Per N.R.S. Ganesan (JM) Both the revenue and the assessee filed the appeal against the very same order of CIT(A)-II, Kochi dated 23-10-2013 for the assessment year 2010-11. Therefore, we heard them together and dispose of the appeals by this common order. ITA No. 08 & 12/Coch/2014
2. Let us first take the revenues appeal in ITA No.08/Coch/2014. The only ground of appeal is with regard to disallowance of employees contribution to provident fund and ESI.
3. We heard Shri K.K. John, the ld.DR and Shri Samuel Thomas, the ld.representative for the assessee.
4. The assessing officer by way of annexure to the assessment order extracted the amount collected from the employees and the date of payment. The date as extracted by the assessing officer falls within the due date for filing the return of income u/s 139(1) of the Act for the assessment year under consideration. Admittedly, second proviso to section 43B was deleted and the entire sub clauses under section 43B were brought under Explanation 1 to section 43B. Therefore, all payments including employees and employers contribution to provident fund and ESI paid on or before the due date for filing the return of income u/s 139(1) has to be allowed as deduction while computing the taxable income. The CIT(A), in fact, followed the judgment of the Apex Court in CIT vs Vinay Cements Ltd (2007) 213 CTR 268 (SC). Therefore, this Tribunal do not find any infirmity in the order of the lower authority. Accordingly, the order of CIT(A) is confirmed. ITA No. 08 & 12/Coch/2014
5. Now coming to the appeal of the assessee, Shri Samuel Thomas, the ld.representative for the assessee submitted that the assessee claimed weighted deduction of 150% on the expenditure incurred on scientific research u/s 35(2AB) of the Act. The assessee has also claimed alternatively, normal deduction u/s 35(1) of the Act. The assessing officer disallowed both the claim of the assessee. According to the ld.representative, the assessing officer may be directed to consider normal deduction u/s 35(1) of the Act.
6. On the contrary, Shri K.K John, the ld.DR submitted that when the assessee claimed deduction u/s 35(2AB) of the Act, no deduction shall be allowed u/s 35(1) of the Act. Therefore, the assessee is not eligible for deduction u/s 35(1) of the Act also.
7. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee claimed weighted deduction u/s 35(2AB) of the Act. The assessing officer found that the assessee could not furnish the approval for deduction u/s 35(2AB) of the Act, therefore, not eligible for deduction u/s 35(2AB) of the Act. While considering the alternative claim of the assessee u/s 35(1) of the Act, the assessing officer found that the alternative claim cannot be entertained except through a revised return filed. The assessing officer ITA No. 08 & 12/Coch/2014 placed reliance on the judgment of the Apex Court in Goetze (India) Ltd vs CIT 284 ITR 323 (SC). No doubt, the power of the assessing officer to consider alternative claim is restricted to the claim made in the return or in the revised return. The Apex Court in the case of Goetze (India) Ltd (supra) has clearly observed that the power of the Tribunal to consider an alternative claim is not impinged upon. The contention of the ld.DR before this Tribunal is that in view of section 35(2AB), no deduction shall be allowed u/s 35(1) of the Act.
8. We have carefully gone through the provisions of section 35(1) and section 35(2AB) of the Act. If the claim of the assessee u/s 35(2AB) is allowed, then the assessee may not be eligible for further deduction u/s 35(1) of the Act. In this case, the claim of the assessee u/s 35(2AB) was not allowed. Therefore, the provisions contained in section 35(2AB) may not prevent the assessing officer to consider the claim of the assessee u/s 35(1) of the Act. Hence, in exercise of the appellate powers of this Tribunal, the alternative claim of the assessee u/s 35(1) of the Act is remanded back to the file of the assessing officer. The assessing officer shall consider the claim of the assessee u/s 35(1) and decide the same in accordance with law after giving reasonable opportunity of hearing to the assessee. ITA No. 08 & 12/Coch/2014
9. The assessee has taken one more ground with regard to disallowance u/s 14A of the Act to the extent of Rs.4,11,739.
10. Shri Samuel Thomas, the ld.representative for the assessee submitted that the assessee has not claimed any expenditure. Therefore, the question of disallowance does not arise. We heard Shri K.K. John, the ld.DR also.
11. The assessee, admittedly, invested Rs.42,36,500 in the shares of Kerala Enviro Infrastructure Ltd and Bharuch Eco Aqua Infrastructure Ltd. However, the assessee has not apportioned any expenditure towards this investment and earning of income therefrom. The assessing officer, after considering Rule 8D of the Income-tax Rules, 1962 disallowed Rs.4,11,739. The assessee is not challenging the correctness of the computation made by the assessing officer as per Rule 8D(2) of the IT Rules. The only claim of the assessee is that there was no expenditure incurred. Rule 8D provides for computation of expenditure with regard to claim made by the assessee that no expenditure has been incurred. Therefore, even though no expenditure was incurred by the assessee, the Income-tax rules provide for computation of expenditure with regard to the investment made for earning exempted income. The earning of income or actual incurring of expenditure is immaterial for application of Rule 8D of ITA No. 08 & 12/Coch/2014 the IT Rules. Therefore, this Tribunal cannot appreciate the contention of the assessee that there was no expenditure claimed. Rule 8D would come into operation irrespective of the claim of the assessee for expenditure. Therefore, this Tribunal do not find any infirmity in the order of the lower authorities. Accordingly, the same is confirmed.
12. In the result, the appeal of the revenue in ITA No.08/Coch/2014 is dismissed and the appeal of the assessee in ITA No.12/Coch/2014 is partly allowed. Order pronounced in the open court on this 09th May, 2014. Sd/- sd/- (B.R. Baskaran) (N.R.S. Ganesan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin, Dt : 09th May, 2014 pk/- copy to:
1. The appellant
2. The respondent
3. The Commissioner of Income-tax
4. The Commissioner of Income-tax(A)
5. The DR (True copy) By order Asstt. Registrar, Income-tax Appellate Tribunal, Cochin Bench