HIND MUSAFIR AGENCY LTD., Mumbai V. ACIT-2(1)(2), Mumbai

ITA 247/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6420 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2015-2016
• Appeal Filed On: 17-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Earning of tax free income; Rule 8D; CHAPTER IV
• Section: 32; 27; 15; 143(3); 14A; 115JB; 13; 22

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMB AI BEFORE SHRI PAWAN SINGH JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 247/MUM/2019 (ASSESSMENT YEAR 2015-16 ) HIND MUSAFIR AGENCY LTD. 39 TH FLOOR, SUNSHINE TOWER, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI-400013. [e-mail] PAN: AAACH1250Q VS. ACIT- 2(1)(2) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI KIRIT KAMDAR (AR) RESPONDENT BY : SHRI R. BHOOPATHI (DR) DATE OF HEARING : 15.09.2020 DATE OF PRONOUNCEMEN T : 15.09.2020 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER ; 1. THIS APPEAL BY ASSESSING IS DIRECTED AGAINST THE OR DER OF LEARNED COMMISSIONER (APPEALS)-4, MUMBAI, DATED 3010.2018, WHICH ARISES FROM ASSESSMENT ORDER PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 143(3) DATED 12 TH DECEMBER 2017 FOR THE ASSESSMENT YEAR 2015- 16. T HE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: TAXABILITY OF RENTAL INCOME IN RESPECT OF THE PROPE RTY AT FORT (MUMBAI) UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PR OFESSION' INSTEAD OF THE HEAD 'INCOME FROM HOUSE PROPERTY': RS. 8,91,000: ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME- TAX (APPEALS) ERRED IN UPHOLDING THE ACT ION OF THE ASSESSING OFFICER IN CONSIDERING THE INCOME FROM LETTING OUT OF OFFICE P REMISES OWNED BY THE APPELLANT UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PR OFESSION' INSTEAD OF THE HEAD 'INCOME FROM HOUSE PROPERTY'. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME- TAX (APPEALS) ERRED IN UPHOLDING THE ACT ION OF THE ASSESSING OFFICER IN TAXING THE IMPUGNED RENTAL INCOME UNDER THE HEAD 'P ROFITS AND GAINS OF BUSINESS OR PROFESSION' MERELY ON THE GROUND THAT IMPUGNED P ROPERTY WAS A PART OF THE BUSINESS ASSETS OF THE APPELLANT ON WHICH DEPRECIAT ION HAD BEEN CLAIMED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING T HE FACT THAT THE IMPUGNED PROPERTY WAS USED TILL AY 2014-15 AS THE PRIMARY OF FICE PREMISES OF THE APPELLANT COMPANY AND HAS BEEN A PART OF THE BLOCK OF ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED UNDER SECTION 32. DISALLOWANCE UNDER SECTION 14A IN RESPECT OF EXPEND ITURE ATTRIBUTABLE TO EARNING OF EXEMPT INCOME: RS. 55,773: 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE DISA LLOWANCE UNDER SECTION 14A IN RESPECT OF EXPENDITURE ATTRIBUTABLE TO EARNING O F EXEMPT INCOME TO THE EXTENT OF RS. 97,816 UNDER LIMB (III) OF RULE 8D(2). 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER OF NOT EXCLUDING INVESTMENTS AGGREGATING TO RS. 1,11,5 4,713 HELD IN GROWTH SCHEMES OF MUTUAL FUNDS WHICH ARE NOT CAPABLE OF YIELDING E XEMPT INCOME. