ACIT Vs LA Renon Healthcare Pvt Ltd (ITAT Ahmedabad)
ITAT Ahmedabad held that the AO must record a proper satisfaction regarding the incorrectness of the assessee’s claim before invoking Rule 8D u/s. 14A. Thus, in absence of such satisfaction, disallowance u/s. 14A of the Income Tax Act unsustainable.
Facts-
The case of the assessee was selected for scrutiny under CASS. AO observed that the company has claimed professional fees to the doctors amounting to Rs.5,43,98,834/-. AO also observed that the assessee-company has earned a dividend of Rs.1,64,89,016/- and also claimed interest expense of Rs.1,45,82,263/-.
AO, concluded that the assessee has not given any proof or specific explanation other than general explanation and failed to submit day to day fund flow statement and added total Rs.51,15,778/- invoking provisions of section 14A read with Rule 8D of IT Rules on account of interest of Rs.36,30,382/- and Rs. 14,85,395/- on account of administrative expenses. AO also disallowed Rs.8,27,091/- on account of delay of 2 days in payment of Employee contribution of P.F.
CIT(A) partly allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion-
AO has not doubted the genuineness of these payments. He stated that no documentary evidence has been submitted by the assessee in support of its claim that the doctors have worked in the capacity as consultants, researchers or advisors. Whereas we noted that the assessee has already provided all the details like logbook along with agreements with different doctors, summary sheets of professional fees paid, copies of scientific broachers, training manuals and research papers. The Ld.CIT(A) has also noted that the facts are identical and followed the decision of tribunal while deleting the disallowance.
