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TMI Blog2021 (2) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... settled proposition that if the own funds are more than the investments made should be presumed that the assessee made investments from its own funds. As discussed above, the assessee made investments to the tune of ₹ 15.18 crores in the year under consideration, to which the Balance Sheet as on 31-03-2012 clearly shows as non-current investments, and also shows own funds at ₹ 32,38,52,976/- which is more than the investments made. Therefore, the interest expenses disallowed under Rule 8D(2)(ii) is not maintainable. The disallowance relating to 0.5% of investments to the tune of ₹ 6,47,273/- is confirmed. Thus, suo-moto disallowance made by the assessee under Rule 8D(2)(ii) of ₹ 12,20,303/- and the enhanced disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any engaged in the business of manufacturing of engineering and automobiles parts and also has wind mills in Maharashtra and Tamilnadu. The assessee filed return of income declaring a total income of ₹ 5,72,00,590/- and under scrutiny the AO determined the same at ₹ 5,73,01,284/- inter alia making addition u/s. 14A and disallowing interest expenses vide its order dated 31-12-2014 u/s. 143(3) of the Act. The CIT(A) deleted the addition made on account of interest expenses of ₹ 68,84,106/- and confirmed the addition made u/s. 14A r.w. Rule 8D. 4. After hearing both the parties, we note that the assessee made investments to the tune of ₹ 15.18 crores and disallowed on its own of ₹ 18,67,577/- under Rule 8D(2)(i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- invested in government bonds. It is needless to say that the investments made in government bonds yield no dividend but only interest. 5. It is a settled proposition that if the own funds are more than the investments made should be presumed that the assessee made investments from its own funds. As discussed above, the assessee made investments to the tune of ₹ 15.18 crores in the year under consideration, to which the Balance Sheet as on 31-03-2012 clearly shows as non-current investments, and also shows own funds at ₹ 32,38,52,976/- which is more than the investments made. Therefore, the interest expenses disallowed under Rule 8D(2)(ii) is not maintainable. The disallowance relating to 0.5% of investments to the tun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited (supra) was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act. The relevant portion of the order of Tribunal in ITA No. 1578/PUN/2017 for A.Y. 2011- 12 in the case of M/s. Advik Hi-Tech Pvt. Ltd. is reproduced here-in-below for ready reference : 12. The assessee has also preferred additional ground which reads as follows: The Ld. AO be directed to allow deduction of ₹ 12,91,464/- paid towards Education Cess under Finance Act while computing the taxable income under normal provision of the IT Act. 13. We find that this issue is squarely covered by the decision of the Hon ble Bombay High Court in the case of Sesa Goa Limited Vs. The Joint Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT has reasoned at Para 33 of the said order that the Tribunal has observed that since cess is collected as a part of the income tax and fringe benefit tax, therefore, such cess is to be construed as tax . However, the Hon ble Bombay High Court held that there is no scope for such implications when construing a taxing statute. Even though, cess may be collected as a part of income tax, that does not render such cess either rate or tax, which cannot be deducted in terms of the provisions in Section 40(a)(ii) of the Act. The mode of collection is really not determinative in such matter. Therefore, it was held that amount cess paid is deductable from total income of the assessee. 14. The Pune Bench of the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disallowable item, on its payment, the cess is an allowable expenditure as per provision of section 40(a)(ii) of the Act. Considering the settled nature of the issue as per the ratio laid down in the above referred case by the Hon ble High Court of Judicature for Rajasthan Bench at Jaipur, ground of Cross objection No.4 is allowed. That therefore, from the legal perspective, the issue of education cess is an allowable expenditure as per provisions of Section 40(a)(ii) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) and placing reliance on the decision of the Hon ble Bombay High Court (supra.), we allow the additional ground of appeal raised by the assessee. 8. The ld. DR did not bring on record any order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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