The taxpayer adjusted the interest expenditure against the interest income earned. After such adjustment no interest expenditure remained to be disallowed. The taxpayer offered expenditure other than interest of Rs. 111,521 for disallowance under Section 14A of the Act on the estimated basis. The Kolkata Tribunal held that there was no interest expenditure remaining after adjusting the interest credited to the Profit and Loss Account. Therefore, no part of interest paid can be disallowed for earning tax free dividend. Further, expenditure other than interest had been offered for disallowance by the taxpayer under Section 14A of the Act. Therefore, no further disallowance shall be made.
Issue is decided by Hon’ble Calcutta High Court in the case of CIT Vs. Virgin Creations that the amendment in the provisions of section 40(a)(ia) of the Act by Finance Act, 2010 is remedial and curative in nature and TDS paid on or before the due date of filing of return u/s. 139(1) of the Act, deduction in respect to the amount on which TDS is so paid, is allowable. In the present case the assessee deducted tax in February, 2007 but the same was deposited in May, 2007 for the AY 2007-08 that means the TDS was paid before due date of filing of return u/s. 139(1) of the Act by the assessee, hence, we allow the claim of assessee. This issue of assessee’s appeal is allowed.
Living allowance paid in addition to the regular salaries and benefits in India to the employees of Indian Company who are temporarily deployed in US will be exempt from tax. The deputation agreement between the taxpayers and the Indian Company clearly states that the additional compensation in the US has been paid in lump sum without any reference to meet personal expenses at the place where the duties of office or employment were to be performed. The additional compensation received by the taxpayers was in the form of a special allowance or benefit.
Tribunal in assessee’s own case for A.Y.2003-04 and 2004-05 exactly on the issue of incidental expenses such as freight, octroi and sales tax whether to be included in the total turnover for the purpose of computation of deduction u/s 10B of the Act, respectfully following the same and in view of the above discussion carried out, we allow the appeal of the assessee. The revision order of the CIT u/s 263 of the Act is quashed.
The provisions of rule 8D of the Income-tax Rules which have been notified with effect from March 24, 2008, shall apply with effect from the assessment year 2008-09; Even prior to the assessment year 2008-09, when rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub-section (1) of Section 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act.
The Hon’ble Supreme Court in the case of CIT Vs. Raju Bhatra reported in (2009) 310 ITR 105 (SC) has laid down the ratio that surcharge leviable under the Finance Act was a distinct charge not dependent for its leviability on the assessee’s liability to pay incometax but on assessed tax. Therefore, even without the proviso to section 113 of the Income-tax Act, 1961 relating to tax in the case of block assessment of search cases, the Finance Act, 2001 was applicable to block assessment under Chapter XIV-B in relation to the search initiated on April6, 2000 and according surcharge was leviable.
Assessing Officer noticed from audit report Form No. 3CD that the assessee has incurred contractual payments towards fabrication and erection expenses and deducted TDS. But TDS was not deposited within the time limit prescribed u/s. 201 of the Act. The same was deposited on 15.02.2006. The Ld. Counsel for the assessee could not contribute anything which supports his case.
It is not disputed before us that basement and ground floor were fully owned by the assessee and used for the purpose of business by the assessee. This was accepted by the department in the AY 1998-99 as per details available on record. Once, the assessee is the owner of the asset and put the assessee for the purpose of business during the relevant FY, then the depreciation has to be allowed as per the details.
On the issue of disallowance u/s. 14A, this Bench of the Tribunal has been taking a consistent view that this disallowance should be restricted to 1% of dividend income. Following the same, in this appeal also we hold that the disallowance u/s 14A for earning exempt dividend income should be restricted to 1% of dividend income. The Assessing Officer is accordingly directed to do so and work out the quantum of disallowance. This ground of appeal of the assessee is allowed as directed above.
Calcutta High Court held that the fee or charges received by the Government for parting with its exclusive right to manufacture or vend intoxicants is neither a tax nor a duty nor a fee nor a cess. Here in the present case, the KMC’s exclusive right to built market and let out to shop owners on licence basis under licence agreement dated 15.02.1985 is not a fee as prescribed u/s. 43B of the Act.
