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Income Tax Appellate Tribunal, PUNE BENCH, ‘B’ PUNE
Before: SHRI R.S. SYAL & SHRI C.M. GARG
This appeal by the assessee is directed against the order dated 06-02-2018 passed by the CIT(A)-11, in relation to the assessment year 2012-13.
All the grounds raised by the assessee in the Memorandum of appeal are against the confirmation of disallowance of Rs.59,54,220/- made by the AO u/s.14A of the Income-tax Act, 1961 (hereinafter also called as ‘the Act’).
Briefly stated, the facts of the case are that the assessee earned certain exempt income. The AO made disallowance u/s.14A to the tune of Rs.59,54,220/- which came to be countenanced by the ld. CIT(A). Aggrieved thereby, the assessee has approached the Tribunal.
At the outset, the ld. AR did not raise any dispute as to the confirmation of disallowance made u/s 14A of the Act. It was, however, requested that only the investments which yielded exempt income should be considered for the purpose of calculation of disallowance.
The Hon'ble Delhi High Court in ACB India Ltd. vs. CIT (2015)
374 ITR 108 (Del) has held that the average value of investments, for the purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not the total investments. Similar view has been taken by the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. (2017)
165 ITD 27 (Del) (SB). In view of the afore referred precedents, we set aside the impugned order to this extent and remit the matter to the file of Assessing Officer for re-computing the disallowance under Rule 8D by considering only such investments in calculating the average value of investments, which yielded exempt income during the year. The assessee will be allowed hearing opportunity in such fresh proceedings.
The assessee has raised an additional ground towards the grant of deduction towards Education Cess and Secondary and Higher Education Cess paid for the year under consideration.
We find that this issue is no more res integra in view of the judgment of Hon’ble jurisdictional High Court in Sesa Goa Lt. Vs. JCIT (2020) 423 ITR 426 (Bom.) in which it has been held that Education Cess is not disallowable expenditure u/s.40(a)(ii) of the Act. Similar view has earlier been taken by the Hon’ble Rajasthan High Court in Chambal Fertilisers and Chemicals Ltd. and Another Vs. JCIT (2018) 102 CCH 0202 (Raj-HC). We, ergo, direct to allow deduction for such an amount after verification.
In the result, the appeal is partly allowed for statistical purposes. Order pronounced in the Open Court on 10th November, 2021.