Thomson Press India Ltd vs. ITO
In a detailed ruling dated 27 February 2025, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) dealt with a range of issues across Assessment Years 2009–10 and 2014–15, granting partial relief to the assessee while upholding some disallowances.
Key Disallowances Discussed and ITAT’s Decision
1. Disallowance Under Section 14A
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AO invoked Rule 8D for disallowance of ₹7.66 lakhs.
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The assessee had already disallowed ₹6.30 lakhs suo moto.
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ITAT held that fresh investments were minimal and funded from interest-free reserves.
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Ruling: Disallowance restricted to ₹6.30 lakhs; excess deleted.
2. Section 10B & 10AA – Export Deduction Denied on Misc. Income
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AO excluded miscellaneous income, compensation, and forex gains from export turnover.
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Tribunal relied on its own earlier decisions and directed the AO to:
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Verify the nature of such income.
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Follow consistency in treating such incomes as business income if found so in prior years.
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Ruling: Issue remanded to AO for verification and recomputation.
3. Forex Realizations Post Due Date
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AO reduced export turnover due to delayed realization beyond 30.09.2009.
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ITAT, relying on CIT v. Genpact India, held such amounts should be excluded both from export turnover and total turnover.
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Ruling: AO directed to adjust both components accordingly.
4. Disallowance of Bad Debts Written Off
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AO disallowed ₹1.23 crore written off against provisions made in prior years.
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ITAT found that the same was adjusted and not claimed twice.
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Ruling: Disallowance deleted to avoid double taxation.
5. Section 40(a)(i) – TDS on Foreign Payments
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₹1.12 crore disallowed for failure to deduct TDS.
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The assessee failed to substantiate DTAA benefit or residential status of recipients.
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Ruling: Disallowance upheld as per earlier years’ rulings.
6. Interest on Capital Work in Progress
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₹73.5 lakhs disallowed as interest on funds used for CWIP.
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Tribunal observed that earlier years had identical facts and required loan utilization verification.
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Ruling: Issue remanded for AO’s factual verification.
7. Section 43B(f) – Leave Encashment Provision
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Disallowance of ₹1.11 crore under Section 43B(f).
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As per UOI v. Exide Industries, deduction is allowed only on actual payment.
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Ruling: Deduction allowed in the year of actual payment, not in the year of provision.
Conclusion
The Tribunal’s decision underscores the importance of:
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Consistency with prior years,
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Proper recordkeeping for deductions like bad debts or exempt income, and
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Strict compliance with TDS provisions for foreign payments.
Taxpayers should take note of this ruling, especially regarding disallowances under Sections 14A, 10B, and 40(a)(I).