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2018 (1) TMI 597 - AT - Income TaxDisallowances as the overloading charges u/s 37 -whether this is nothing but a penalty as per provision of section 73 of the Indian Railway Act, 1989 - stand of the assessee was that these payments were not in the nature of penalty for infringement of law and were purely in the nature of compensatory charges and therefore cannot be disallowed under Explanation to section 37(1) - Held that:- The expenses were not allowed as deduction. We are of the view that in the facts and circumstances of the present case the claim of the assessee for deduction was rightly allowed by CIT(A). We therefore uphold the order of CIT(A) and dismiss ground no.1 raised by the revenue. Assessee as an employer withheld the provident fund contribution payable by its employees from their salaries payable, as their share of contribution to Provident Fund (PF) and Employees State Insurance (ESI) - whether the order of the CIT(A) is erroneous because it relied on the sec.43B(b) of the Act whereas the present issue is involved with Sec.36(1)(va) read with 2(24)(x) ? - Held that:- Employees’ contribution to PF paid on or before the due date of filing the return of income u/s 139(1) of the Act should be allowed as deduction. SEE CIT vs Vijayshree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] Additions u/s 14A - Held that:- In the light of the uncontroverted factual details with regard to availability of own funds the disallowance of interest expenses in terms of Rule 8D(2)(ii) of the Rules was rightly deleted by CIT(A). As far as disallowance under Rule 8D(2)(iii) of the Rules is concerned, the CIT(A) has followed the decision of the Tribunal in the case of REI Agro Ltd. (2013 (9) TMI 156 - ITAT KOLKATA) and has directed the AO to exclude the investments which did not yield tax free income, while working out the average value of investment. We find no grounds to interfere with the order of CIT(A).
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