AMD Industries Ltd., New Delhi V. JCIT, Special Range- 1 , New Delhi

ITA 5308/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5487 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Earning of tax free income; Set aside
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NO. 5308/DEL/2018 [A.Y 2015-16] M/S AMD INDUSTRIES LTD VS. THE J.C.I.T. 18, 1 ST FLOOR, PUSA ROAD SPECIAL RANGE-1 KAROL BAGH, NEW DELHI NEW DELHI PAN : AAACA2843 C [APPELLANT] [RESPONDENT] DATE OF HEARING : 21.09.2021 DATE OF PRONOUNCEMENT : 21.09.2021 ASSESSEE BY : SHRI SURESH K. GUPTA, C.A. REVENUE BY : SHRI BHOPAL SINGH, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST OR DER OF THE COMMISSIONER OF INCOME TAX [APPEALS] - 32, NEW DELH I DATED 30.05.2018 PERTAINING TO ASSESSMENT YEAR 2015-16. 2 2. THE GRIEVANCE OF THE ASSESSEE RELATES TO THE ADD ITION OF RS. 5,07,008/- MADE U/S 14A OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] R.W.R. 8D OF TH E RULES WHEN EXEMPT INCOME IS ONLY RS. 14,451. 3. THE ASSESSEE HAS ALSO RAISED ONE ADDITIONAL GROU ND WHICH READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND POSITION OF LAW EDUCATION CESS AND SECONDARY AND HIGHER EDUC ATION CESS AMOUNTING TO RS. 7,59,662/- IS A DISALLOWABLE EXPENDITURE U/S 40A(II) OF THE ACT? 4. FOR ADMISSION OF THIS ADDITIONAL GROUND, STRONG RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NTPC LTD 229 ITR 383 AND JUTE CORPORATION OF INDIA LTD 187 ITR 688. 5. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME WHICH HE CLAIME D AS EXEMPT FROM TAX. THE ASSESSING OFFICER WAS OF THE OPINION THAT PROVISIONS OF SECTION 14A R.W.R 8D SQUARELY APPLY AND, ACCORDINGLY, COMPU TED DISALLOWANCE AT RS. 5,07,008/-. 3 6. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT(A) AND STRONGLY CONTENDED THAT DISALLOWANCE SHOULD BE REST RICTED TO THE EXTENT OF EXEMPT INCOME OF RS. 14,451/-. 7. THOUGH THE LD. CIT(A) WAS CONVINCED WITH THE CLA IM OF THE ASSESSEE, BUT HE FOUND THAT THE ASSESSEE ITSELF COM PUTED SUO MOTO DISALLOWANCE OF RS. 1,34,268/- U/S 14A OF THE ACT A ND ACCORDINGLY, RESTRICTED THE TOTAL DISALLOWANCE TO RS. 1,34,268/- . 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHE MENTLY STATED THAT BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CARAF BUILDERS AND CONSTRUCTIONS PVT LT D 414 ITR 122, DISALLOWANCE U/S 14A OF THE ACT CANNOT EXCEED EXEMP T INCOME. 9. THE LD. DR STRONGLY STATED THAT THE ASSESSEE ITS ELF HAS SUO MOTO DISALLOWED RS. 1,34,268/- AND THE DISALLOWANCE REST RICTED TO THAT AMOUNT BY THE LD. CIT(A) IS FULLY JUSTIFIABLE. 10. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT THE ASSESSEE HAS SUO MOTO DISALLOWE D RS. 1,34,268/- ON EXEMPT INCOME OF RS. 14,451/-. HOWEVER, IN LIGHT O F THE DECISION OF 4 THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI [SUP RA], CONTENTION OF THE ASSESSEE CANNOT BE BRUSHED ASIDE LIGHTLY. WE, THER EFORE, DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO T HE EXTENT OF EXEMPT INCOME OF RS. 14,451/-. THIS GROUND IS, ACCORDINGL Y ALLOWED. 11. COMING TO THE ADDITIONAL GROUND, WE FIND THAT S UCH CLAIM HAS BEEN ALLOWED BY THE CO-ORDINATE BENCHES IN SEVERAL CASES AND WE REFER TO THE DECISION IN THE CASE OF EXLSERVICES.COM INDI A PVT LTD ITA NO. 7392/DEL/2018. THE RELEVANT FINDINGS READ AS UNDER : 20. BEFORE US, LEARNED AR SUBMITTED THAT ASSESSEE IN THE RETURN OF INCOME DID NOT CLAIM DEDUCTION FOR THE EDUCATION CE SS PAID AMOUNTING TO RS.70,98,828/- BEFORE THE DUE DATE OF FILING RETURN OF INCOME. HE SUBMITTED THAT HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHAMBAL FERTILISERS AND CHEMICALS LTD. VS. JCIT D.B ITA NO. 52/2018, VIDE ORDER DATED 31.07.2018 HAS HELD THAT EDUCATION CESS IS AN