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TMI Blog2011 (10) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance by applying the provision of section 14A of the Act ? (b) Whether the Assessing Officer was justified in disallowing a sum of Rs. 59,833/-, as expenditure not relatable to business, mainly on the ground that income earned by the assessee is only in the form of dividend income, capital gains on sale of units and in the absence of not carrying of any other business, business expenditure cannot be claimed and allowable ? (c) Whether professional fees pertaining to the period 1990-1991 to 2003-2004 is allowable as deduction in the assessment year 2005-2006 mainly on account of the fact that it was actually paid in this year ? 2. During the previous year relevant to the assessment year under consideration assessee earned divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the action of the Assessing Officer. 3.1. Assessing Officer further observed that in the absence of carrying on any business in the year under consideration assessee is not entitled to claim any business expenditure and accordingly disallowed a sum of Rs. 59,833/-. Learned CIT(A) was of the opinion that in the absence of any business transaction in this year, question of allowing any deduction towards business does not arise and accordingly confirmed the action of the Assessing Officer. 4. With regard to deduction of Rs. 19,850/- claimed by the assessee, representing professional tax, the Assessing Officer as well as the CIT(A) were of the opinion that prior period expenses cannot be claimed as deduction in the year under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l tax can be claimed as deduction, under section 43B of the Act, only in the year of payment and by statutory compulsion the assessee-company has to make a claim of deduction in this year i.e., the year of payment. 6.1. On the other hand, learned DR strongly relied upon the Orders passed by the tax authorities. 7. We have carefully considered the rival submissions and perused the record. As regards the first issue we find that Rule 8D is not retrospective in its operation, in the light of decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. 328 ITR 81. Even under section 14A of the Act reasonable expenditure, which was necessary for the purpose of earning tax free income has to be considered for disallowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional tax payable has to be claimed as deduction in the year to which it pertains to and only upon disallowing such claim in the earlier years a deduction would be permissible in the year of payment in the light of provisions of section 43B of the Act. We fail to understand the logic behind the plea of learned DR. Heading of section 43B states that certain deductions can be allowed upon actual payment. It is not in dispute that professional tax can be claimed as deduction, irrespective of the method of accounting followed by an assessee, in the year of actual payment. Admittedly, assessee paid the professional tax in the previous year relevant to the assessment year 2005-2006. Under the circumstances, we are of the firm view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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