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE COMMISSIONER OF INCOME- TAX (APPEALS) ERRED IN UPHOLDING THE ACT ION OF THE ASSESSING OFFICER OF NOT EXCLUDING INVESTMENTS AGGREGATING TO RS. 2,93,3 80 HELD IN EQUITY SHARES OF BARODA INDUSTRIES PRIVATE LIMITED WHICH HAVE NOT YI ELDED EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER OF NOT EXCLUDING STRATEGIC INVESTMENTS IN GROUP COMPAN IES (I.E. BAJAJ ELECTRICALS LIMITED AND BARODA INDUSTRIES PRIVATE LIMITED) AGGR EGATING TO RS. 65,06,933 WHICH ARE IN THE NATURE OF LONG-TERM INVESTMENTS AN D DO NOT REQUIRE DAY-TO-DAY MONITORING. DEDUCTION IN RESPECT OF EDUCATION CESS: RS. 11,04,9 67: ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 3 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE APPELLANT PRAYS THAT THE ASSESSING OFFICER BE DIRECTED TO ALLOW DED UCTION IN RESPECT OF EDUCATION CESS ON INCOME-TAX PAID DURING THE YEAR. 2. BRIEF FACTS OF THE CASE AT THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF TRAVEL AND TOURISM, FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 31 ST MARCH 2017 AND DECLARING TOTAL INCOME OF 1,00,31,920/- AND BOOK PROFIT UNDER SECTION 115JB A T RS. 18,05,52,057/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 12 TH DECEMBER 2017. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER NOTED TH AT THE ASSESSEE HAS CLAIMED RENTAL INCOME AND OFFERED THE SAME UNDER TH E HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE CLAIMED RENTAL INCOME FROM THE HOUSE PROPERTY WHICH WAS INCLUDED IN BLOCK OF ASSET FOR W HICH THE ASSESSEE HAS CLAIMED DEPRECIATION. DURING THE YEAR UNDER CONSIDE RATION THE ASSESSEE ALSO CLAIMED DEPRECIATION ON THE ASSET AND CLAIMED RENTAL INCOME OF THE SAME ASSET UNDER THE HEAD INCOME FROM HOUSE PROPER TY. THE ASSESSING OFFICER AFTER ISSUING THE SHOW CAUSE NOTICE AND CON SIDERING THE REPLY OF ASSESSEE, TREATED THE RENTAL INCOME FROM HOUSE PRO PERTY (BUSINESS ASSET) AS INCOME FROM BUSINESS INCOME. THE ASSESSING OFF ICER FURTHER HELD THAT THAT IN FUTURE ON SALE OF PROPERTY WILL BE CON SIDERED AS SHORT TERM CAPITAL GAIN UNDER SECTION 50 OF THE ACT. ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 4 3. THE ASSESSING OFFICER DURING THE ASSESSMENT FURTHER NOTED THAT THE ASSESSEE HAS MADE INVESTMENT FOR EARNING EXEMPT INC OME. ON SHOW CAUSE NOTICE FOR DISALLOWANCE UNDER SECTION 14A, TH E ASSESSEE CLAIM THAT INVESTMENT WAS MADE IN GROUP CONCERNED AS A STRATEG IC DECISION. THE ASSESSING OFFICER INVOKED THE PROVISION OF RULE 8 D AND WORKED OUT THE DISALLOWANCE OF 4,97,414/-. THE ASSESSING OFFICER DISALLOWED RS. 399598/- UNDER RULE 8D(II) AND RS. 97,816/- UNDER R ULE 8D(III). SINCE THE ASSESSEE HAS ALREADY DISALLOWED AMOUNT OF RS. 5 5,774/- THE ASSESSING OFFICER AFTER GRANTING SET-OFF OF SUO MOTO DISALLOW ANCE, DISALLOWED 4,41,640/-. ON APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) THE TREATMENT OF INCOME FROM HOUSE PROPERTY AS BUSIN ESS INCOME WAS UPHELD, HOWEVER, DISALLOWANCE UNDER SECTION 14A REA D WITH RULE 8D WAS SUSTAINED TO THE EXTENT OF 97,816/-. THUS, FURTHER AGGRIEVED THE ASSESSEE HAS FILED PRESENT BILL BEFORE THIS TRIBUNA L. THE ASSESSEE HAS RAISED FRESH/ NEW GROUND OF APPEAL RELATED TO DEDUC TION OF EDUCATION CESS OF RS. 11,04,967/-. 