TMI Blog2021 (7) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that no expenses was incurred for the purpose of earning exempt income - Assessing Officer in instead of verifying the fact invoked provision of Rule 8D(2) and made disallowance under Rule 8D(2)(ii) and under Rule 8D(2)(iii) thereby making total disallowance. As assessee made similar submission as made before us and contended that assessee has not earned any exempt income. The Ld. CIT(A) confirmed the action of Assessing Officer. It is now settled positional law that if no exempt income is earned, no disallowance under section 14A can be made. The Hon'ble Supreme Court recently in PCIT v. Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER] while dismissing appeal of the Revenue held that in absence of any exempt income, disallowance under section 14-A of any amount was not permissible. Considering the settled position under the law the Assessing Officer is directed to delete the entire disallowance under section 14A. Disallowance of various expenses to the extent of 10% - assessee submits that the assessee incurred total expenses on account of sales and business promotion office, miscellaneous expenses, labour expense and conveyance - whether expenses we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The case was selected for scrutiny. The Assessing Officer after issuing show cause notice and given opportunity to the assessee made disallowance under section 36(1)(va) r.w.s. 2(24)(x) of ₹ 13,02,518/-, due to delay in deposit of employees contribution of provident fund. The Assessing Officer also made disallowance under section 14A by taking view that assesse has made investment of ₹ 1.65 crores and claimed interest expenses of ₹ 2.93 crores. The Assessing Officer issued show cause notice as to why the provision of section 14A r.w.r. 8D of the Act. The assessee has filed it reply. In the reply, the assessee contended that the assessee has not earned any exempt income during the relevant period. The assessee has not incurred any expenses for the purpose of earning of such exempt income. The investments are made for the purpose of business. The contention of the assessee was not accepted by the Assessing Officer. The Assessing Officer after invoking the provision of Rule 8D made disallowance of ₹ 4,44,263/-. The Assessing Officer further noted that assessee has debited various expenses in its profit and loss account, consisting of sale promotion, busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which the salary relates and not from the end of the month in which it is actually paid. The Co-ordinate Bench of this Tribunal in Shri Sandeep Subhash Nanavati v. DCIT (ITA No. 1362/AHD/2017) dated 14.02.2020 held that due date to be considered relevant for making payment of contribution has to be seen not with reference to the relevant months relatable to wages/salary but month of its actual disbursement. On the basis of aforesaid submission, the Ld. AR of the assessee prayed that the addition was not justified. 6. On the other hand, the Ld. DR for the revenue submits that before CIT(A), the assessee has not pressed this ground of appeal, therefore, he cannot raised this plea as the ground of appeal was not adjudicated by first appellate authority on merit. In alternative submission, the Ld. DR for the Revenue submits that in case this Bench is of the opinion that this submission raised by the assessee required consideration. This ground may be restored to the Ld. CIT(A) for consideration of facts and adjudication afresh. 7. In the rejoinder submission, the Ld. AR for the assessee after hearing the submissions of the Ld. DR for revenue submits that this ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.2013. The Ld. A.R. submits the assessee has invested only ₹ 1.65 crores only. Thus no interest disallowance is warranted against the assessee. To support his submission, the Ld. AR of the assessee relied upon the decisions : CIT v. Corretch Energy P. Ltd. 45 taxmannc.om 116 CIT v. Hero Cycles Limited 323 ITR 518 (P H HC) CIT v. Winsome Textile Industries Ltd. 319 ITR 204 Everest Kanto Cylinder Ltd. v. ACIT, ITA No. 7073/Mum/2012 dated 25.09.2014 Manugraph India Pvt. Ltd. v. DCIT, ITA No. 476/Mum/2012 dated 29.03.2015 CIT v. UTI Bank Ltd. 32 taxmann.com 370 (Gujarat High Court) CIT v. Reliance Utilities Power Ltd. 313 ITR 340 (Bombay High Court) Gujarat Industrial Development Corporation Ltd. 37 taxmann.com 254 (Gujarat High Court) Amod Stamping (P.) Ltd. 45 taxmann.com 427 Gujarat High Court Torrent Power Ltd. 222 Taxman 367 (Gujarat High Court) Raghuvir Synthetics Ltd. 394 ITR 222 (Gujarat High Court) The DCIT v. Gujarat Mineral Development Corporation Ltd. (ITA No. 1185/Ahd/2007, 1246/Ahd/2007, 543 1324/Ahd/2008, 1324/Ahd/2008 Ahmedabad Bench of ITAT). 11. On the other hand, the Ld. DR for the Revenue supported the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. On the other hand, the Ld. DR for the Revenue supported the order of Ld. CIT(A). The Ld. DR submits that the Ld. CIT(A). was very reasonable in restricting the disallowance of expenses @ 10%. 16. We have considered the rival submission of both the parties and have gone through the orders of authorities below. We find that during the assessment Assessing Officer disallowed 15% of the expenses by taking view that all expenditure are not fully supported by bills and vouchers, therefore, not verifiable. The Ld. CIT(A) restricted the disallowance to 10%. We find that the Ld. CIT(A) restricted the disallowance is to 10% despite holding that the Assessing Officer has not verified the expenses. The Ld. AR of the assessee vehemently submits that assessee is a corporate entity and all expenses were incurred wholly and exclusively for the purpose of business. We find merit in the submission of Ld. A.R. of the assessee that in absence of specifying specific discrepancies, or rejecting books of accounts no ad-hoc disallowance of various expenses is permissible. We further find that the disallowance are ad-hoc and not based on any reasoning. Thus we direct the Assessing Officer to d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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