DCIT CIRCLE-2 (1)(2), MUMBAI V. M/S FOODS AND INNS LTD., MUMBAI

ITA 6862/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8586 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Appeal Filed On: 06-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Earning of tax free income; Services rendered outside India; Permanent establishment; Question of law; Speculative transactions; TDS; Set aside
• Section: 143(3); 14A; 43(5); 195; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) “F” BENCH, MUMBAI BEFORE SHRI LALIET KUMAR, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER ITA NOs. 6859, 6860 & 6862/MUM/2019 (A.Ys: 2013-14, 2014-15 & 2015-16) DCIT – Circle – 2(1)(2) Room No. 561, 5th Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 v. M/s. Food and Inns Ltd., Sion Trombay Road, Punjabwadi Deonar, Mumbai - 400088 PAN: AAACF0521C (Appellant) (Respondent) CO NOs. 132, 133 & 135/MUM/2021 [ARISING OUT OF ITA NOs. 6859, 6860 & 6862/MUM/2019 (A.Ys: 2013-14, 2014-15 & 2015-16)] M/s. Food and Inns Ltd., Sion Trombay Road, Punjabwadi Deonar, Mumbai - 400088 PAN: AAACF0521C v. DCIT – circle – 2(1)(2) Room No. 561, 5th Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 (Appellant) (Respondent) Assessee by : Shri Nitin Kulkarni Department by : Shri Achal Sharma Date of Hearing : 15.12.2021 Date of Pronouncement : 21.02.2022 2 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., O R D E R PER S. RIFAUR RAHMAN (AM) 1. These appeals are filed by the Revenue and cross objections are filed by the assessee against different orders of the Learned Commissioner of Income Tax (Appeals)–4, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 28.08.2019 for the A.Y. 2013-14 and dated 29.08.2019 for the A.Y. 2014-15 & 2015-16. Since the issues raised in all the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. 2. Revenue has raised identical grounds for all the assessment years except for figures. Grounds raised by the revenue for the A.Y. 2013-14 are as under - “1. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing relief to the assessee relying on the decision of the Hon’ble Delhi High court in cases of Joint investment (P) Ltd. vs CIT (2015) 372 ITR (Del) & Cheminvest Ltd vs CIT (2015) 61 Taxman.com 118 (Delhi), without appreciating the fact that the disallowance was done in accordance with of section 14A r.w.s. Rule 8D and without regard to the clarification on legislative intent supplied by CBDT circular 5/2014.” 2. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Corporate Guarantee Commission claimed by the assessee without appreciating the facts correctly.” 3. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the claim of foreign exchange loss 3 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., on forward contracts as business loss, without appreciating the facts related to the specific provisions of section 43(5) of LT. Act whereby the loss was held to be speculative.” 4. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of commission on export sales and overseas warehousing charges u/s 40(a)(i) of the Act, without appreciating that the said foreign commission and ware housing agents was from a business connection in India.” 5. The appellant craves leave to amend, alter, and delete any of the aforesaid grounds and add any additional grounds either before or at the time of hearing.” 3. At the outset, with regard to Ground No. 1 which is in respect of section 14A of the Act, Ld. AR of the assessee brought to our notice that the issue in appeal was considered by the Co-ordinate Bench of this tribunal in assessee’s own case for the Assessment Year 2011-12 and A.Y. 2012-13 and decided the issue in favour of the assesse, against the department. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 4. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee in the immediate preceding year i.e., A.Y.2012-13. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 983/Mum/2018 dated 30.09.2019 held as under: - 4 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., “6. We have heard the rival submissions of the parties and carefully perused the relevant material on record including the decision of the coordinate Bench rendered in assessee’s case ITA No 4577/Mum/2015 for the assessment year 2011-12. The coordinate Bench of the Tribunal has decided the identical issue in favour of the assessee. The relevant portion of the order passed by the Ld. CIT (A) reads as under: “4.4 I have considered the facts of the case and the appellant’s submissions. I find that the Hon’ble ITAT in its order dated 07.08.2017 in ITA No. 4577/Mum/2015 for A.Y. 2011-12 had observed and held as under:- “3. We have heard both the Counsel and perused the records. We find that the Assessing Officer’s reliance upon the decision of the Special Bench of ITAT in the case of Cheminvest Ltd. (supra) is misplaced. The said decision was reversed by the Hon’ble Delhi High Court. We find that the Hon’ble jurisdictional High Court has also followed the same proposition in the case of Pr.CIT v. Ballarpur Industries Ltd. TA No.51 of 2016). The Hon'ble High Court has held as under. "By this income tax appeal the appellant - Department challenges the orders of the Commissioner of Income Tax and the Income Tax Appellate