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Income Tax Appellate Tribunal, ‘A ’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
2 & 1220/Chny/2023 आदेश / O R D E R MANU KUMAR GIRI (Judicial Member) These cross appeals by the assessee and revenue are directed against the order of the Ld. Commissioner of Income Tax (Appeals)(NFAC) Delhi [CIT(A)] in order No. ITBA/NFAC/S/250/2023- 24/1053200864(1) dated 26.05.2023. The assessment was framed by the ACIT, Corporate Circle 2 (1), Chennai for the assessment year 2013-14 passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’), vide order dated 29.03.2016.
Assessee’s appeal in for A.Y. 2013-14 2. The Assessee has raised 9 grounds of appeal. Ground Nos. 1 to 5 is in relation to the disallowance u/s 14A of the Act read with Rule 8D. Ground No. 6 pertains to the Employee’s contribution to PF/ESI. Ground No. 7 is in respect to disallowance of interest on TDS u/s 40a(ii), and Ground Nos.8 to 9 are in relation to the depreciation claim of deferred revenue expenditure (relaunch expenses).
3. At the outset, Ld. Counsel for the Assessee filed detailed chart ground-wise and also filed Co-ordinate Bench order in assessee’s own case for Assessment years 2010-11, 2011-12 & 2012-13 in 754 & 1219 of 2023 dated 27.03.2024.
3 & 1220/Chny/2023 4. We have heard the Ld. Counsel for the Assessee and Ld. DR for the revenue and also perused the impugned order and chart submitted by the counsel for the Assessee.
5. With regard to ground Nos. 1 to 5 which are in relation to the disallowance u/s section 14A of the Act read with Rule 8D, Ld. AO computed indirect expense disallowance under rule 8D(2) for Rs.94,44,674/-. Ld. CIT(A), considering the explanation to section 14A as introduced by Finance Act 2022, confirmed the disallowance.
Aggrieved, the assessee is in further appeal before us. The Ld. AR submitted that the assessee has not earned any exempt income during the year.
We find that this issue is covered in assessee’s favor by the decision of Hon’ble High Court of Madras in the case of CIT vs. Chettinad Logistics P. Ltd. (80 Taxmann.com 221) holding that Section 14A cannot be invoked where no exempt income was earned by assessee in relevant assessment year. Respectfully following the same, we direct Ld. AO to verify the same. If no exempt income has been earned by the assessee, the impugned disallowance shall stand deleted. The Explanation to Sec.14A, in our considered opinion, is 4 & 1220/Chny/2023 prospective in nature and the same is not applicable in this year. The corresponding grounds raised by the assessee stand allowed for statistical purposes.
Ground No. 6 pertains to disallowance of Rs.1,35,03,575/- as belated payments of Employees contribution to PF/ESI. It is admitted position that this issue is covered against the assessee by the Judgment of Hon’ble Supreme Court in the case of Checkmate Services P. Ltd Vs CIT [2022] 448 ITR 518 (SC). Respectfully following the same, we confirm the disallowance. The corresponding ground stands dismissed.
Next ground No. 7 is in respect to disallowance of Rs.99,465/- being interest on TDS as per Explanation 3 to section 40(a)(ii) of the Act. This ground is not pressed by Ld. AR and hence, dismissed as not pressed.
Ground Nos. 8&9, as per submissions of Ld. AR has become infructuous considering the decision of Tribunal for AYs 2010-11 to 2012-13. Therefore, these grounds are dismissed as infructuous.
In the result, the assessee’s appeal stands partly allowed.
The registry has noted delay of 83 days in filing the appeal by the revenue. The revenue submits that the delay caused is for sufficient reason and also supported by the affidavit. Considering the reasons given in affidavit by the Income Tax Officer and adopting pragmatic approach, the delay in filing of the appeal is condoned and appeal is admitted for adjudication.
The Revenue has raised the following Grounds in its appeal: 1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case.
Whether the Ld.CIT(A) was right in holding that the issue of interest receipt and bad debts as allowed though verification has been directed by the Ld. CIT(A) on the other hand and thus the issue has not reached finality?
3 The Ld.CIT(A) erred in not providing any opportunity u/s 46A of IT Act, to the AO or calling for a remand report.
Whether the Ld. CIT(A) was right in holding that disallowance u/s 40(a)(0) of the Act is not warranted on the payments made to foreign agencies by ignoring that such payments need to be taxed whether or not the permanent establishment is in India as per provisions of the section 9(2) of the Act.
For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.
Ground Nos.2 & 3 are with reference to bad debts written off and rule 46A respectively.
We have perused paras 6.6.1 and 6.6.2 of Ld.CIT(A) order and find that Ld.CIT(A) rightly allowed the appeal subject to verification of the relevant record/ particulars relating to allowability of bad debts written off. We also find that ground raised by the revenue relating to rule 46A is misplaced. Hence, both grounds stand dismissed.
Ground No.4 is with reference to disallowance of payments made to foreign correspondent / foreign news agencies invoking section 40(a)(I) r.w.s195 and section 9 of the Act.
We have perused paras 6.1.2 to 6.1.7 of Ld.CIT(A) order and find that there is no infirmity in the order of Ld.CIT(A) on this issue and rightly allowed the appeal after analyzing the case laws, written submissions and provisions of the Act. Therefore, we refrain from interfering in the impugned order of CIT(A) on this issue. Hence, we dismiss this ground.
In the result, assessee’s appeal in is partly allowed whereas revenue’s appeal in ITA No.1220/CHNY/2023 is dismissed.
Order pronounced in the open court on 15th May, 2024 at Chennai.