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2023 (4) TMI 936 - AT - Income TaxDisallowance of leave encashment u/s 43B (1) - On perusing Form 3CD, AO noticed that assessee has shown leave encashment payable but had not disallowed the same in its computation of income - contention of the assessee that during the year under consideration, assessee had make provision for leave encashment but the payments have been made in subsequent years and therefore if the payment is disallowed in the year under consideration, it be allowed as deduction in the year of payment - HELD THAT:- Identical issue arose in the case of group concern of the assessee in the case of TV Today Network Ltd. [2021 (12) TMI 1435 - ITAT DELHI] As in view of the contentions of the assessee that the payments of leave encashment has been made in subsequent years, we direct the AO to verify and allow the deduction u/s 43B of the Act being the provision made for leave encashment on actual payment basis in the year of its payment as held in the case of Exide Industries Ltd. [2007 (6) TMI 175 - CALCUTTA HIGH COURT] - Ground of assessee is allowed for statistical purposes. Disallowance u/s 14A - Suo moto disallowance - HELD THAT:- Hon’ble Delhi High Court in the case of Cargo Motors (P.) Ltd [2022 (10) TMI 571 - DELHI HIGH COURT] has held that for purpose of making disallowance of expenses under section 14A as per Rule 8D, only those investments were to be considered for computing average value of investments which yielded exempt income during relevant year. AO was not justified in working out the disallowance on account of administrative expenses u/s 14A r.w. Rule 8D(2)(iii) by computing the average value of investments on the basis of entire investment. We therefore direct the AO and direct him to work out the disallowance u/s 14A r.w. Rule 8D(2)(iii) on considering the investments which have yielded tax free income. We accordingly restore the issue back to the file of AO to rework the disallowance u/s 14A r.w. Rule 8D in accordance with law. This ground of the assessee is partly allowed for statistical purposes.
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