Tribunal, Nagpur. On hearing the learned Counsel for the Department and on perusal of the impugned orders, it appears that both the Authorities have recorded a clear finding of fact that there was no exempt income earned by the assessee. While holding so, the Authorities relied on judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression "does not form part of the total income" in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case. the Authorities held that since tile investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been 5 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., included in the total income. The findings of facts recorded by both the Authorities do not give rise totally substantial question of law. Since no substantial question of law arises in this income tax appeal, the income tax appeal is dismissed with no order as to costs." 4. From the above it is clear that the Hon'ble jurisdictional High Court also has uphold the decision that when no dividend income is claimed, disallowance u/s 14A is not permissible. Hence, the authorities below's 'reliance upon the Special Bench decision in the case of Cheminvest Ltd. and the CBBT Circular are misplaced. Hence, we find that the appeal by the Revenue itself is misplaced. Furthermore, we note that the learned CIT (A) has held that since the assessee has adequate surplus funds, no disallowance of interest should be done. The learned CIT(A) has directed 0.5°/o disallowance of the investments. Since we have already held that no disallowance was called for ill case as no exempt income is claimed, we set aside the orders of the authorities below and decide the issue in favour of the assessee." 7. The Ld. CIT(A) has decided this issue in favour of the assessee following the decision of the coordinate Bench rendered in assessee’s own case for the assessment year 2011-12. The revenue has not pointed out any material change in the facts of the present case. Since, the findings of the Ld. CIT(A) are in accordance with the decision of the coordinate Bench discussed above, we do not find any reason to interfere with the findings of the Ld. CIT(A). Hence, we uphold the decision of the Ld. CIT(A) and dismiss ground No 1 to 3 of the revenue’s appeal. 5. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2012-13 is hereby followed, ground raised by the revenue is accordingly dismissed. 6. With regard to Ground No. 2 which is in respect of corporate guarantee commission, Ld. AR of the assessee brought to our notice that the issue in appeal was considered by the Co-ordinate Bench of this 6 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., tribunal in assessee’s own case for the Assessment Year 2011-12 and A.Y. 2012-13 and decided the issue in favour of the assesse, against the department. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 7. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y.2012-13. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 983/Mum/2018 dated 30.09.2019 held as under: - “10. We have carefully perused the material on record in the light of the rival contention of the parties. As pointed out by the Ld. counsel for the assessee, the coordinate Bench has decided the identical issue in favour of the assessee in assessee’s own case ITA No. ITA No. 4577/Mum/2015 and CO. No.87/Mum/2017 for A.Y. 2011-12 by upholding the findings of the first appellate authority vide which the Ld. CIT(A) had deleted the addition of the difference between 0.75% and 3% of the total amount of guarantee. The findings of the Ld. CIT(A) read as under:- “5.3 I have considered the facts of the case and the appellant's submissions. I find that the Hon'ble ITAT in its order dated 07.08.2017 in ITA No. 4577/Mum/2015 and CO. No.87/Mum/2017 for A.Y. 2011-12 has decided the issue in favour of the appellant by holding as under: "6. We have heard both the Counsel and perused the records. We find that the assessee in this case has executed corporate guarantee in favour of Bank of Maharashtra to M/s. Finns Frozen Foods India Limited and charged guarantee commission at 0.75%. However, the Assessing Officer has referred to Allahabad Bank rate of 3% and held that the same was the prevailing market rate and hence added the difference. As against the above, the assessee has referred to 7 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., the rate of State Bank of India and the learned CIT (A) has relied upon case laws from ITAT where0.5% charge for guarantee commission by ICICI Bank was held to be reasonable. We find that in the background of these facts, it cannot be said that the assessee has not charged prevailing rate and hence on the facts and circumstances of the case 0.75% guarantee commission charged is held to be adequate. Hence, addition of notional income by the Assessing Officer has rightly been deleted by the learned CIT (A). Hence, we uphold the order of the learned CIT(A)." Respectfully following the above decision of the Hon'ble ITAT in the appellant's own case, the addition of Rs.14,96,160/- on account of Corporate Guarantee Commission is deleted. This ground of appeal is allowed. 