total disallowance of Rs. 1,40,266/- whereas assessee has suo-moto disallowed a sum of Rs. 4,45,692/- and has mentioned in the audit report and AO has failed to take note of the said disallowance. It means that the ld. AO has not complied with the provisions of Section 14A of the Act of recording satisfaction before applying Rule 8D of the Rules. On this ground itself the disallowance made under section 14A r.w.r. 8D, for Assessment Year 2017-18 is deleted. Deemed dividend u/s 2(22)(e) - sum received by the assessee company from another group company - HELD THAT:- As respectfully following the ratio laid down in the decisions and judgments of Bhaumik Colour Pvt. Ltd. [2008 (11) TMI 273 - ITAT BOMBAY-E], DCIT 1(1)(2), Mumbai Vs Gilbarco Veeder Root India (P) Ltd. [2018 (8) TMI 437 - ITAT MUMBAI] as well as CIT Vs. Vatika Township (P) Ltd. [2014 (9) TMI 576 - SUPREME COURT] since undisputedly the assessee is not a shareholder in Apeejay Tea Ltd., which has given loan/advance to assessee, therefore, the assessee does not fall under any of the limbs provided under section 2(22)(e) of the Act, and the same cannot be invoked in the hands of the assessee. We, thus set-aside the finding of the ld. CIT(A) and delete the addition made under section 2(22)(e) of the Act and allow these common grounds of appeal raised by the assessee against the addition made u/s 2(22)(e) of the Act. Disallowance u/s 2(24)(x) - delayed deposit of employees’ contribution to PF/ESI i.e. after the due date as provided under the respective welfare enactments - HELD THAT:- This issue is no more res integra in view of the judgment of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that “deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF/ESI cannot be claimed even though deposited within the due date of filing of return of income read with Section 43B of the Income-tax Act, 1961. Therefore, the amounts are liable to be added as income in the hands of the assessee, the disallowance so made are confirmed and the grounds raised by the assessee are dismissed. Disallowance on account of interest on delay deposit of TDS and interest of delay payment of service tax - HELD THAT:- We notice that the issue of interest on delay deposit of TDS has been extensively dealt in the case of M/s Premier Irrigation Adritec (P) Ltd. [2023 (1) TMI 1124 - ITAT KOLKATA] wherein the Tribunal has held that interest payment on delayed deposit of income tax, whether TDS or otherwise is not an allowable expenditure. Respectfully following the decision of the Tribunal, the disallowance of interest on delayed deposit of TDS stands confirmed. So far as the interest on delayed payment of Service tax is concerned, we notice that the same is allowable in view of the ratio laid down in the case of Lachmandas Mathuradas [1997 (12) TMI 16 - SUPREME COURT] Since the bifurcation of the alleged disallowance is not available on record, we direct the Assessing Officer to carry out the necessary exercise for which the assessee shall provide the related documents and then shall confirm the disallowance for the interest on delay in deposit of TDS and allow the interest paid on delay in deposit of service tax. Accordingly, this issue raised for AY 2016-17 and 2017-18, is partly allowed for statistical purposes.
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