4. WE HAVE HEARD THE SUBMISSION OF LEARNED AUTHORIZED REPRESENTATIVE (LD. AR) OF THE ASSESSEE AND THE LEARNED DEPARTMENT REPR ESENTATIVE (LD. DR) FOR THE REVENUE AND GONE THROUGH THE ORDERS OF AUTH ORITIES BELOW. GROUND NO. 1 TO 3 RELATES TO TREATMENT OF LETTING INCOME A S INCOME FROM BUSINESS ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 5 IN PLACE OF INCOME FROM HOUSE PROPERTY. THE LEARN ED AR OF THE ASSESSEE SUBMITS THAT DURING THE YEAR, THE ASSESSEE HAD LET OUT ITS OFFICE PREMISES SITUATED AT FORT, MUMBAI TO DTDC. THE RENTAL INCOME RECEIVED FROM DTDC WAS OFFERED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN THE RETURN OF INCOME AND EXPENSES OF REPAIR OF R S. 28,184/- ON REPAIR AND MAINTENANCE OF PROPERTY WAS DISALLOWED IN THE R ETURN OF INCOME. PRIOR TO RENTING OUT THE PROPERTY, IT WAS USED FOR THE PURPOSE OF ASSESSEES BUSINESS AND WAS A PART OF BLOCK OF ASSET ON WHICH DEPRECIATION WAS BEING CLAIMED BY THE ASSESSEE FOR INCOME TAX PURPOS ES SINCE THE YEAR OF ACQUISITION THAT IS FINANCIAL YEAR 2004-05. DURING THE ASSESSMENT, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY INCOME FROM LETTING OUT SHOULD NOT BE TREATED AS A BUSINESS INCOME AS THE ASSESSEE HAS CLAIMED DEPRECIATION UNDER SECTION 32. THE ASSESSEE VIDE IT S REPLY DATED 4 DECEMBER 2017 MADE DETAILED SUBMISSION BEFORE THE A SSESSING OFFICER. THE ASSESSING OFFICER HAS RECORDED THE SUBMISSION I N PARA -4 OF THE ASSESSMENT ORDER. THE RENTAL INCOME CANNOT BE TREAT ED AS A BUSINESS INCOME AS A RENTING OUT PROPERTY IS NOT THE BUSINES S OF ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TOUR AND TRA VELS. THIS FACT IS DULY RECORDED BY ASSESSING OFFICER IN THE ASSESSMENT ORD ER ITSELF. IT WAS SUBMITTED THAT 97% OF THE INCOME OF THE ASSESSEE IS FROM THE TRAVEL AND ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 6 TOURISM AND ONLY ABOUT 3% RELATES TO THE ISOLATED A CTIVITY OF LETTING OUT OF FORT PROPERTY. THE LD AR FOR THE ASSESSEE PRAYED FO R TREATING THE INCOME FROM LETTING OF PROPERTY AS INCOME FROM HOUSE PROPE RTY. IN SUPPORT OF HIS SUBMISSIONS THE LD AR FOR THE ASSESSEE RELY ON THE DECISIONS OF HONBLE APEX COURT IN RAJ DADARKAR & ASSOCIATE VS ACIT [201 7] 81 TAXMANN.COM193 (SC), CHENNAI PROPERTY & INVESTMENT LTD VS CIT [2015] 56 TAXMANN.COM 456(SC) AND SHAMBHU INVESTMEN T PRIVATE LIMITED VS CIT [2003] 263 ITR 143 (SC) 5. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT AS PER SUB-SECTION (2) OF SECTION 38 OF THE ACT, IF ANY BUILDING USED FOR THE PURPOSE OF BUSINESS IS NOT EXCLUSIVELY SO USED FOR THE PURPOSE OF BUSINESS , THE DEDUCTION UNDER SECTION 32 SHALL BE RESTRICTED TO A FAIR PROPORTION ATE PART, WHICH MAY BE DETERMINED BY THE ASSESSING OFFICER. 6. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPOR TED THE ORDER OF THE LOWER AUTHORITIES. THE LD DR FURTHER SUBMITS THAT T HE ASSESSEE WAS CLAIMING DEPRECIATION ON THE ASSET AND ALSO CLAIM ED DEPRECIATION IN RESPECT OF BUSINESS ASSET AND CLAIMED RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHICH IS NOT PERMISSIBL E UNDER THE SCHEME OF INCOME TAX ACT. THE LD. DR FURTHER SUBMITS THAT THE RATIO OF CASE LAWS RELIED BY THE ASSESSEE ARE NOT APPLICABLE ON THE FA CTS OF THE PRESENT CASE. ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 7 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. WE HAV E ALSO DELIBERATED ON THE VARIOUS CASE LAWS CITED BY LD AR FOR THE ASSESSEE. THERE IS NO DISPUTE THAT THE OFFICE PREMISES, WHICH IS LET OUT BY THE ASSESS EE DURING THE RELEVANT YEAR UNDER CONSIDERATION IS PART OF BLOCK OF ASSET AND T HE ASSESSEE HAS CLAIMED AND AVAILED DEPRECIATION ON IT IN EARLIER YEARS. TH E ASSESSEE CLAIMED THAT THEY HAVE SHIFTED ITS OFFICE TO DADAR AND THE BUSIN ESS ASSET (OFFICE PREMISES) FOR THE FIRST TIME WAS LET OUT TO DTDC AND THE ASS ESSEE OFFERED THE SAID LETTING INCOME UNDER THE HEAD INCOME FROM HOUSE PR OPERTY. THE ASSESSING OFFICER TREATED THE SAID INCOME UNDER THE HEAD BUS INESS INCOME IN PLACE OF INCOME FROM HOUSE PROPERTY BY TAKING VIEW THAT TH E ASSESSEE CANNOT CLAIM THE INCOME FROM LETTING OF PROPERTY, AS INCOME FROM HOUSED PROPERTY ON WHICH DEPRECIATION HAS BEEN CLAIMED. THE CONTENTION OF THE ASSESSEE THAT LETTING OUT OF THE PROPERTY WAS NOT A BUSINESS ACTI VITY OF ASSESSEE WAS ALSO REJECTED BY ASSESSING OFFICER AS THE ASSESSEE ITSEL F DECLARED THAT THEY HAVE CLAIMED DEPRECIATION OF RS. 93,284/- INDEPENDENTLY ON THE ASSET. THE LD. COMMISSIONER (APPEALS) AFFIRMED THE ACTION OF ASSES SING OFFICER BY TAKING VIEW THAT UNDOUBTLY THE PROPERTY ON WHICH THE ASSES SEE EARNED RENTAL INCOME IS PART OF BUSINESS ASSET AND THE ASSESSEE H AD CLAIMED DEPRECIATION ON IT. ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 8 8. BEFORE US THE LD AR FOR THE ASSESSEE RAISED TWO FOL D SUBMISSIONS, (I) THAT THE LETTING OUT OF THE PROPERTY IS NOT THE PART OF BUSINESS ACTIVITY OF THE ASSESSEE AND THAT LETTING OUT OF PROPERTY WAS AN IS OLATED ACTIVITY OF THE ASSESSEE AND (II) AS PER SECTION 38(2), IF ANY BUIL DING USED FOR THE PURPOSE OF BUSINESS IS NOT EXCLUSIVELY SO USED FOR THE PURP OSE OF BUSINESS, THE DEDUCTION UNDER SECTION 32 SHALL BE RESTRICTED TO A FAIR PROPORTIONATE PART, WHICH MAY BE DETERMINED BY THE ASSESSING OFFICER. W E HAVE NOTED THAT FIRST CONTENTION OF THE ASSESSEE HAS BEEN CONSIDERE D BY THE LOWER AUTHORITIES AND HAD ALREADY BEEN REJECTED. WE ARE I N AGREEMENT WITH THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE CANNOT ALTOGETHER CLAIM DEPRECIATION ON THE BUSINESS ASSET AS WELL AS INCOM E FROM THE SAME BUSINESS ASSET AS INCOME FROM THE HOUSE PROPERTY. T HE CASE LAWS RELIED BY LD. AR FOR THE ASSESSEE NOT APPLICABLE ON THE UN IQUE FACTS OF THE PRESENT CASE. IN NONE OF THE CASE LAWS CITED ABOVE, THE SAME PROPERTY WAS SHOWN IN THE BLOCK OF ASSET AS SHOWN IN THE PRESENT CASE. THE ASSESSEE HAS DECLARED ITS INCOME FROM LETTING OUT OF HOUSE PROPERTIES UNDER THE HEAD INCOME FROM HOUSE PROPERTY' WHICH FALLS UNDER CHAPT ER IV-C OF THE 1961 ACT CONTAINING SECTION 22 TO 27. THUS, THE ASSESSEE WILL BE ENTITLED ONLY FOR DEDUCTIONS PRESCRIBED UNDER SECTIONS 22 TO 27 OF CHAPTER IV-C OF THE ACT, WHILE COMPUTING INCOME FROM HOUSE PROPERT Y CHARGEABLE TO ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 9 TAX . THIS CHAPTER IV-C OF THE ACT DOES NOT PROVIDE FOR DEPRECIATION ON IMMOVABLE PROPERTIES AS ONE OF DEDUCTIONS FROM INCO ME EARNED BY ASSESSEE FROM LETTING OUT OF SUCH HOUSE