M/s. KPIT Technologies Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 14, Pune

ITA 1273/PUN/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5626 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1273/PUN/2018 िनधा रण वष / Assessment Year : 2015-16 M/s. KPIT Technologies Ltd., Rajiv Gandhi Info Tech Park, Phase-I, MIDC, Hinjewadi, Pune 411 057 PAN : AAACK7308N Vs. DCIT, Circle-14, Pune Appellant Respondent आदेश / ORDER PER. R.S. SYAL, VP : This appeal by the assessee is directed against the order passed by the ld. CIT(A)-7, Pune on 03-05-2018 in relation to the Assessment Year 2015-16. 2. The first issue raised in this appeal is against confirmation of disallowance amounting to Rs.38,29,184/- made by the Assessing Officer (AO) u/s.14A of the Income-tax Act, 1961 (hereinafter also called ‘the Act’. Assessee by : Shri Kishor Phadke Revenue by : Shri S.P. Walimbe Date of hearing : 23-12-2021 Date of pronouncement : 23-12-2021 ITA No.1273/PUN/2018 M/s.KPIT Technologies Ltd., 2 3. Briefly stated, the facts of the case are that the assessee earned exempt income of Rs.5.42 crore. Disallowance of Rs.20.00 lakh was suo motu offered u/s.14A of the Act. The AO did not accept the assessee’s contention and proceeded to compute disallowance as per Rule 8D(2) at Rs.58,29,184/-. The additional amount of Rs.38,29,184/- was added, which got confirmed in the first appeal. 4. Having heard both the sides and gone through the relevant material on record, we find that similar issue came up for consideration before the Tribunal in assessee’s own case for the two immediately preceding assessment years, namely, 2013-14 and 2014-15. The assessment order for the instant year has been identically worded as was done for the earlier years. The Tribunal has reproduced the relevant paras of the assessment order for the assessment year 2013-14. After considering the manner of computation of disallowance u/s.14A, the Tribunal held that the AO failed to record the mandatory satisfaction before proceeding to make disallowance u/s.14A of the Act. That is how, the addition was deleted. The facts of the instant year are mutatis mutandis similar to those of the preceding years. The ld. DR ITA No.1273/PUN/2018 M/s.KPIT Technologies Ltd., 3 candidly accepted the fact. Respectfully following the precedent, we order to delete the addition of Rs.38,29,184/-. 5. The next ground is against the increase of disallowance u/s 14A amounting to Rs.38,29,184/- in the computation of book profit u/s.115JB of the Act. 6. Here again, it is found that similar issue cropped up in the preceding years. The Tribunal vide para No.5 has considered the relevant judgments including Pr. CIT Vs. M/s. Bhushan Steel Limited and others (2015) 94 CCH 0335 DEL-HC holding that no disallowance can be made u/s.14A in the computation of income u/s.115JB. We respectfully follow the same and allow the ground of appeal. 7. The next ground is against the confirmation of disallowance of weighted deduction of Rs.29.00 lakh u/s.35(2AB) of the Act. 8. The factual matrix of this ground is that the assessee claimed weighted deduction u/s.35(2AB) amounting to Rs.11.57 crore. The AO observed that the Department of Scientific and Industrial Research (DSIR) had reduced this amount to Rs.11.28 crore. The amount not allowed by the DSIR at Rs.29.00 lakh was held to be ITA No.1273/PUN/2018 M/s.KPIT Technologies Ltd., 4 ineligible for the weighted deduction u/s.35(2AB). The ld. CIT(A) confirmed the addition. 9. Having considered the rival submissions and perusing the relevant material on record, we find that similar issue came up for consideration before the Tribunal in assessee’s own case for the preceding years. The Tribunal considered this aspect vide para no.8 of its order by observing that the amendment in the relevant rules came into force only from 01-07-2016 which would not apply to mar the claim of the assessee for the weighted deduction. After considering the facts, the Tribunal granted weighted deduction on the amount not allowed by the DSIR. Since the facts and circumstances of the instant ground are similar, respectfully following the precedent, we allow this ground of appeal. 10. The assessee has raised an additional ground of appeal which reads as under : “6.1 Appellant contends that, appellant is eligible for claim of deduction of Education Cess paid for the year amounting to Rs.1,09,37,976/-, considering the decisions of the Honourable Jurisdictional Bombay High Court in the case of Sesa Goa Ltd. Vs. JCIT – 423 ITR 426, which will have impact on increase in MAT credit.” ITA No.1273/PUN/2018 M/s.KPIT Technologies Ltd., 5 11. The Hon’ble Supreme Court in National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) has observed that “the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item”. Answering the question posed before it in affirmative, their Lordships held that on the facts found by the authorities below, if a question of law arises (though not raised before the authorities) which has bearing on the tax liability of the assessee, the Tribunal has jurisdiction to examine the same. Having gone through the subject matter of the additional ground taken up by the assessee, it is discernible that the additional ground raises a pure question of law. We, therefore, admit the additional ground for disposal on merits. ITA No.1273/PUN/2018 M/s.KPIT Technologies Ltd., 6 12. 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. 13. In the result, the appeal is partly allowed. Order pronounced in the Open Court on 23 rd December, 2021. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 23 rd December, 2021 Satish ITA No.1273/PUN/2018 M/s.KPIT Technologies Ltd., 7 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent; 3. The CIT(A), Pune-7, Pune, 4. 5. 6. The Pr.CIT-6, Pune DR, ITAT, ‘A’ Bench, Pune गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 23-12-2021 Sr.PS 2. Draft placed before author 23-12-2021 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.