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TMI Blog2021 (8) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... O is directed to delete the entire disallowance made u/s.14A of the Act and retain the voluntary disallowance u/s.14A of the Act both under normal provisions as well as in the computation of book profits u/s.115JB of the Act. Disallowance of loss in connection with bonds/debentures written off - assessee had made investments in the debentures / bonds - HELD THAT:- Considering the fact that the debenture interest income earned by the assessee in the earlier years had been duly offered to tax under the head income from business and assessed as such, we hold that the loss by way of write off of investments which is arising in the ordinary course of business of money lending becomes allowable deduction u/s.36(1)(vii) of the Act. Accordingly, we hold that assessee would be entitled for deduction in respect of debentures / bonds written off u/s.36(1)(vii) of the Act. The grounds raised by the assessee in this regard are hereby allowed. Deduction for education cess on income tax paid during the year - HELD THAT:- We find that this additional ground raised by the assessee is purely a legal issue and does not involve verification of any facts and hence, we deem it fit to admit the same and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as ld. AO). ITA NO.2603/Mum/2017 (A.Y.2012-13) This appeal in ITA No.2603/Mum/2017 for A.Y.2012-13 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-1, Mumbai in appeal No.CIT(A)-I/LTU/DCIT-LTU/15/2015-16 dated 02/12/2016 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 10/03/2015 by the ld. Asst. Commissioner of Income Tax-LTU, Mumbai (hereinafter referred to as ld. AO). As identical issues are involved in all these appeals, they are taken up together and disposed of by this common order for the sake of convenience. ITA No.4078/Mum/2016 (A.Y.2010-11) 2. The first issue to be decided in this appeal is with regard to the disallowance made u/s.14A of the Act read with Rule 8D(2) of the Rules. The assessee has raised the ground Nos. 1-16 in this regard. 3. We have heard rival submissions and perused the materials available on record. We find that assessee is a non-banking finance company primarily engaged in the business of making investments in various companies with focus on new business opportunities. We find that assessee had earned dividend income from domestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable income. The ld. AO proceeded to make disallowance of the said expenditure u/s.14A both under normal provisions of the Act as well as in the computation of book profits u/s.115JB of the Act. This action of the ld. AO was upheld by the ld. CIT(A). 3.2. At the outset, we find that there was absolutely no satisfaction recorded by the ld. AO in his assessment order as to how the voluntary disallowance made by the assessee is incorrect having regard to the correctness of the accounts of the assessee. Such satisfaction is mandated to be recorded in terms of Section 14A(2) read with rule 8D(1) of the Rules. Non-recording of such mandatory satisfaction on an objective basis with cogent reasons would make the entire addition illegal. Reliance in this regard is placed on the decision of the Hon'ble Apex Court in the case of Maxoop Investments reported in 402 ITR 640. Since, the disallowance made u/s.14A of the Act by the ld. AO is hereby directed to be deleted on the aforesaid technical aspect, the other elaborate arguments advanced by the ld. AR by making various propositions need not be gone into, as adjudication of the same would be merely academic in nature. Accordingly, the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the investment company, the said investments were made by the assessee in the ordinary course of its business which had become bad and accordingly, the assessee was forced to write off the same and claim as deduction u/s.36(1)(vii) of the Act. We find considerable force in this argument of the ld. AR and also considering the fact that the debenture interest income earned by the assessee in the earlier years had been duly offered to tax under the head 'income from business' and assessed as such, we hold that the loss by way of write off of investments which is arising in the ordinary course of business of money lending becomes allowable deduction u/s.36(1)(vii) of the Act. Accordingly, we hold that assessee would be entitled for deduction in respect of debentures / bonds written off in the sum of ₹ 10,02,61,073/- u/s.36(1)(vii) of the Act. The grounds raised by the assessee in this regard are hereby allowed. 6. The ground Nos.20-22 raised by the assessee was stated to be not pressed by the ld. AR at the time of hearing by conceding that assessee company is not entitled for deduction thereon. Accordingly, ground Nos.20-22 are hereby dismissed. 7. The assessee had raised ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f proportionate premium paid on lease hold land. This additional ground was stated to be not pressed by the ld. AR at the time of hearing and accordingly, the same is hereby dismissed as unadmitted and not pressed. 14. We find that assessee had raised yet another additional ground vide letter dated 04/10/2018 seeking deduction for education cess on income tax paid during the year. 15. We have heard rival submissions and perused the materials available on record. We find that this additional ground raised by the assessee is purely a legal issue and does not involve verification of any facts and hence, we deem it fit to admit the same and take up for adjudication. We find that this issue is no longer res-integra in view of the decision of the Hon'ble Jurisdictional High Court in the case of Sesa Goa Ltd., vs. JCIT reported in 423 ITR 426 wherein the Hon'ble Bombay High Court held that education cess, higher and secondary education cess are liable for deduction in computing income chargeable under the head 'profits and gains of business or profession'. Accordingly, the additional ground raised by the assessee in this regard vide letter dated 04/10/2018 is hereby allowed. 16. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital gains. This has admittedly not been done by the ld. AO in the instant case. Hence, we deem it fit and appropriate to remand this issue to the file of the ld. AO for denovo adjudication of the said issue raised in ground Nos. 10 & 11 of the assessee. Accordingly, the ground Nos. 10 & 11 are allowed for statistical purposes. 21. The assessee had raised another additional ground seeking revision of dividend distribution tax paid u/s. 115O of the Act in respect of dividend paid to non-resident shareholders to the extent of such tax exceeds the rates prescribed under the relevant tax treaties. This additional ground was stated to be not pressed by the ld. AR at the time of hearing and accordingly, the same is hereby dismissed as unadmitted and not pressed. 22. We find that assessee had raised yet another additional ground vide letter dated 04/10/2018 seeking deduction for education cess on income tax paid during the year. 23. We have heard rival submissions and perused the materials available on record. We find that this additional ground raised by the assessee is purely a legal issue and does not involve verification of any facts and hence, we deem it fit to admit the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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