PROPERTY. HOWEVER, SECTION 32 OF THE ACT PROVIDES FOR DEPRECIATION AND FALLS UNDER C HAPTER IV-D WHICH CONCERNS ITSELF WITH COMPUTATION OF INCOME FROM PRO FITS OR GAINS FROM BUSINESS OR PROFESSION. THUS, THERE IS NO QUESTION OF ALLO WING ANY DEDUCTION AS DEPRECIATION UNDER SECTION 32 FOR THE PERIOD FOR WHICH THIS PROPERTY WAS LET OUT AND INCOME THEREOF WAS OFFERED FOR TAX UNDER TH E HEAD 'INCOME FROM HOUSE PROPERTIES'. THUS, WE CONCU R WITH THE FINDING OF THE ASSESSING OFFICER. 9. HOWEVER, WE HAVE NOTED THAT IN SECOND CONTENTION BY LD AR FOR THE ASSESSEE THAT OFFICE HOUSE PROPERTY (OFFICE PREMISE S) EARLIER USED FOR THE PURPOSE OF BUSINESS IS NOT USED FOR THE PURPOSE OF BUSINESS DURING THE YEAR UNDER CONSIDERATION AND THAT THE ASSESSEE HAS LET OUT THE SAME FOR THE FIRST TIME ON RENT AND ASSESSING OFFICER MAY RESTRI CT TO A FAIR PROPORTIONATE PART OF ASSET FOR THE PURPOSE OF DEPRECIATION. WE F IND CONVINCING FORCE IN THE CONTENTION OF THE LD. AR FOR THE ASSESSEE AND R ESTORE BACK THIS ISSUE TO FILE OF ASSESSING OFFICER TO EXAMINE THE ISSUE AFRE SH ON THIS CONTENTION AND PASS THE ORDER IN ACCORDANCE WITH LAW. NEEDL ESS TO ORDER THAT BEFORE ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 10 PASSING THE ORDER THE ASSESSING OFFICER SHALL GRANT OPPORTUNITY TO THE ASSESSEE AS PER THE NEW PROCEDURE OF ASSESSMENT. TH E ASSESSEE IS ALSO DIRECTED TO PROVIDE ALL INFORMATION AND EVIDENCE TO THE ASSESSING OFFICER. 10. IN THE RESULT THESE GROUNDS OF APPEAL ARE ALLOWED F OR STATISTICAL PURPOSE. 11. GROUND NO. 4 TO 7 RELATES TO DISALLOWANCE UNDER SE CTION 14A. THE LD AR FOR THE ASSESSEE FAIRLY CONCEDED THAT GROUND NO.7 IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE APEX COURT IN M AXOPP INVESTMENT LTD VS CIT REPORTED IN 402 ITR 430 SC. HENCE, GROU ND NO. 7 OF THE APPEAL IS DISMISSED. 12. SO FAR AS GROUND NO. 4 TO 6 ARE CONCERNED THE LD A R FOR THE ASSESSEE SUBMITS THAT HE HAS A VERY LIMITED PRAYER THAT FOR THE PURPOSE OF DISALLOWANCE UNDER RULE 8D(III), ONLY THOSE INVESTM ENT WHICH YIELDED THE EXEMPT INCOME DURING THE YEAR MAY BE CONSIDERED FOR COMPUTING THE AVERAGE VALUE OF INVESTMENT WHICH YIELDED EXEMPT IN COME DURING THE YEAR . IN SUPPORT OF HIS SUBMISSIONS THE LD AR FOR THE A SSESSEE RELY ON THE DECISION OF SPECIAL BENCH OF DELHI TRIBUNAL IN ACIT VS VIREET INVESTMENT VS ACIT [2017] 165 ITD 27 (DELHI- TRIB S B). 13. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF THE LD COMMISSIONER (APPEALS). ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 11 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PA RTIES AND GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW. AS NOTED ABOVE THE LD AR FOR THE ASSESSEE HAVE CONFINED HIS SUBMISSIONS TO T HE EXTENT THAT ONLY THOSE INVESTMENT WHICH YIELDED EXEMPT INCOME DURING THE YEAR SHOULD BE CONSIDERED FOR COMPUTING THE AVERAGE VALUE OF INVESTMENT WHICH YIELDED EXEMPT INCOME DURING THE YEAR AS HELD BY SPECIAL BE NCH OF DELHI TRIBUNAL IN VIREET INVESTMENT P. LTD. (SUPRA). AFTER CONSIDERING THE SUBMISSION OF LD. AR OF THE ASSESSEE, WE FIND CONVI NCING FORCE IN HIS SUBMISSION THAT ONLY THOSE INVESTMENTS WHICH YIELDE D EXEMPT INCOME DURING THE YEAR BE CONSIDERED FOR COMPUTING THE AVE RAGE VALUE OF INVESTMENT. THEREFORE, THE ASSESSING OFFICER IS DIR ECTED TO RE-COMPUTE THE DISALLOWANCE UNDER RULE 8D(2)(III) BY FOLLOWING THE DECISION OF SPECIAL BENCH OF DELHI TRIBUNAL IN VIREET INVESTMENT P. LTD. (SUPRA). NEEDLESS TO ORDER THAT BEFORE RE-COMPUTING THE DISALLOWANCE UND ER RULE 8D(2)(III), THE ASSESSING OFFICER SHALL GRANT OPPORTUNITY OF HE ARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PROVIDE NECESSARY DETAILS AND INFORMATION TO THE ASSESSING OFFICER. 15. IN THE RESULT, THIS GROUND OF APPEAL IS PARTLY ALLO WED. 16. GROUND NO. 8 RELATES TO DEDUCTION OF EDUCATION CES S. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS RAISED THIS GROUND OF APPEAL FOR THE ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 12 FIRST TIME BEFORE THE TRIBUNAL. THE GROUND OF APPEA L IS PURELY LEGAL IN NATURE. THE ASSESSEE IS CLAIMING DEDUCTION OF PAYME NT OF EDUCATION CESS AS ALLOWABLE DEDUCTION ON THE BASIS OF VARIOUS DEC ISION OF TRIBUNAL, HONBLE BOMBAY HIGH COURT IN SESA GOA LTD. VS. DCIT [2020] 107 CCH 376 (BOM) AND HONBLE RAJASTHAN HIGH COURT IN C HAMBAL FERTILIZERS AND CHEMICAL LTD. VS. DCIT (ITA NO. 52 OF 2018). 17. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT THE ASSESSEE HAS NOT CLAIMED SUCH DEDUCTION EITHER IN THE RETURN OF INCOME OR BEFORE THE FIRST APPELLATE AUTHORITY. THE HONBLE BENCH MA Y TAKE DECISION FOR ADMISSION OF ADDITIONAL GROUND OF APPEAL AND IN CAS E THE ADDITIONAL GROUND OF APPEAL IS ADMITTED, THE ISSUE MAY BE REST ORED TO THE FILE OF ASSESSING OFFICER FOR CONSIDERING THE ISSUE. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND DELIBERATED ON VARIOUS CASE LAWS RELIED BY LD. AR OF THE ASSESSEE. WE HAVE NOTED THAT THE ASSESSEE HAS RAISED THIS GROUND OF APPEAL, FOR THE FIRST TIME BEFORE THE TRIBUNAL. THE LD. AR FOR THE ASSESSEE SUBMITTED THA T THE GROUND OF APPEAL IS PURELY LEGAL IN NATURE. CONSIDERING THE FACT THA T THE GROUND OF APPEAL RAISED BY ASSESSEE IS PURELY LEGAL IN NATURE AND NO NEW FACTS ARE NECESSARY TO BE BROUGHT ON RECORD FOR CONSIDERING THE RELIEF CLAIMED UNDER THIS GROUNDS OF APPEAL AND FURTHER, CONSIDERING THE DECI SION OF HONBLE ITA NO. 247/MUM/2019 HIND MUSAFIR AGENCY LTD 13 BOMBAY HIGH COURT IN SESA GOA (SUPRA), WE ADMIT THE GROUND OF APPEAL AND DIRECT THE AO TO CONSIDER THE CLAIM OF ASSESSEE AND ALLOW APPROPRIATE RELIEF IN ACCORDANCE WITH THE DECISION OF HONBLE B OMBAY HIGH COURT IN SESA GOA LTD. (SUPRA) WHEREIN IT WAS HELD THAT EDUC ATION CESS AND HIGHER AND SECONDARY EDUCATION CESS ARE LIABLE FOR DEDUCTION IN COMPUTING INCOME CHARGEABLE UNDER HEAD OF 'PROFITS AND GAINS OF BUSINESS OR PROFESSION. HENCE, THIS GROUND OF APPE AL IS ADMITTED AND RESTORED TO THE FILE OF ASSESSING OFFICER TO CONSID ER AND ALLOW APPROPRIATE RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN SESA GOA LTD. (SUPRA). IN THE RESULT, THIS GROUND OF APPEAL ALLOWED FOR STATISTICAL PURPOSE. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED AS PER R ULE 34(5) ON 15/09/2020. SD/- SD/- RAJESH KUMAR PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 15 .09.2020 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI