2022 (3) TMI 1400 - AT - Income Tax

Non accounting income - amount collected from punters for disbursement as dividend to punters stands diverted at source by virtue of overriding title - disallowance made by assessing officer by invoking the provisions of section 40A 3 - Treating the total receipts to be application of money as against diversion at source by overriding title as considered by the assessee - issue challenging the decision of the CIT(A) in treating the total receipts to be application of money as against diversion at source by overriding title as considered by the assessee - HELD THAT - We remand these issues back to the Ld.AO to consider the submissions of assessee de novo in light of the Rules of Betting and the principles laid down by various Hon ble Courts.

Summary

Issues:
1. Disallowance of amount collected from punters for disbursement as dividend.
2. Disallowance under section 40A(3) of the Act.
3. Disallowance of expenditure claimed under section 43B of the Act.
4. Disallowance of bad debts written off.
5. Disallowance of prior-period expenses.
6. Disallowance of brought forward unabsorbed business loss and depreciation.
7. Disallowance of interest under section 234B of the Act.

Analysis:

1. The Appellate Tribunal considered the appeal filed by the assessee against the order passed by the Ld. CIT (A) for assessment year 2011-12. The main contention was regarding the diversion of amount collected from punters for disbursement as dividends. The Tribunal remanded the issue back to the Assessing Officer to reconsider the submissions of the assessee in light of the Rules of Betting and legal principles established by various courts.

2. The disallowance made under section 40A(3) of the Act was also challenged. The Tribunal observed that there was no speaking order on this issue. Consequently, the matter was remanded to the Assessing Officer to provide a detailed order after considering the evidence and documents submitted by the assessee. Both parties were granted the opportunity to present their case in accordance with the law.

3. Regarding the disallowance of certain expenditures claimed under section 43B of the Act, the Tribunal partially allowed the claim of the assessee. The Tribunal directed the lower authority to consider the claim of brought forward unabsorbed depreciation and business losses for the relevant assessment year, emphasizing the need for a proper computation of interest payable under section 234B as per legal provisions.

4. The Tribunal also addressed the issue of disallowance of bad debts written off, prior-period expenses, and brought forward unabsorbed business loss and depreciation. The Tribunal directed the Assessing Officer to provide a speaking order after considering all relevant evidence and granting the assessee a fair opportunity to present their case.

5. Ultimately, the Tribunal allowed the appeal filed by the assessee for statistical purposes, indicating that the decision was made based on procedural grounds rather than the merits of the case. The order was pronounced in open court on 14th March 2022, bringing the legal proceedings to a conclusion.