Case Law Details
Sahara India Life Insurance Co. Ltd. Vs ACIT (ITAT Delhi)
AO made the addition on the basis of tax audit report where it was mentioned that an amount of Rs. 31,63,861/- towards leave encashment unpaid is disallowed u/s 43B. The CIT(A), following the orders of his predecessor for preceding so many assessment years, deleted the addition. The order of CIT(A) in our opinion, is not in accordance with law. With effect from 01.04.2002, clause (f) has been inserted in provisions of section 43B according to which any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee shall not be allowed as a deduction in computing the income of the assessee unless such sum is paid. Since the assessee in the instant case has admittedly not paid this sum towards leave encashment, therefore, the ld.CIT(A) is not justified in allowing the same. Merely because some wrong practice has been followed by the ld.CIT(A) in the past such wrong cannot be perpetuated. Since the order of the ld.CIT(A) is not in accordance with law, therefore, the order of ld.CIT(A) on this issue is set aside and the ground raised by the Revenue is allowed.
Interest on TDS expense not allowable under Income Tax
So far as the deletion of Rs.960 made by the AO on account of interest on TDS as per grounds of appeal No.3 is concerned, we find, the AO made the addition on the ground that Rs.960/- has been debited under the head ‘Miscellaneous expenses’ being interest on TDS which, according to him, is inadmissible u/s 40(a) of the IT Act. Here also, the ld.CIT(A) deleted the same by following the orders of his predecessors for preceding assessment years. However, in our opinion, interest on TDS is not an allowable expenditure in the light of the decisions of Hon’ble Supreme Court in the case of Bharat Commerce & Industries reported in 230 ITR 733 and the decision of Hon’ble Calcutta High Court in the case of Martin & Harries (P) Ltd. Vs. CIT, reported in 73 Taxmann 555. The ground raised by the Revenue on this issue is accordingly allowed.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