11. The Ld. CIT(A) has decided the issue in question by following the decision of the Tribunal rendered in assessee’s case referred above. The revenue has not pointed out any change in the facts and the circumstances of the present case. We, therefore do not find any reason to interfere with the findings of the Ld. CIT(A) which is in accordance with the decision of the coordinate Bench. Hence, we uphold the findings of the Ld. CIT(A) and dismiss this ground of appeal of the revenue and further direct the AO to delete the addition.” 8. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2012-13 is hereby followed, ground raised by the revenue is accordingly dismissed. 9. With regard to Ground No. 3 which is in respect of Loss of foreign Exchange on forward contracts, Ld. AR of the assessee brought to our notice that the issue in appeal was considered by the Co-ordinate Bench of this tribunal in assessee’s own case for the Assessment Year 2009-10, 2010-11 and A.Y. 2012-13 and decided the issue in favour of the assesse, 8 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., against the department. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 10. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y.2012-13. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 983/Mum/2018 dated 30.09.2019 held as under: - “13. We have carefully perused the material on record in the light of the rival contention of the parties. As pointed out by the Ld. counsel for the assessee, the coordinate Bench has decided the identical issue in favour of the assessee in assessee’s own case 1262/Muni/2011, 6629/Muni/2012 and 6271/Mum/2014 for A.Y.s 2009-10 & 2010-11 by upholding the findings of the first appellate authority vide which the Ld. CIT(A) had deleted the addition made by the AO, rejecting the claim of the assessee. The findings of the Ld. CIT(A) read as under: - “6.3 I have considered the facts of the case and the appellant's submissions. I find that the Hon'ble ITAT in its combined order dated 07.06.2016 in ITA Nos. 1262/Muni/2011, 6629/Muni/2012 and 6271/Mum/2014 for A.Y.s 2009-10 & 2010-11 has discussed the issue at length and decided the issue in favour of the appellant by observing and holding as under: "5.3.1 We have heard the rival submissions and perused and carefully considered the material on record including the judicial pronouncement referred to in the orders of the authorities below. Form the fact on record, it is not disputed that the assessee is engaged in the manufacture and export of processed food products such as fruit pulp and other allied items, for which it was receiving export sales 9 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., proceeds from abroad in foreign exchange currencies. We find from the record that the learned CIT (A), after examination of the matter, found that the assessee had entered into foreign exchange forward contracts with banks only to safeguard itself and hedge against the exposure risks in future fluctuation in the exchange rates of foreign currency to be received by it as export sole proceeds. It is seen that these foreign exchange forward contracts entered into with banks from time to time iii the relevant periods under consideration. were made against confirmed export orders and export of goods by the assessee. 5.3.2 In our view the AO's findings to the contrary that the aforesaid foreign exchange losses suffered by the assessee are speculative in nature was factually flawed as it was based on a factually incorrect assumption that the assessee not being dealer in foreign exchange, its forward contracts were only for foreign exchange which were settled without delivery thereof. The RB1 has permitted importers and exporters to enter into foreign exchange forward contracts with the banks in respect of its export orders. In the case on hand the assessee entered into foreign exchange export contracts with banks to the extent of its export orders; which means every foreign exchange forward contract is against a specific export order. in this factual matrix, it is clear that the assessee did not deal in foreign exchange, but entered into foreign exchange forward contract with banks to safeguard itself against possible foreign exchange losses on account of export sale proceeds to be received. 5.3.3 We concur with the view of the learned CIT (A) in the impugned order that the facts and circumstances of the case establish that the proviso (a) to section 43(5) of the Act is squarely applicable in the case on hand since the foreign exchange forward contracts entered into by the assessee with banks, in the course of its manufacturing and export business of fruit pulp and allied items, were in order to safeguard itself against possible future foreign exchange tosses on account of exports sale proceeds receivable, due to fluctuation in price of different commodities and which contracts were backed by confirmed export orders for 10 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., dealing of goods manufactured or traded by it. These transactions were not speculative in nature and the resultant foreign exchange losses were consequently not speculative losses but allowable business losses. Such contracts are directly from and incidental to the assessee's business of manufacture and export of fruit pulp and allied products and therefore, in our view, do not represent speculative transactions. Therefore, the concept of delivery and non- delivery thereof is of no consequence and is irrelevant in the context of the facts of the case on hand. As long as the aforesaid transactions of foreign exchange forward contracts are concerned, they are directly linked with the assessee's business of manufacture and export of twit pulp and allied items, in our considered view, by no stretch of imagination can they be classified as 'speculative business’. 