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2018 (11) TMI 1785 - AT - Income TaxDisallowance u/s 14A - assessee challenged disallowance under section 14A of the Act r.w. Rule 8D - HELD THAT:- In this case, the assessee has not demonstrated that the investments have been made out of only its surplus funds and moreover, the assessee has not established that the borrowed funds have been utilized for the purpose of investments at any stage. Admittedly, in this case, the dividend income earned by the assessee was ₹.27,22,973/- whereas, the disallowance of expenditure worked out by the Assessing Officer goes manifold to the extent of ₹.1,08,15,631/-. The window for disallowance indicated in section 14A of the Act was only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income. In a recent judgement in the case of Maxopp Investment Ltd. & Ors [2018 (3) TMI 805 - SUPREME COURT] restricting the disallowance to the quantum of exempt income. Thus, the ld. CIT(A) has rightly restricted the disallowance to the extent of exempt income earned by the assessee. As long as an exempt income was earned, the expenditure incurred as attributable to earning such exempt income, had to be disallowed under section 14A of the Act. Thus, the ground raised by the assessee stands dismissed. Additon made on account of employees’ contribution to ESI & PF - AO treated the delayed payments representing employees contribution towards PF/ESI as income of the assessee and brought to tax under section 2(24)(x) r.w.s. 36(1)(va) - HELD THAT:- In this case, it is not disputed by the Revenue that the assessee has not paid the employees’ contribution received by it before the due date of filing of the income tax return as specified under section 43B of the Act. Various Courts including the Hon’ble Jurisdictional High Court in the case of CIT v. Industrial Security and Intelligence India Pvt. Ltd. [2015 (7) TMI 1063 - MADRAS HIGH COURT] held that there can be no deemed addition under section 36(1)(va) r.w.s. 2(24)(x) of the Act, if the impugned amount has been paid before the due date of filing of the return. The ld. DR could not controvert the above decision of the Hon’ble Jurisdictional High Court. Just because the Department has not accepted the above decision and preferred Review Petition, we cannot take a different view, other than the view taken by the Hon’ble Madras High Court, which is binding on the Tribunal. We sustain the order of the ld. CIT(A) in deleting the addition - Decided against revenue.
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