POLYCAB INDIA LTD.,MUMBAI vs. ACIT CC 5 (2), MUMBAI

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ITA 6275/MUM/2019Status: DisposedITAT Mumbai11 May 2021AY 2016-175 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee cannot be denied legitimate claims and granted an opportunity to substantiate its claims before the AO. The disputed issues were restored to the AO for verification.

What were the facts?

The assessee filed a revised return of income claiming deduction for education cess and secondary/higher education cess, which was rejected by the AO. The AO also made a disallowance under Section 14A. The CIT(A) upheld the AO's order.

What were the issues?

Whether education cess is an allowable deduction and whether the disallowance under Section 14A is justified.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

For Appellant: Ms. Priyanka S
For Respondent: Shri Manpreet Duggal, DR
Hearing: 05.05.2021Pronounced: 11.05.2021

O R D E R

PER PAVAN KUMAR GADALE, JM:

1.

The appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) -53 Mumbai, passed u/s.143(3) and 250 of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal:

1. On the facts and circumstances of the appellants case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO. In rejecting the revised computation of income filed by the appellant during the course of assessment proceedings as per the grounds contained in the assessment order of otherwise.

Polycab Indi Ltd., Mumbai - 2 -

2. On the facts and circumstances of the appellants case and in law, the Ld. CIT(A) erred in confirming the action of AO in not allowing the deduction of education cess and secondary and higher education cess claimed in the revised computation of income, as per the grounds contained in the assessment order or otherwise.

3. On the facts and circumstances of the appellants case and in law, the LD. CIT(A) erred in confirming the action of AO in making disallowance u/s 14A r.w.r 8D(2)(iii) of Rs. 9,33,000/- as per the grounds stated in the order or otherwise. 4. The appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal.

2.

The Brief facts of the case are that the assessee company is engaged in the business of manufacturing and sale of wires & cables and filed the return of income electronically for the A.Y 2016-17 on 30.11.2016 with a total income of Rs. 250,15,50,545/-. Subsequently, the assessee filed revised return of income on 07.03.2017 disclosing a total income of Rs. 231,23,63,832/- and the return of income was processed u/s 143(1) of the Act. The case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act are issued. In compliance the Ld. AR of the assessee submitted the details through online portal.In the course of assessment proceedings, the assessee filed a revised computation of income by letter dated 14.12.2018, where the assessee company treated the education cess and secondary and higher education

Polycab Indi Ltd., Mumbai - 3 - cess are allowable expenditure relying on the judicial decisions. But the A.O. observed that the revised computation of income submitted by the assessee cannot be considered and therefore the claim of the assessee on filing the revised computation of income is rejected. On the other disputed issues the A.O made disallowance u/s 14A r.w.r 8D2(iii) of Rs9,33,000/- and assessed the total income of Rs 224,54,71,908/-and passed order u/s 143(3) of the Act dated 25.12.2018.

3.

Aggrieved by the order, the assessee has filed an appeal before the CIT(A). whereas the CIT(A) has dealt on the grounds of appeal, findings of the A.O and submissions and finally dismissed the assessee’s appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Honble Tribunal.

4. At the time of hearing, the Ld. AR of the assessee submitted that the assessee is entitled to make the claim in revised computation of income filed in the assessment proceedings. The assessee has relied on the judicial decisions and claimed the deduction of education cess and secondary and higher education cess. Further, the disallowance u/s 14A r.w.r 8D(2)(iii) is not warranted as the assessee company has own funds and the investments have been made out of surplus funds. The contentions of Polycab Indi Ltd., Mumbai - 4 - the Ld. AR that there was no expenditure incurred on earning the exempted income and barrowed funds are not utilized for investment purpose and prayed for allowing the appeal.

4.

Contra, the Ld.DR objected that the assessee company cannot claim the deduction in the revised computation of income filed in the assessment proceedings.

5.

We heard the rival submissions and perused the material on record. The Ld.AR’s contention that the A.O has rejected the claim of deduction of education cess and secondary and higher education cess in the revised computation of income were the assessee has relied on the judicial decisions. Whereas, the A.O observes that the assessee has to file a revised return of income for such claim and the assessee in claiming the deduction based on the judicial decisions. In respect of disallowance u/s 14A r.w.r 8D(2)(iii), the contention of the Ld.AR that the assessee has substantial own funds and out of the surplus own funds the investments are made and no expenditure was incurred for earning the exempted income. We considering the overall facts, circumstances and judicial decisions are of the opinion that the assessee cannot be denied the legitimate claim of and are inclined to grant one more deduction

Polycab Indi Ltd., Mumbai - 5 - opportunity to the assessee to substantiate its claim. Accordingly, the disputed claim along with other issues are restored to the file of the A.O to verify and examine the facts for limited purpose and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the details. And we allow the grounds of appeal of the assessee for statistical purpose.

8.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 11.05.2021

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