Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (2) TMI 1721 - AT - Income TaxEducation cess disallowed u/s 40(a)(ii) - HELD THAT:- We are inclined to agree with the contentions of ld. Departmental Representative that education cess is a ‘surcharge’ on income tax hence not allowable as a deduction. We prefer to follow the proposition of law laid down in the case of M/s. Kalimati Investment Company Limited [2012 (5) TMI 705 - ITAT MUMBAI] AND in the case of Sesa Goa Ltd versus JCIT [2013 (9) TMI 233 - ITAT PANAJI] on this issue. Hence we dismiss this ground of the assessee. MAT Applicability - As appellant, being a company engaged in Non-Banking Finance Business and governed by the Reserve Bank of India Act, 1934 r.w. Prudential Norms issued thereafter, it is not maintained its books of accounts strictly in terms of Part II & Part III of the Schedule VI of the Companies Act, 1956 and hence the provisions of Section 115JB is not applicable - HELD THAT:- Assessee submission that, due to the mandatory directions issued by the RBI u/s 45J of the RBI Act 1934, the assessee had to make certain provisions in the accounts and consequently, the accounts cannot be said to have been drawn up under the Companies Act 1956 but should be held that the accounts was a mixture of the requirements of the Companies Act and the requirements of the RBI Act and hence the provisions of Section 115JB of the At does not apply is not tenable. The assessee prepares its accounts as required under the Companies Act 1956. While doing so, it follows, at its own discretion, the Accounting Standards prescribed by the Institute of Chartered Accountants of India, guidance notes issued by Institute of Chartered Accountants of India on various issues, Accounting Standards prescribed under the Income Tax Act 1961 and in case of Non-banking Financial Companies, it additionally follows at its discretion the requirements suggested by the RBI. These requirements, suggestions and prescriptions are not in conflict with the requirements under the Companies Act. The auditors have not, in their audit report, alleged so. There is no dispute that the Balance Sheet and Profit & Loss accounts are drawn up in accordance with Part II & III of Schedule VI of the Companies Act, 1956. Hence, this additional ground is dismissed as devoid of merit. Disallowance u/s 14A - contentions of the assessee company that the AO has not recorded reasons for applying Rule 8D - HELD THAT:- Though the AO was wrong in holding that Rule 8D is procedural in nature, the fact is that the claim of the assessee, that it had not incurred any expenditure for earning exempt income, has been rejected by the Assessing Officer. This to our mind is sufficient satisfaction that was arrived at by the Assessing Officer that the claim of the assessee is not correct. This was prior to the Assessing Officer invoking Rule 8D of the I.T. Rules 1962. Hence this argument of the assessee is rejected. Disallowance under Section 14A r.w. Rule 8D(2)(ii) - The assessee has not furnished any calculation that it had interest free funds which can be presumed to have been invested in non-interest bearing investments. In the absence of such details been filed either before the Assessing Officer or before the ld. CIT(A) or before us, the argument of the ld. Counsel for the assessee cannot be entertained. Unless some prima facie facts and figures are brought on record, we cannot restore the issue to file of the Assessing Officer for verification and fresh adjudication as requested by the ld. Counsel for the assessee. Thus we find no infirmity in the order of the ld. CIT(A). Hence, we dismiss this ground of the assessee. Income recognition - Disallowance of provision for Non-performing assets (NPA) made in accordance with the prudential norms of the RBI in computation of income under the normal provisions of the Act - HELD THAT:- Departmental Representative correctly submitted that the judgment of Southern Technologies [2010 (1) TMI 5 - SUPREME COURT] covers the issue and that in the judgment of Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - DELHI HIGH COURT] , the Hon’ble High Court has considered all these aspects including the decision in the case of TRO v. Custodian [2007 (8) TMI 343 - SUPREME COURT] and came to our conclusion that under the real income theory, interest income on Non-Performing Assets (NPA’s) need not to be recognized as income. Provision of leave encashment - HELD THAT:- This issue is set aside to the file of the Assessing Officer to adjudicate the issue de novo, after considering the final judgment of Exide Industries Limited & Anr. Vs. Union of India & Ors. [2007 (6) TMI 175 - CALCUTTA HIGH COURT] read with CIT vs. M/s Exide Industries Ltd. & Anr. [2009 (5) TMI 894 - SC ORDER] Addition of profit on sale of fixed assets/investments in the computation of book profits u/s 115JB - HELD THAT:- This issue is admittedly covered against the assessee by the decision of the Special Bench of the Hyderabad ITAT in the case of Rain Commodities Ltd. vs. DCIT; [2010 (7) TMI 794 - ITAT HYDERABAD] . Hence this ground is dismissed. MAT computation - addition of “Provision made for Nonperforming Assets (NPA)” in computing book profits u/s 115JB - HELD THAT:- We agree with the submissions of the ld. Counsel for the assessee that the provision in question is not made for meeting liabilities. But we are of the view that the amount in question is set aside as a provision for diminution in the value of assets, hence covered by the Explanation 1(i) to section 115JB of the Act. This amendment was held as retrospective in nature. The effect of this provision is reduction in the value of the assets of the company. Hence we find no infirmity in the order of the ld. CIT(A). Disallowance u/s 14A - CIT(A) has restricted the disallowance to the dividend income earned by the assessee - HELD THAT:- CIT(A) applied this proposition of law laid down in the case of Joint Investment Pvt. Ltd. vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT] .Hence we find no infirmity in the order of the ld. CIT(A) on this issue. Addition on account of disallowance u/s 14A r.w.r 8D while computing book profit u/s 115JB - HELD THAT:- This issue is covered by the decision of the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] . Respectfully following the same we dismiss this ground of the revenue.
|