TMI Blog2021 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... u disallowance. So, in the absence of satisfaction recorded by the AO, mechanical invoking of provisions contained u/s 14A read with Rule 8D is not permissible as has been held by Hon ble Delhi High Court in case of Maxopp Investment Ltd. [ 2011 (11) TMI 267 - DELHI HIGH COURT] CIT (A) has rightly deleted the addition made by the AO u/s 14A of the Act. So, ground no.1 is determined against the Revenue. Disallowance of consumption incentive - Addition on the ground that these expenses are in the nature or provision, liability for which may or may not accrue in the time to come - CIT (A) deleted this addition - HELD THAT:- Keeping in view the facts and circumstances of the case and following the order passed by the coordinate Bench of the Tribunal in the assessee s own case for AYs 2008-09 2009-10, we are of the considered view that when the assessee has been consistently following mercantile system of accounting, the liability brought on record is an ascertained liability and the party-wise detail has been brought on record by the assessee and perused by the AO as well as ld. CIT (A) qua the discount given. So, we find no illegality or perversity in the findings return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of equity shares in subsidiary and associate company and claimed exempt income of ₹ 2,34,585/-. AO by invoking the provisions contained under section 14A of the Income-tax Act, 1961 (for short the Act ) read with Rule 8D of the Income-tax Rules, 1962 proceeded to compute disallowance to the tune of ₹ 38,94,755/-. 3. AO also made addition of ₹ 3,34,81,847/- by way of disallowance of consumption incentive on the ground that these expenses are in the nature of provision, liability for which may or may not accrue in the time to come. 4. AO also made disallowance of ₹ 43,14,198/- on account of late deposit of employees contribution of Provident Fund (PF) u/s 36(1)(va) Explanation 2 and assessed the total income of the assessee at ₹ 30,99,68,141/-. 5. Assessee carried the matter before the ld. CIT (A) by way of filing appeal who has partly allowed the same. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,94,755 Less : Disallowance made by the assessee 29,04,491 Disallowance to be made 9,90,264 8. Ld. CIT (A) deleted the addition on the ground that the AO has failed to record his satisfaction before invoking the provisions contained u/s 14A of the Act and also relied upon the decisions of Courts including the Hon ble jurisdictional High Court in cases of:- (i) Maxopp Investment Ltd. vs. CIT (AY 2002-03) ITA No.687/2009 (Del); (ii) Cheminvest Ltd. vs. CIT (AY 2004-05) (2015) 61 taxmann.com 118 (Del.); (iii) CIT-IV vs. Holcim India Pvt. Ltd. ITA No.486/2014 and 299/2014 (Del.); (iv) CIT vs. Taikisha Engineering India Ltd. ITA 115/2014 119/2014 dated 25.11.2014 (Del.); (v) DCM Ltd. vs. DCIT, Circle 10(1), New Delhi and Vice- Versa 2015 (9) TMI 1110 (ITAT Delhi); (vi) Joint Investments Pvt. Ltd. vs. CIT 372 ITR 694 (Del.); (vii) CIT vs. Hero Cycles Ltd. (2010) 189 taxmann 50 (Punj Har.); and (vii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi High Court in case of Maxopp Investment Ltd. vs. CIT (2012) 347 ITR 272 (Del.) , the operative part of which is extracted as under:- Section 14A even prior to the introduction of sub-sections (2) and (3) would require the Assessing Officer to first reject the claim of the assessee with regard to the extent of such expenditure and such rejection must be for disclosed cogent reasons. It is then that the question of determination of such expenditure by the Assessing Officer would arise. The requirement of adopting a specific method of determining such expenditure has been introduced by virtue of .sub-section (2) of section 14A . Prior to that, the assessee was free to adopt any reasonable and acceptable method. So, even for the pre-rule 80 period, whenever the issue of section 14A arises before an Assessing Officer, he has, first of all, to ascertain the correctness of the claim of the assessee in respect of the expenditure incurred in relation to income which does not form part of the total income under the Act. Even where the assessee claims that no expenditure has been incurred in' relation to income which does not form part of the total income, the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Thus the liability in respect of the claim would crystallized on the happening of future events i.e. booking of additional time space by the advertisers, which may or may not happen. The liability is clearly of contingent nature and cannot be called 'ascertained liability'. The legal position is settled that a liability can be termed as 'ascertained' only when it can be quantified with reasonable estimate and the liability in respect of the same has accrued during the year. While the quantification of liability may be correct in this case, yet it cannot be said that the liability in respect of the claim has accrued during the year. From the details given it is clear that these discounts are in the nature of provisions only and may or may not be passed on to the parties. Had it been an ascertained liability the same would have been credited to the party account and would not have been kept in a separate account. The right accounting entry for passing the account would have been as follows:- Discount account Dr. To Party Account Cr. The discount in this can be said to be have been passed on to the customers. However, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the appellant's own case for AY 2008-09, 2009-10 and 2010-11 on this issue and accordingly delete the disallowance made in the impugned order (₹ 3,34,81,847/- ) on this point. This ground off appeal is allowed. 16. Ld. AR for the assessee further contended that aforesaid finding returned by the ld. CIT (A) in assessee s own case for Assessment Years 2008-09 2009-10 have been confirmed by the Tribunal in ITA Nos.6080/Del/2012 4097/Del/2013 vide order dated 28.03.2019 . We have perused the order passed by the Tribunal which is on the identical facts and operative part of which is extracted as under :- 30. We have carefully considered the rival contention and found that the claim of the assessee is that company has given discount to its debtors based on consumption of Airtime during the current year. It filed its detail of the credit balance of the debt. From the details of credit balance of debtors, the learned assessing officer enquired about the details of the consumption debtor of ₹ 34,000,000/- which was explained by the assessee, that this is a discount account which is credited by the company by passing an accounting entry by crediting one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT (A) deleted the addition by returning following findings :- The reason for the disallowance appears to be no modification of the due date with respect to the employees contribution u/s 36(1)(va) as it is with respect to that for the employer s contribution to PF u/s 43B of the Act. During the appellate stage, the AR of the appellant argued on the lines of the written submissions filed by the appellant relying on court decisions including that of the Apex Court in this connection. The appellant s contention rests on reading Section 43B in conjunction with Section 36(1)(va) of the Act. While Section 36(1)(va) allows deduction towards any sum received by the assessee from its employees and credited to the employee s account in the relevant fund or funds on or before the due date. As per the explanation under the sub clause, due date means the date by which the assessee is required as an employer to credit an employee s contribution to the employee s account in the relevant fund under any Act, rule, order or notification issued there under or under any standing order, award, contract or service or otherwise'. However, Section 43B of the Act, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in case of CIT vs. Alom Extrusions Ltd. (2009) 319 ITR 306 (SC) as well as in CIT vs. Vinay Cement Ltd. 213 ITR 268 (SC) , operative part thereof is extracted for ready perusal as under:- The deletion with effect from April 1, 2004 by the Finance Act, 2003 of the second proviso to section 43B of the Income-tax Act, 1961, which stipulates that contributions to the provident fund and Employees State Insurance fund should be made within the time mentioned in section 36(1)(va), that is, the time allowed under the Employees Provident Funds and Miscellaneous Provisions Act, 1952, as well as the Employees State Insurance Act, 1948, is treated as retrospective in nature. If the employees contribution is not deposited by the due date prescribed under the relevant Acts and is deposited thereafter, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the those Acts. In so far as the Income-tax Act, 1961, is concerned, the assessee can get the benefit of deduction of the payments, if the actual payment is made before the return is filed. Where for the assessment year 2002-03 the assessee had dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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