2024 (5) TMI 1230 - AT - Income Tax

Disallowance of interest u/s. 36(1)(iii) - advance was given to the wife of the employees out of the overdraft account having credit balance frequently resulting into payment of interest on which the assessee has paid interest - HELD THAT - ITAT Ahmedabad Bench in assessee s own case for AY 2014-15 2020 (11) TMI 260 - ITAT AHMEDABAD held as assessee was having substantial amount of interest free funds as against amount of loan advanced. Addition u/s. 145A - excise duty payable on closing stock of finished goods - HELD THAT - We find that the Ld.CIT(A) has deleted the addition in assessee s case for the AYs 2013-14 2014-15 2020 (11) TMI 260 - ITAT AHMEDABAD Before us neither the Ld.DR has placed any material on record nor controverted the findings of the ld.CIT(A). The CIT(A) while passing the aforesaid order relied upon the decision(s) of Hon ble Supreme Court in the case of CIT vs. Indo Nippon Chemicals Co. Ltd. 2003 (1) TMI 8 - SUPREME COURT and CIT vs. M/s. Dynavision Ltd. 2012 (9) TMI 265 - SUPREME COURT . In view of the aforesaid facts we are of the opinion to approve the findings of Ld.CIT(A) and delete the addition. Thus this ground of Assessee s appeal is allowed. Disallowance u/s. 14A r.w.r. 8D - HELD THAT - The assessee has claimed as exempt income being earned as dividend income. AO held that the indirect expenses were involved in earning this exempt income. The Assessing Officer accordingly worked out disallowance u/s. 14 r.w.Rule 8D and made disallowance of Rs. 2, 73, 643/- and the same was upheld by Ld.CIT(A) vide order dated 09/06/2023. Accordingly we approve the findings of the Ld.CIT(A) and accordingly ground No.5 of assessee s appeal is rejected.

Summary

Issues:
1. Late filing of appeal
2. Disallowance of depreciation
3. Disallowance of interest expenses
4. Addition in stock value
5. Disallowance under section 14A

Analysis:

1. Late Filing of Appeal:
The appeal was filed late by 29 days due to technical glitches in downloading the appellate order. The delay was condoned by observing the principle of natural justice as requested by the assessee. The delay was not objected to by the Departmental Representative, leading to the condonation of the delay.

2. Disallowance of Depreciation:
The ground related to the disallowance of depreciation was not pressed by the counsel for the assessee and was dismissed accordingly.

3. Disallowance of Interest Expenses:
The issue of disallowance of interest expenses was discussed, and it was found that the issue was covered by a decision of the ITAT in the assessee's own case for a previous assessment year. The disallowance was allowed based on the precedent set by the Co-ordinate Bench.

4. Addition in Stock Value:
The addition in stock value under section 145A was challenged by the assessee. The CIT(A) had deleted the addition in the assessee's case for previous assessment years, citing relevant legal precedents. The ITAT approved the findings of the CIT(A) and deleted the addition, allowing the ground of the assessee's appeal.

5. Disallowance under Section 14A:
The disallowance under section 14A was upheld by the CIT(A) based on the computation method prescribed in Rule 8D. The ITAT considered the findings of a previous case and restricted the disallowance to the extent of administrative expenses. The ITAT rejected the ground of the assessee's appeal related to disallowance under section 14A.

In conclusion, the appeal of the assessee was partly allowed, with specific grounds being dismissed or allowed based on legal precedents and interpretations of relevant provisions of the Income Tax Act.