5.3.4 We find that the issue on hand is squarely covered in favour of the assessee by the decision of the Hon'ble Bombay High; Court in the case of CIT vs. BadridasGauridu (P) Ltd. (2003) 261 ITR 256 (Bom): "The assessee had entered into forward contracts with the Banks in respect of foreign exchange. Some of these contracts could not be honoured by the assessee for which it had to pay some amount which was debited to the P & L account. The assessee claimed the same as business loss being payment on account of cancellation of forward booking of forex with the banks in respect of exports orders. Finally, when the issue came up for consideration the Hon'ble Bombay High Court held as under: - The assessee was not a dealer in foreign exchange. The assessee was a cotton exporter. The assessee was an export house. Therefore, foreign exchange contracts were booked only as incidental to the assessee's regular course of business. The Tribunal has recorded a categorical finding to this effect in its order. The Assessing Officer has not considered these facts. Under Section 43(5) of the Income- tax Act, "speculative transaction" has been defined to mean a transaction in which a contract for the purchase or sale of a commodity is settled otherwise than by the actual 11 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., delivery or transfer of such commodity. However, as stated above, the assessee was not a dealer in foreign exchange. The assessee was an exporter of cotton. In order to hedge against losses, the assessee had booked foreign exchange in the forward market with the bank. However, the export contracts entered into by the assessee for export of cotton in some cases failed. In the circumstances, the assessee was entitled to claim deduction in respect of Rs. 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court. with which we agree, in the case of CIT v. SoorajmullNagarmull (1981)22 CTR Cal) 8: (1981) 129 ITR 169 (Cal)". 5.3.5 Taking into account the facts and circumstances of the case as discussed above and the judicial pronouncement referred to (supra), we are of the considered view that the orders of the learned CIT (A) for assessment years 2009-10 and 2010-11 holding that foreign exchange losses of 16,72,65,011/- and 6,53,06,057/- for assessment year's 2009- 10 and 2010-11 respectively were business losses and directing the AO to allow the same calls for no interference from us and we therefore confirm an uphold the same. Consequently, Revenue's grounds No. 1(a) and (b) for A. Y. 2009-10 and ground No. 2 for A. Y. 2010-11 are dismissed." Respectfully following the above decision of the Hon’ble ITAT in the appellant’s own case, the disallowance of Rs. 2,03,90,644/- on account of foreign exchange is deleted. This ground of appeal is allowed.” 14. The Ld. CIT(A) has decided the issue in question by following the decision of the Tribunal rendered in assessee’s case referred above. The revenue has not pointed out any change in the facts and the circumstances of the present case. We, therefore do not find any reason to interfere with the findings of the Ld. CIT(A) which is in accordance with the decision of the coordinate Bench. Hence, we uphold the findings of the Ld. CIT(A) and dismiss this ground of appeal of the revenue and further direct the AO to delete the addition.” 12 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., 11. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2012-13 is hereby followed, ground raised by the revenue is accordingly dismissed. 12. With regard to Ground No. 4 which is in respect of s 40(a)(i) of the Act relating to payments of export commission to foreign agents and overseas warehousing charges to warehousing agents, the relevant facts are, during the assessment proceedings, the Assessing Officer observed that assessee paid on ₹.2,38,82,578/- towards overseas agent’s commission to foreign agents and paid ₹.6,11,24,190/- towards overseas warehousing charges. According to Assessing Officer, payments were made out of India, the provision of section 195 of the Act are attracted. Assessee was liable to deduct tax on the payments, accordingly, disallowed the expenses claimed u/s.40(a)(i) of the Act. Aggrieved assessee preferred an appeal before the Ld.CIT(A). Ld.CIT(A) after considering the submissions of the assessee observed that in earlier assessment years i.e. A.Y. 2004-05, 2006-07 Assessing Officer disallowed similar disallowances and the then CIT(A) allowed the issue in favour of the assessee and the department has not filed any appeal against those orders. Ld.CIT(A) by relying in the case of Hon'ble Jurisdictional High 13 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., Court order in the case of Sesa Resources Ltd., allowed the grounds raised by the assessee. Aggrieved revenue is in appeal before us. 13. Considered