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TMI Blog2019 (12) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... JB has been examined by the Co-ordinate Bench of Tribunal in M/s Dhanuka Agritech Ltd. [ 2019 (11) TMI 750 - ITAT DELHI ] wherein the appeal of the assessee is allowed. The same is squarely applicable to the facts of the instant case. Further, the matter stands squarely covered by the order of the Hon ble Jammu Kashmir High Court in the case of Shri Balaji Alloys Vs CIT [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT ] - Appeal of the assessee on the ground of Excise Duty subsidy and interest subsidy as capital receipt is hereby allowed. Claim of education cess as an allowable expenditure - Allowable deduction u/s 37 - HELD THAT:- The similar issue of allowability of cess u/s 37 has been examined in ITC LTD. [ 2019 (4) TMI 1574 - ITAT KOLKATA ] wherein the amount of the cess paid has been held to be an allowable deduction. We find that in the case of Chambal Fertilizers and Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT ] held that in view of the Circular of CBDT where the word cess is deleted, the claim of the assessee for deduction is acceptable. In that case, the Hon ble High Court held that there is difference between the cess and tax and cess cannot be equated wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules 8D of the I.T. Rules, 1962. However, the Assessing Officer after recording reasons and following CBDT Circular No. 5/2014 dated 11.02.2014 disallowed ₹ 2,50,000/-u/s 14A of the Act read with Rules 8D(2)(iii). 4. During the arguments before us, the ld. AR submitted that the company has not earned any exempt income and hence the disallowance made by the assessee following the CBDT Circular No. 5/2014 dated 11.02.2014 is legally not valid. The ld. DR relied on the orders of the authorities below. The revenue has not disputed the factual position. Hence, keeping in view the judgment of Hon ble Delhi High Court in the case Cheminvest Ltd. Vs CIT in ITA No. 749/2014 dated 02.09.2015, judgment of Hon ble Supreme Court in the case of Chitti Logistics wherein the SLP filed by the revenue in the similar matter, we hold that no disallowance is called for. Further, in the case of IL FS Energy Development Company Ltd., the Hon ble High Court of Delhi dated 16.08.2017 held that the Circular of the CBDT cannot override the provisions of the Section 14A. Hence, we hereby hold that the order of the ld. CIT (A) is not legally valid in confirming the disallowance made by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. 7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal [vide, e.g., C.I.T, v. Anand Prasad (Delhi), C.I.T. v. KaramchandPremchand P. Ltd. and C.I.T. v. Cellulose Products of India Ltd. . Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mecare Products Ltd. in ITA No. 2595/Del/2002 holding that it is not the appropriate forum to raise the issue at this juncture. 8. Heard the arguments of both the parties and perused the material available on record. 9. In the case of Jute Corporation of India Ltd. Vs CIT vide order dated 04.09.1990, 1991 AIR 241 held that the Hon ble Apex Court while adjudicating on the issue of additional ground held that the declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminus with that of the Income Tax Officer. If that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitation if any prescribed by the statutory provisions. In the absence of any statutory provisions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the case of NTPC, the Hon ble Apex Court enunciated that it would not be proper if the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) and it amounts to taking too narrow a view of the powers of the Appellate Tribunal. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Thus, we find that the Courts have always upheld the powers of the Tribunal or rather directed the Tribunals to assess the correct tax liability of the assessees. In case the assessee has wrongly or owing to lack of knowledge pays tax on an item of amount which is not taxable in accordance with the provisions of the Income Tax Act, the assessee would have every right to pray for right taxation of his taxable income. 13. Thus, it can be said that the claim of the assessee has to be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment. 17. The CBDT Circular No. 772 dtd. 23.12.1998-- explaining the above substituted provision of Section 143(3) explicitly stated that under the erstwhile provisions, there was no provision to issue refund and the Assessing Officer was only empowered to determine the sum payable by the assessee, but under the amended provisions the A.O. is empowered to provide for determination of sum payable by the assessee as well as the refund of any amount due to him. 18. On harmonious reading of these provisions after giving due consideration of the legislative history of Section 143(3) and the judgment of the Hon'ble Calcutta High Court in the case of CIT Vs Britannia Industries Ltd in ITA No. 03/2013 vide order dated 13.07.2017 held that even if it (accepting the fresh claim of the assessee) results in an assessment below the returned income and consequently refund arises, it is valid as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim, we hereby hold that the assessee is eligible to raise the issue at appellate levels. 22. Having said so, the issue whether the Excise Duty subsidy and interest subsidy can be treated as capital receipt is examined. The similar subsidy has been allowed as capital receipt and also the issue of computation of profits u/s 115JB has been examined by the Co-ordinate Bench of Tribunal in ITA No. 3837/Del/2016 in the case of M/s Dhanuka Agritech Ltd. wherein the appeal of the assessee is allowed. The same is squarely applicable to the facts of the instant case. Further, the matter stands squarely covered by the order of the Hon ble Jammu Kashmir High Court in the case of Shri Balaji Alloys Vs CIT 333 ITR 335. The snippets of the order of the Hon ble High Court and the decision of the Hon ble Apex Court on the issue is as under: The assessee, pursuant to the New Industrial Policy announced for the State of J K, received excise refund and interest subsidy, etc which it claimed to be a capital receipt. In the alternative, it was claimed that the same was eligible for deduction u/s 80-IB. The AO, CIT (A) and Tribunal rejected the claim and held the receipts to be revenue on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s ground of appeal is dismissed. 24. The appeal of the assessee on the ground of Excise Duty subsidy and interest subsidy as capital receipt is hereby allowed. 25. Regarding the claim of education cess as an allowable expenditure, we find that the CBDT vide Circular No. 91/58/66 ITJ(19) clarified as under: Interpretation of provisions of Section 40(a)(ii) of the I.T Act clarification regarding. Section 40(a)(ii) Recently a case has come to the notice of the Board where the ITO has disallowed the cess paid by the assessee on the ground that there has been no material change in the provisions of Section 10(4) of the old Act and Section 40(a)(ii) of the new Act. 2. The view of the ITO is not correct. Clause 40(a)(ii) of the IT Bill, 1961 as introduced in the Parliament stood as under: (a) any sum paid on account of any cess, rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains. When the matter came up before the Select Committee, it was decided to omit the word cess from the clause. The effect of the omission of the word cess is that only taxes paid are to be disallowed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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