TMI Blog2011 (11) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation on building has been disallowed by the AO for the reason that the convenience deed in respect of property being lease hold ownership office, building and car parking at Ansal Plaza, was yet to be executed in favour of the assessee. The said disallowance has been made by the AO as so made in the A.Y. 2004-05. 6. On an appeal, ld. CIT(A) allowed the assessee s claim in the light of the finding of his predecessor on identical issue in the previous assessment year. The ld. CIT(A) found himself in agreement with his predecessor as he found that the property in question was mutated in the assessee s name by Municipal Corporation of Delhi and house tax was being regularly paid and the assessee was using the said premises for its business purposes. The ld. CIT(A) has applied the ratio of decision of Hon ble Supreme Court in the case of Mysore Minerals reported in 239 ITR 775 (SC). 7. Being aggrieved, the revenue is in appeal before us. 8. In the case of hearing of this appeal, it was pointed out by the ld. Counsel for the assessee that ld. CIT(A) s order passed in A.Y. 2004-05 has been upheld by the Income Tax Appellate Tribunal, Delhi Bench C vide order dated 29.04.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in deleting the disallowance made on account of depreciation on building. 9. Respectfully following the Tribunal s order passed in A.Y. 2004-05, we do not find any reason to interfere with the order of ld. CIT(A) in allowing the depreciation on office building. Thus, the ground no. 2 raised by the revenue is rejected. 10. Ground no. 3 is directed against CIT(A) s order in deleting the addition of ₹ 10,25,151/- on account of foreign traveling expenditure. 11. It has been stated by the AO that during A.Y. 2002-03, 2003-04 2004-05, the expenditure in respect of attending meeting of Global Alliance for Sugar Trade Reform Liberalization was disallowed. It was submitted by the assessee that assessee company s Committee Members/Directors were regularly attending Doha meeting of WTO and that the meeting were attended to establish assessee s business connection and relation with buyers and sellers. However, in view of the reasons given by the AO in the assessee s case in A.Y. 2002-03, 2003-04 2004-05, the foreign traveling expenditure amounting to ₹ 10,25,151/- was disallowed by the AO. 12. On an appeal, ld. CIT(A) allowed the assessee s claim aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident fund or an approved superannuation fund, subject to such limits as may be prescribed for the purpose of recognizing the provident fund or approving the superannuation fund, as the case may be; and subject to such conditions as the Board may think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed on some definite basis by reference to the income chargeable under the head Salaries or to the contributions or to the number of members of the fund. Reading the aforesaid section it is clear that to claim deduction by way of contribution to a recognized provident fund, it has to be demonstrated that the contribution is towards a recognized provident fund. The phrase Recognized Provident Fund is defined in sec. 2(38) of the Act. As per the definition it means a provident fund, which has been and continues to be recognized by the Chief Commissioner or Commissioner in accordance with rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees Provident Funds Act, 1952. Since as per the letter issued by CIT, Delhi-III dated 28.05.1976 the provident f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has failed to disallow expenditure incurred in earning exempt income on its own volition resulting into concealment of Income Penalty u/s 271(1)(c) of the I.T. Act, 1961 as initiated. 24. However, the AO disallowed the sum of ₹ 10 lakh as the same amount was disallowed in A.Y. 2002-03. 25. On an appeal, the ld. CIT(A) confirm the disallowance to the extent of ₹ 6,49,336/- as against ₹ 10 lakh disallowed by the AO. The working of ₹ 6,49,336/- being the amount of disallowance sustain by the ld. CIT(A) is as under: - On a perusal of the details of the above expenses and nature of functions performed by the personnel, I find that the administrative expenses would mostly relate to the carrying on of the normal primary business activities of the appellant. However, even the appellant has admitted vide submission dated 08.10.10 to the fact of part of such expenses having been incurred to earning of exempt income. In fact the appellant has also provided it s own working of such expenses related to Head office at Ansal Plaza, Delhi only, as investment in tax exempt instruments are taken only at Head office and not at appellant s office at Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act 15% of salary remuneration paid to the GM Dy. GM of the company. The total remuneration paid to them (which includes salary, employer s contribution to PF and employee s welfare expense) is ₹ 7,28,115/- and 15% thereof works out to ₹ 1,09,217/- which is disallowed u/s 14A of the I.T. Act. Further a 10% disallowance on salary, employer s contribution to PF and employee s welfare payment to personnel of accounts department (total ₹ 9,69,202/-) which works out to ₹ 96,920/- is also made. Further, out of the total administrative expenses as discussed in preceding para for ₹ 2,21,59,967/- an amount of 2% thereof (the appellant ahs in its submission dated 08.10.10 has allocated 1% of such expenses) is reasonably attributed to earning of exempted income. This works out to ₹ 4,43,199/- which is disallowed u/s 14A of the I.T. Act. Thus, the total disallowance u/s 14A of the I.T. Act and as discussed above would work out to ₹ 6,49,336/- (Rs. 1,09,217 + ₹ 96,920 + ₹ 4,43,199) Apart from this disallowance which is calculated and confirmed above ₹ 6,49,336/-, the disallowance of ₹ 10,00,000/- made by the AO on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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