the rival submissions and material placed on record, we observe from the record that assessee has paid foreign agent commission and warehousing charges to the parties in Holland. Since the payments were relating to services rendered outside India and service providers are non-residents, who do not have any permanent establishment in India. The various courts have held that before effecting TDS one of the aspects to be examined is whether such income is taxable in India in terms of Income-tax Act. The issue in this case is very clear that none of the payments remitted outside India are taxable in India. Therefore, we conclude the decision in favour of the assessee and against the revenue. Accordingly, ground raised by revenue is dismissed. A.Y. 2014-15 and A.Y. 2015-16 14. The revenue filed appeal in A.Y. 2014-15 and A.Y. 2015-16 against the order of the Ld.CIT(A). All the grounds raised by them are similar to A.Y. 2013-14 except Ground No. 1 which is reproduced below: - 14 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing relief to the assessee without appreciating the fact that late payments of employee’s contribution to EPF is not an allowable deduction u/s 36(1)(va) rws 2(24)(x).” 15. With regard to above ground which is in respect of delayed payments of employee PF/ESIC u/s. 2(24)(x) r.w.s. 36(1)(va) of the Act, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee’s own case for the Assessment Year 2011-12 and decided the issue in favour of the assesse and against the department. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 16. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y.2011-12. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 4577/Mum/2015 dated 07.08.2017 held as under: - “7.1 On this issue, the Assessing Officer disallowed Rs.3,72,619 received from employees as contribution to Provident Fund by holding that the payment is not made to the relevant fund before the due date as specified in the relevant Act. However, the assessee claimed that the payments were made before the due date of the filing of the return under the Income-tax Act. Hence, no disallowance should have been made. For this proposition, the assessee referred to several case laws as under: (i) CIT v, AIMIL Ltd. (Delhi High Court) 312 ITR 508 15 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., (ii) Vinay Cements 213 CTR 268 (SC) (iii) Alom Extrusions Ltd. (2009) 309 ITR 306 (SC) (iv) Dharmendra Sharma 297 ITR 320 (Del.) (v) P.M. Electronics Ltd. 313 ITR 161 (Del.) (vi) CIT v. Hindustan Organics Chemicals Ltd. 366 ITR 1 (Bom.) (vii) CIT v. Bank of Rajasthan Ltd. 233 ITR 530 (Bom.) (viii) CIT v. Magus Customers Dialog Pvt.Ltd. 371 ITR 244 (Kar) 7.2 Considering the above, the learned CIT(A) deleted the addition. 7.3. Against the above order, the Revenue is in appeal before us. 8. We have heard both the Counsel and perused the records. We find that the case laws referred above duly support the case of the assessee. Hence, we do not find any infirmity in the order of the learned CIT(A). Accordingly, we uphold the same.” 17. Respectfully following the above decision and following the principle of consistency, at the same time, we observe that there is amendment in section 36(1)(va) and 43B, in the Finance Act, 2021 which is according to us will apply prospectively. Hence, the view taken by the Tribunal in A.Y. 2011-12 is respectfully followed, ground raised by the revenue is accordingly dismissed for both the appeals under consideration. 18. This other grounds are similar to grounds of appeal raised for the A.Y. 2013-14 and the decision taken therein shall apply mutatis-mutandis 16 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., to the appeals for the A.Y. 2014-15 and 2015-16 also. We order accordingly. 19. Coming to cross objections filed by the assessee, assessee has filed following grounds of appeal and additional grounds: - “Ground of Cross Appeal 1. On the facts and in circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming the Disallowance to the extent of exempt income earned i.e Rs 67,377/- and has ignored the suo moto disallowance of Rs 37,584/- made by the appellant Additional Ground of Appeal 2. In view of the decision of the Honorable Jurisdictional Bombay High Court in the case of Sesa Goa Limited vs. JCIT (423 ITR 426) the deduction of education and secondary higher education cess of Rs 3,48,889, computed on the income assessed as per the order passed under Section 143 (3) of the Act and as modified on giving effect of the order passed under section 250 and section 254 of the Income Tax Act, be allowed as expenditure deductable under section 40(a)(ii) r.w.s 28 (i) of the Act. 3. The appellant craves to leave to add, to alter or amend the additional grounds of cross appeal on or before the hearing.” 