ALLOWABLE DEDUCTION WHILE COMPUTING THE INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION AS IT DOES NOT FALL WITHIN SECTION 40(A)(II) OF THE ACT. HE FURTHER SUBMITTED THAT IDENTICAL ISSUE AROS E IN ASSESSEES OWN CASE FOR A.Y. 2012-13, 2013-14 AND 2015-16 IN ITA N OS. 8452/DEL/2019, 5435 & 5436/DEL/2017 WHEREIN THE CO-ORDINATE BENCH OF TRIBUNAL ALLOWED THE ADDITIONAL GROUND RAISED IN THIS REGARD AND DIRECTED THE AO TO ALLOW CLAIM OF DEDUCTIBILITY OF CESS AS DEDUCTIB LE BUSINESS EXPENDITURE. HE POINTED TO THE COPY OF RELEVANT ORDER PLACED AT PAGE NO.49. HE 5 THEREFORE SUBMITTED THAT BY FOLLOWING THE ORDER OF TRIBUNAL ON IDENTICAL FACTS IN ASSESSEES OWN CASE IN EARLIER YEARS, THE GROUNDS BE ALLOWED. 21. LEARNED DR ON THE OTHER HAND DID NOT CONTROVERT THE SUBMISSIONS MADE BY THE LEARNED AR. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT ADDIT IONAL GROUND IS WITH RESPECT TO CLAIM OF DEDUCTION OF RS.70,98,828/- ON ACCOUNT OF PAYMENT OF EDUCATION CESS. WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE AND THE CO-ORDINATE BENCH OF TRIBUNAL DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: 33. BY WAY OF ADDITIONAL GROUND, THE ASSESSEE HAS CLAIMED DEDUCTIBILITY OF EDUCATION CESS. 34. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT IN THERETURN OF INCOME FILED FOR RELEVANT A.YS, THE AS SESSEE DID NOT CLAIM DEDUCTION FOR EDUCATION CESS PAID BEFORE THE DUE DATE FOR FILING RETURN OF INCOME FOR SUBJECT A.YS IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CHAMBAL FERTILIZERS AND CHEMICALS LIMIT ED IN ITA NO. 52/2018 ORDER DATED 31.07.2018 HAS HELD THAT EDUCAT ION CESS IS AN ALLOWABLE DEDUCTION WHILE COMPUTING THE INCOME UNDE R THE HEAD PROFITS AND GAINS FROM PROFESSION OR BUSINESS. 6 35. EVEN THE CBDT, IN ITS CIRCULAR NO. 91/58/66-ITJ (19) DATED 18.05.1967 HAS CLARIFIED THAT THE WORD CESS HAS B EEN OMITTED FROM CLAUSE AND EFFECT OF OMISSION OF THE WORD CES S IS THAT ONLY TAXES PAID ARE TO BE DISALLOWED IN THE ASSESSMENTS FOR THE YEARS 1961-63 ONWARDS. 36. IN LIGHT OF THE DECISION OF THE HON'BLE RAJASTH AN HIGH COURT [SUPRA] WE DIRECT THE ASSESSING OFFICER TO ALLOW CL AIM OF DEDUCTIBILITY OF CESS FROM THE INCOME IN THE CAPTIO NED A.YS. ADDITIONAL GROUND IN ALL THE APPEALS IS ALLOWED. 23. WE FIND THAT FACTS OF THE CASE IN THE YEAR UNDE R CONSIDERATION ARE IDENTICAL TO THAT OF THE EARLIER YEARS. FURTHER NO DISTINGUISHING FEATURE IN THE FACTS OF THE CASE IN THE YEAR UNDER CONSIDERATI ON AND THAT OF THE EARLIER YEARS HAS BEEN POINTED OUT BY THE REVENUE. BEFORE US, REVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMON STRATE THAT THE ITAT ORDERS IN ASSESSEES OWN CASE FOR EARLIER YEARS ON IDENTICAL ISSUE HAS BEEN STAYED/ SET ASIDE/ OVERRULED BY HIGHER JUDICIAL FOR UM. WE THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES O WN CASE FOR EARLIER YEARS AND FOR SIMILAR REASONS DIRECT THE AO TO ALLO W THE CLAIM OF DEDUCTIBILITY OF CESS AMOUNTING TO RS.70,98,828/-. THUS THE GROUND OF THE ASSESSEE IS ALLOWED. 12. RESPECTFULLY FOLLOWING THE FINDINGS OF THE COOR DINATE BENCH [SUPRA], WE ALLOW THE ADDITIONAL GROUND. THE ASSES SING OFFICER IS DIRECTED TO ALLOW THE DEDUCTION ON CESS, EDUCATION CESS AND HIGHER EDUCATION CESSS. 7 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 5308/DEL/2018 IS ALLOWED. 12. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.09. 2021. SD/- SD/- [SUDHANSHU SRIVASTAVA ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST SEPTEMBER, 2021 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 8 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEF ORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER I S UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER