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2014 (12) TMI 340 - AT - Income TaxDisallowance u/s 14A r.w Rule 8D(2) – Held that:- CIT(A) was rightly of the view that the assessee had its own funds of capital and reserve & surplus more than the investments appearing in the balance sheet for the year - the assessee had not used borrowed funds as the assessee’s own funds were available for the purpose of investment – relying upon CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - the disallowance made by the AO in relation to administrative and managerial expenses under Rule 8D(2)(iii) is upheld – Decided against revenue. Disallowance on late deposit of Employees’ Contribution to Provident Fund deleted - Held that:- CIT(A) rightly deleted the disallowance relying upon CIT vs. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] wherein the effect of deletion of second proviso to section 43B of Finance Act, 2003 is retrospective therefore, the assessee would be entitled to claim the benefit of deduction if the amount of contribution to Employees’ Provident Fund is deposited on or before the due date of filing of return for the relevant AY - a grace period of five days is available to the employer even after the due date for deposit of PF under Provident Fund Act - assessee has deposited the contribution within the grace period - when the assessee had made a payment within the grace period, then it can be safely said that the assessee had made the payment within the due date under the Provident Fund Act, the requirement of section 43B even otherwise is deemed to be complied with – the order of the CIT(A) is upheld – Decided against revenue. Deemed dividend u/s 2(22)(e) – Held that:- CIT(A) was rightly of the view that the payee company was a public limited company, hence the provisions of section 2(22)(e) were not attracted to the company - the amount was not in the form of loan or advance but it was inter-corporate deposit upon which the interest payment had been made by the assessee after deducting TDS as per law - the payment was made to the assessee company in the ordinary course of business - since the payee company is a public limited company and the inter-corporate deposits were made due to business exigencies and in the ordinary course of business, the provisions of section 2(22)(e) are not attracted – the order of the CIT(A) is upheld – Decided against revenue. Disallowance on club entry fees deleted – Held that:- CIT(A) was rightly of the view that the expenses were incurred by the directors of the assessee company for the purpose of promoting the business activity of the assessee company - the expenditure was revenue in nature - the expenditure was not incurred for obtaining club membership –the order of the CIT(A) is upheld – Decided against revenue. Capitalization of cost of investment disallowed – Held that:- The assessee during the year has earned substantial dividend income and long term capital gains which had been claimed as exempt u/s 10(38) - The disallowance of expenditure made u/s 14A is relating to the expenditure which the assessee had incurred in earning the exempt income - the expenditure is to be allowed in the relevant AY in which the exempt income has been claimed – the order of the CIT(A) is upheld – Decided against assessee.
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