UNISON METAL LIMITED,,AHMEDABAD vs. THE DY. CIT, CIRCLE-4(1)(2),, AHMEDABAD

First we take up the appeal for Assessment Year 2013-14, i.e. ITA No.169/Ahd/2019. 3. It is pertinent to observe that these appeals were listed on earlier occasion, i.e. on 20th April 2021. The assessee filed a letter requesting for adjournment on that date and the hearing was accordingly adjourned to 17th June 2021. On 17th June 2021, the Bench did not function and the hearing

The assessee has taken four grounds of appeal. In Ground No.1, the assessee has pleaded as under:-

A perusal of the order would reveal that, like in the Tribunal, the assessee has sought adjournment before the learned First Appellate Authority and did not make sufficient and sincere efforts to present its case; and, therefore, learned First Appellate Authority has to decide the appeal ex-parte. We do not find any error in the order of the learned CIT(A) on this point; hence, this ground of appeal is rejected.

In Ground Nos. 2 & 3, the assessee has pleaded as under:-

With the assistance of learned Departmental Representative, we have perused the assessment order. The findings of the learned Assessing Officer on this point read as under:-

Though this aspect does not throw much light on the reasoning what weighed with the Assessing Officer while calculating the disallowance for the purpose of Section 14A; however, a perusal of his reliance upon the decision of Special Bench of the Tribunal in the case of Cheminvest Ltd vs. ITO, reported in 124 TTJ 577 (Del) (SB) as well as his findings in AY 2014-15, we find that the learned Assessing Officer was for the view that the disallowance under Section 14A of the Act is to be made by keeping in mind the reasoning that the expenditure in relation to the exempt income is required to be disallowed and not to examine whether the expenditure incurred by the assessee has resulted into exempt income or taxable income. According to him, what is relevant is to work out the expenditure in relation to the exempt income and not to examine whether the expenditure incurred by the assessee has resulted into exempt income or taxable income. Firstly the Special Bench decision of the Tribunal put into service by the Assessing Officer at serial no. 1 amongst other decisions in the findings extracted supra is concerned, this decision has been reversed by the Hon’ble Delhi High Court. Similarly, in the grounds of appeal, the assessee has pleaded that it has no exempt income; and, in view of the decision of Hon’ble juri ictional High Court in the case of CIT vs. Corrtech Energy Pvt Ltd, reported in 372 ITR 97, no disallowance should have been made. The investment in the shares has been pleaded by the assessee at Rs.32,000/- in this year. Though it is not verifiable from the findings of any of the authorities below, but, considering the pleadings of the assessee that it has no taxable income, we allow this ground of appeal and delete the disallowance. We are doing this because in Assessment Year 2014-15, the ITA Nos. 169 & 170/Ahd/2019 AY : 2013-14 & 2014-15 5

In Ground No.4, the assessee has pleaded that the learned CIT(A) has erred in confirming the disallowance of travelling expenses amounting to Rs.1,34,066/-.

A perusal of the impugned order would reveal that these expenditures were incurred in Assessment year 2012-13. It was crystallized in that year. Therefore, according to the Revenue Authorities, it should have been claimed in the earlier year. The assessee has pleaded that since there is a same rate of taxes; therefore, this expenditure should be allowed in this year also. We do not find any force in this contention of the assessee; because if that be so, then it will be at the sweet will of the assessee to declare the quantum of income in any assessment year. The assessee may show higher income in a particular year and lower income in another year. It has to be adhered to the accounting principles as contemplated under Section 145 of the Income-tax Act and compute the true income assessable in a particular year. The Revenue Authorities have rightly disallowed this ITA Nos. 169 & 170/Ahd/2019 AY : 2013-14 & 2014-15 6

Now we take up ITA No.170/Ahd/2019 for Assessment Year 2014-15. 12. As far as the date of hearing is concerned, both the appeals were listed together before the Tribunal in the past and hearing was adjourned on the request of the assessee. Inspite of specific request for 4th October 2021, no one has come present before the Tribunal on behalf of the assessee. We, therefore, with the assistance of the learned Departmental Representative, proceed to decide the appeal ex-parte qua the assessee.

As far as Ground No.1 is concerned, the assessee has challenged the ex-parte proceedings taken by the learned First Appellate Authority. After going through the records, we do not find any error in the findings of the learned First Appellate Authority. Ground No.1 is, therefore, rejected.

In Ground Nos. 2 & 3, the assessee has challenged the disallowance made under Section 14A of the Income-tax Act. In this year, we find that the assessee has claimed tax-free income of Rs.1,81,315/-. The Assessing Officer has worked out the disallowance at Rs.2,21,640/- with the help of formula provided in Rule 8D. The Assessing Officer has worked out only administrative expenses @ half percentage of average investment. On due consideration of the facts and circumstances of the case, we are of the view that the disallowance in any case cannot exceed the exempt income in itself. The expenditure is to be disallowed relatable to earning of exempt income. So, it cannot be assumed that Rs.2,21,640/- could be incurred for earning tax-free income of Rs.1,81,315/-. This is an erroneous approach at the end

In the next Ground of Appeal, the grievance of the assessee is that the learned CIT(A) has erred in upholding disallowance of employees contribution of provident fund of Rs.45,164/-. The assessee has contended that though this amount was paid after due date provided in the PF Act, but it was paid prior to the due date of filing of the return. This explanation did not meet the approval of Hon’ble High Court of Gujarat as reported in the case of CIT Vs. GSRTC [2014] 366 ITR 170 (Guj.) The learned First Appellate Authority has followed this decision and, to our mind, learned First Appellate Authority has not committed any error in upholding the disallowance. Accordingly, this ground of appeal of the assessee is rejected.

In the result, both the appeals of the assessee are partly allowed.

""यथ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु" ( ) / The CIT(A)- अपील िवभागीय "ितिनिध अिधकरण अपीलीय आयकर 5. , , /DR,ITAT, Ahmedabad, 6. गाड" फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायक पंजीकार (Asstt.