20. Assessee filed additional ground in the cross objections with the following prayer: - “The Respondent hereby make the humble request to the Honorable Members to grant the permission to include the additional ground of appeal in the cross appeal which is being filed in the above mentioned ITA. The additional ground of appeal arise out of the decision of — 17 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., 1. Honorable Jurisdictional High Court in the case of Sesa Goa Limited vs. JCIT (423 ITR 426) 2. Honorable High Court of Rajasthan in the case of Chambal Fertilizers Limited vs. PCIT in ITA No 52/2018 3. Honorable ITAT, Mumbai, “J” Bench in the case of Asian Paints Limited vs. Additional Commissioner of Income Tax in ITA No 2754 /MUM/2014 4. Atlas Cocoa (India) Ltd vs. ACIT - ITA No.1470/PUNE/2010 5. Rekitt Benckiser (I) P Ltd vs. DCIT (2020) 117 taxmann.com 519 (Kol) The additional ground of appeal arising from the above decisions which were not available at the time of assessment proceedings and passing of assessment order.” 21. Ld. DR vehemently argued against the above additional ground and submitted that it should not be entertained. 22. Considered the rival submissions and material placed on record, as the said additional ground is legal ground, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon’ble Supreme Court in the case of National Thermal Power Co., Limited v. CIT [229 ITR 383 (SC)], we admit the said additional ground raised by the assessee. 23. The relevant facts submitted before us are as below: - “1. Appellant had not claimed the deduction of Education Cess and Higher and Secondary Education Cess as business expenditure 18 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., in the return of income filed for the above mentioned respective years. 2. During the assessment proceedings for the above mentioned respective years the appellant did not make any claim before the assessing officer requesting him to allow Education Cess and Higher and Secondary Education Cess as business expenditure. 3. During the appeal proceedings before CIT(A) against the assessment order passed under section 143(3) of the Income Tax Act, no claim was made for allowing Education Cess and Higher and Secondary Education Cess as business expenditure. 4. In view of the decision of Jurisdictional High Court in the case of Sesa Goa Limited reported in 423 ITR 426 and also the decisions of various other High Courts and Income Tax Appellate Tribunals, the appellant is making the claim requesting the Honourable Members of “F” Bench, ITAT Mumbai to allow the Education Cess and Higher and Secondary Education Cess as business expenditure. 24. In support of his contentions, Ld. AR relied on the following decisions: 1. Honorable Jurisdictional High Court in the case of Sesa Goa Limited vs. JCIT (423 ITR 426) 2. Honorable High Court of Rajasthan in the case of Chambal Fertilizers Limited vs. PCIT in ITA No 52/2018 3. Honorable ITAT, Mumbai, “J” Bench in the case of Asian Paints Limited vs. Additional Commissioner of Income Tax in ITA No 2754 /MUM/2014 4. Atlas Cocoa (India) Ltd vs. ACIT - ITA No.1470/PUNE/2010 5. Rekitt Benckiser (I) P Ltd vs. DCIT (2020) 117 taxmann.com 519 (Kol) 19 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., 25. Considered the rival submissions and material placed on record, we observe that the issue of claim of deduction of education cess and higher education cess are decided by the Hon'ble Bombay High Court in the case of Sesa Goa Limited vs. JCIT (supra) in favour of the assessee. The relevant facts are as under: - “41. Besides, we note that in the present case, though the claim for deduction was not raised in the original return or by filing revised return, the Appellant – Assessee had indeed addressed a letter claiming such deduction before the assessment could be completed. However, even if we proceed on the basis that there was no obligation on the Assessing Officer to consider the claim for deduction in such letter, the Commissioner (Appeals) or the ITAT, before whom such deduction was specifically claimed was duty bound to consider such claim. Accordingly, we are unable to agree with Ms. Linhare's contention based upon the decision in Goetze (supra). 42. For all the aforesaid reasons, we hold that the substantial question of law No.(iii) in Tax Appeal No.17 of 2013 and the sole substantial question of law in Tax Appeal No.18 of 2013 is also required to be answered in favour of the Appellant – Assessee and against the Respondent-Revenue. To that extent therefore, the impugned judgments and orders made by the ITAT warrant interference and modification. 43. Thus, we answer all the three substantial questions of law framed in Tax Appeal No.17 of 2013 in favour of the Appellant – Assessee and against the Respondent -Revenue. Similarly, we answer the sole substantial question of law framed in Tax Appeal No.18 of 2013, in favour of the Appellant – Assessee and against the Respondent – Revenue. 26. Respectfully following the above decision, we are inclined to remit the issue back to the file of the Assessing Officer to consider the 20 ITA NOs. 6859, 6860 & 6862/MUM/2019 CO NOs.132, 133 & 135/MUM/2021 M/s. Food and Inns Ltd., submissions of the assessee and allow the claim of the assessee as per law. Accordingly, additional ground raised by the assessee is allowed. 27. In the result, appeals filed by the Revenue are dismissed and cross objections filed by the assessee is allowed for statistical purpose. Order pronounced on 21.02.2022 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board. Sd/- Sd/- (LALIET KUMAR) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 21/02/2022 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum