M/S. NIRSHILP SECURITIES PVT LTD.,MUMBAI vs. DCIT-10(3)(1), MUMBAI

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ITA 2228/MUM/2019Status: DisposedITAT Mumbai18 December 2020AY 2013-144 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal remanded the disallowance under Section 14A to the CIT(A) for de novo adjudication. The Tribunal allowed the deduction for education cess and surcharge, following the jurisdictional High Court's decision.

What were the facts?

The assessee earned dividend income and made a suo motu disallowance under Section 14A. The CIT(A) dismissed the appeal without considering the assessee's submissions, leading to a remand. The assessee also claimed deduction for education cess and surcharge.

What were the issues?

Whether the CIT(A) properly considered the assessee's submissions regarding Section 14A disallowance, and whether education cess and surcharge are deductible under Section 37(1).

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3),Section 37(1)

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Income Tax Appellate Tribunal, VIRTUAL COURT

Before: SHRI M.BALAGANESH, AM & SHRI RAVISH SOOD, JM

For Appellant: Shri Vijay Mehta
For Respondent: Shri G.N. Makwana
Hearing: 17/12/2020Pronounced: 18/12/2020

आदेश / O R D E R PER M. BALAGANESH (A.M):

1.

This appeal in A.Y.2013-14 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-17, Mumbai in appeal No.CIT(A)-17/IT-326/10523/16-17 dated 22/03/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated

M/s.Nirshilp Securities Pvt. Ltd., 23/03/2016 by the ld. Dy. Commissioner of Income Tax-10(3)(1), Mumbai (hereinafter referred to as ld. AO).

2.

The only effective issue to be decided in the original ground of appeal is with regard to disallowance made u/s.14A of the Act.

3.

We have heard rival submissions and perused the materials available on record. At the outset, the ld. AR drew our attention to ground No.1 raised in the original grounds of appeal praying for setting aside of this appeal to the file of the ld. CIT(A) for denovo adjudication, in as much as the entire submissions made by the assessee before the ld. CIT(A) were not at all considered by the ld. CIT(A) on the aspect of issue of disallowance u/s.14A of the Act.

3.1. We find that the ld. AO had made disallowance u/s.14A of the Act in the sum of Rs.22,17,485/- while completing the assessment. We find that assessee had earned dividend income of shares of Rs.80,45,543/- and had made suomoto disallowance of Rs.8,04,554/- calculated @10% of dividend income from shares. We also find that assessee had dividend income on mutual funds of Rs.1,84,64,432/- for which no disallowance of expenses was made u/s.14A of the Act by the assessee.

3.2. We find that assessee had originally filed the appeal in manual form on 07/04/2016 before the ld. CIT(A) against the order of assessment framed u/s.143(3) of the Act dated 23/03/2016, which has been dismissed vide appeal No.CIT(A)-17/IT/31/16-17 dated 05/09/2018 by the ld. CIT(A). When this manual appeal filed was pending before the ld CIT(A), the assessee had filed an appeal electronically before the ld. CIT(A) on 03/06/2016. We find that assessee had duly intimated the ld. CIT(A) to consider the written submission already filed by it in the appeal filed manually before him, while deciding the appeal filed electronically.

M/s.Nirshilp Securities Pvt. Ltd., But we find that the ld. CIT(A) had not taken cognizance of the same and had decided the appeal ex parte without considering the submissions of the assessee. When this was put to the ld. DR, he also fairly agreed for remanding this appeal to the file of the ld. CIT(A) for denovo adjudication as the issue involved is more factual and certainly requires verification of facts. Accordingly, with the consent of both the parties, we deem it fit and appropriate to remand this issue raised in original grounds of appeal to the file of the ld. CIT(A) on the aspect of issue of disallowance u/s.14A of the Act for denovo adjudication in accordance with law. Accordingly, the original grounds raised by the assessee are allowed for statistical purposes.

4.

We find that assessee had raised an additional ground of appeal for claiming deduction of Rs.16,62,083/-on account of primary and secondary education cess on Income Tax and surcharge paid by the assessee.

4.1. We have heard rival submissions and perused the materials available on record. We find that the claim made by the assessee is purely a legal issue and does not involve verification of fresh facts. Hence, we deem it fit and admit the additional ground and consider the same for our adjudication.

4.2. We find that the issue in dispute herein is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of Sesa Goa Ltd., vs. JCIT reported in 117 Taxmann.com 96 wherein the Hon’ble High Court had categorically held that education cess paid on Income Tax and surcharge would be eligible for deduction u/s.37(1) of the Act. Respectfully following the said decision, we direct the ld. AO to grant deduction of Rs.12,43,456/- while framing the assessment pursuant to this Tribunal order. Accordingly, the additional ground raised by the assessee is allowed.

M/s.Nirshilp Securities Pvt. Ltd.,

5.

In the result, appeal of the assessee is partly allowed for statistical purposes.

Order pronounced on 18/12/2020 by way of proper mentioning in the notice board.

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