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2013 (1) TMI 367 - AT - Income TaxDisallowance u/s 43B Late deposit of employees contribution to PF Held that:- As decided in case of P.I. Drugs & Pharmaceuticals Ltd.(2010 (8) TMI 768 - ITAT MUMBAI) that as long as even employees' contribution to PF and ESIC are paid by the assessee before the due date of filing the income tax return, the same are to be allowed as deduction in computation of income of the assessee. In favour of assessee Disallowance u/s 43B - Octroi charges and interest accrued but not due to UTI Held that:- The assessee had paid the octroi due in the shape of advance payment and there is no outstanding or default; the disallowance u/s 43B on this account is not justified. In favour of assessee Disallowance u/s 43B - Interest accrued but not due to UTI Held that:- As per the agreement between the parties, interest was not become due for payment, even till the due date of filing of the return of income, the provision of Section 43B would not be attracted. As decided in case of Gujarat Toll Road Investment Company Limited (2009 (5) TMI 582 - ITAT AHMEDABAD-C) decided in favour of assessee Expenditure on scientific research u/s 35 AO disallowed on ground that the project was not completed and not capitalized as on 31.3.2003, then the amount is not used for the purpose of scientific research Held that:- Section 35 does not require that the assessee's excess assets should aloe be capitalized in the books of account or put to use. Further A.O. has allowed the claim u/s 35 in the subsequent year; but only on the balance cost because the claim for the AY under consideration is under dispute. In favour of assessee Whether share in the loss of AOP can be set off against the other business income - Held that:- As decided in case of Ramanlal Madanlal (1978 (2) TMI 54 - CALCUTTA HIGH COURT) when the loss is eligible for carry forward and set off as per the provisions of Chapter VI of the I T Act in the hands of the AOP, then no such claim can be allowed in the hands of the member of the AOP. In favour of revenue Deduction u/s 80IA(4) work contract or not Held that:- Status of the assessee can be determined from the terms and conditions of the contract whether it is a rate contract or even a labour contract or a lump-sum contract or the assessee is a developer. Nothing has been produced before us by the assessee to controvert the finding of the Commissioner of Income Tax (Appeals); even the assessee has not produced a single contract/agreement under which the project, which is the subject matter of the controversy are carried out by the assessee. In favour of revenue Deduction u/s 80M allocation of interest expenditure - Held that:- A.O. while allocating the pro-rata interest attributable to the dividend income has not disallowed the corresponding amount of interest expenditure from the business income of the assessee u/s 36. When the A.O. has accepted the entire expenditure as business expenditure u/s 36, then the apportionment of the interest without establishing the nexus between the borrowed funds and the investment is not justified. In favour of assessee Computation of book profit u/s 115JB MAT - Adjustment in respect of share of loss in the AOP Held that:- There is no quarrel on the point that other than the adjustments as provided u/s 115JB, the A.O. cannot make any adjustment in the book profit arrived at as per the accounts prepared in accordance with Schedule VI. However, in the earlier years, the assessee itself has claimed that the shares in the AOP should be excluded while computing the book profit as per the provisions of sec. 115JB and on the similar analogy, the assessee itself has added back the amount of share in the loss of AOP for the year under consideration while computing the book profit u/s 115JB. In favour of assessee Software expenditure Revenue v/s capital nature A.O. disallowed the claim of the assessee by treating the same as capital in nature and allowed 25% depreciation on the same - Held that:- As decided in case of Datacraft India Ltd. (2010 (7) TMI 642 - ITAT, MUMBAI) that the expenditure has been laid out for acquiring the intangible assets to be used by the assessee for a number of years and therefore, the same will have an enduring benefit. However, since this intangible asset is part and parcel of computation. In favour of assessee Disallowance of general expenses payment for pooja - donation for local festivals - benevolent activities Held that:- As decided in case of Shahzada Nand And Sons (1977 (4) TMI 4 - SUPREME COURT) that the requirement of commercial expediency must be judged in the context of current socioeconomic thinking. It is an undisputed fact that no business can be conducted in hostile, socioeconomic environment. The expenses incurred on the activities which create a suitable environment and impression with reference to image and smooth functioning of the business activity of the assessee by gaining the trust of the employees as well as the local public in the affairs of the assessee company. In favour of assessee Disallowance of relief u/s 91 DTAA Relief of double tax paid in the country outside India as well as in India - Tax paid in Bhutan There is no agreement under section 90 for the relief or avoidance of double taxation - Held that:- Since the average rate of tax in India is higher than the Bhutan; therefore, the relief u/s 91 is allowable at the rate of average tax paid in Bhutan being lower rate of tax than in India. The computation of relief by the A.O. is contrary to the relevant provisions of the Act as provided u/s 91 of the act. The A.O. has computed the income from Bhutan operations at Rs. 68.63 Crores and included the same in the total income of the assessee, then the relief u/s 91 is allowable @ 8.53% on the said income, which is subjected to tax in both the countries. - Remand back to AO in favour of assessee Interest u/s 234D - Interest on excess refund Held that:- since the assessee has contended that the assessee has not received any amount of refund granted u/s 143(1); therefore, no interest is chargeable u/s 234D; even when the amount of refund is reduced at the time of assessment passed u/s 143(3). Matter remitted back for fresh decision. Disallowance of old debit balance written off - write offs pertain to old debit balances of closed projects which are not recoverable Held that:- The assessee has not produced any records to show that this amount has already included in the income of the assessee in the earlier year. Therefore, in the absence of the relevant details to show the compliance of mandatory conditions as prescribed u/s 36(2) In favour of revenue Computation book profit u/s 115JB - Adjustment in respect of the amount of disallowance u/s 14A Held that:- There is no dispute that as per the clause (f) of Explanation I to sec. 115JB the expenditure debited to P&L Account incurred in relation to the income exempt u/s 10 is to be added for computation of book profit. As decided in case of GODREJ AND BOYCE MFG. CO. LTD. (2010 (8) TMI 77 - BOMBAY HIGH COURT) that any expenditure which is disallowed u/s 14A and attained the finality has to be added back while computing the book profit. Remand back to AO Fresh claim without filling revised return - Exemption u/s 10(35) has not been claimed in return of income Held that:- Since the bar for entertain the fresh claim without filing the revised return is only with the jurisdiction of the A.O. and not the jurisdiction of the appellate authorities. The Tribunal as taken this view in series of decisions that such claim can be entertain by the appellate authority even without filling the revised return. Therefore, in the interest of justice, we remit this issue to the record of the A.O. to decide the same on merit. In favour of assessee
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