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TMI Blog2021 (11) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ctfully following the precedent, we overturn the impugned order on this score and direct to include such amount in the profit for the purpose of deduction u/s 10AA. Allocation of common expenses (including interest on loan ) to the eligible undertakings for the purpose of computing deduction under section 10AA - HELD THAT:- AR could not point out that the amount of corporate expenses and the amount of interest cost was allocated to the eligible Hyderabad SEZ and Chennai SEZ units. Since these costs were incurred for and pertained to all the units of assessee including the SEZ units, it was necessary to consider them in computing the profit from the two SEZ units for the purpose of deduction u/s 10AA of the Act. It is found that the AO made allocation to these two SEZ units on the basis of turnover key, which was, in fact, computed by the assessee itself. Thus, on a totality, the amount of corporate expenses and interest cost allocated by the AO to the Hyderabad SEZ and Chennai SEZ is nothing but the amounts suo motu calculated by the assessee which were earlier not included in the cost base for computing profit from them. We, therefore, uphold the same. This ground is not allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was issued by the Department u/s 197 to Unique Tourism Pvt. Ltd., then suo motu disallowance made by the assessee u/s 40(a)(ia) of the Act should be deleted. Needless to say, the assessee will be accorded a reasonable opportunity of hearing. Education cess on income-tax and Secondary and Higher Education cess on Income-tax paid during the year ought to be allowed as deduction while computing the taxable income for the year - HELD THAT:- Similar issue came up for consideration before the Hon ble Bombay High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] in which it has been held that Education cess and Higher secondary education cess are not allowable as deduction in the year of payment and hence, the deduction is not linked with actual payment. Similar issue has been considered and decided by the Tribunal in the assessee s own case for the A.Y. 2011-12. Respectfully following the precedent, we set aside the impugned order and remit the matter to the file of the AO for making requisite verification in this regard and thereafter allow necessary deduction. Disallowance made u/s 14A read with 8D - HELD THAT:- Similar course of action was tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue deals with deduction u/s 10AA of the Income-tax Act, 1961 (hereinafter also called `the Act ) vis- -vis telecommunication charges. 3. The facts apropos this issue are that the assessee incurred telecommunication charges and internet user charges, which it did not exclude from the export turnover as well as total turnover in computing deduction u/s 10AA of the Act. The AO reduced such amounts from the amount of export turnover only. The ld. CIT(A) directed to exclude such amounts both from the export turnover and the total turnover. Whereas the Revenue wants exclusion of such charges only from the amount of export turnover, the assessee wants their inclusion in both. 4. We have heard both the sides and gone through the relevant material on record. It is seen that similar issue came up for consideration before the Tribunal in assessee s own case for the immediately preceding year. Vide order dated 26.10.2021, the Tribunal in ITA No.2395/PUN/2017 and ITA No.2624/PUN/2017 has upheld the exclusion of telecommunication charges etc. both from the export turnover and total turnover in the computation of deduction u/s 10AA of the Act. The impugned order is, therefore, upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO computed the ratio of operating expenses to revenue at 20.69% of non-eligible units and 17.88% of eligible units. On being show caused, the assessee submitted that the allocation of expenses was properly done. However, on a without prejudice basis, the assessee furnished calculation of corporate expenses at ₹ 9,61,12,965 which was not bifurcated to assessee s SEZ units. On the basis of turnover key, the assessee computed the amount of corporate expenses in relation to Hyderabad SEZ at ₹ 1,46,98,465 and Chennai SEZ at ₹ 66,51,576. Similarly, in respect of Interest cost also, the assessee initially submitted that there was no specific borrowing for SEZ units. However, on a without prejudice basis, the assessee furnished allocation of such interest cost to Hyderabad SEZ unit at ₹ 55,05,446 and Chennai SEZ unit at ₹ 24,91,409 on the basis of turnover key. The AO recomputed the amount of eligible deduction from the two SEZ units by reducing the proportionate corporate expenses and interest expenses from the income computed by the assessee in respect of Chennai and Hyderabad SEZ units. The CIT(A) echoed the assessment order on this point. 11. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO giving directions through para 24 that the assessee s claim of set off of brought forward losses be verified and unabsorbed depreciation should be allowed as per law. Since the ld. CIT(A) has already issued necessary directions in this regard, the ground taken by the assessee becomes infructuous and is hence dismissed. 15. The assessee has taken an additional ground reading as under: Additional ground: In the facts and circumstances of the case, the learned AO erred in making disallowance of ₹ 46,36,714 under section 40(a)(ia) on account of short deduction of tax at source. 16. The Hon ble Supreme Court in National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) has observed that the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reasonable opportunity of hearing. 19. The assessee has raised another additional ground reading as under: The amount of Education cess on income-tax and Secondary and Higher Education cess on Income-tax paid during the year ought to be allowed as deduction while computing the taxable income for the year. 20. This is again a legal ground which goes to the root of the matter not requiring any fresh investigation of facts. We, therefore, admit the same and proceed to dispose it on merits. It can be seen that a similar issue came up for consideration before the Hon ble Bombay High Court in the case of Sesa Goa Ltd. vs. JCIT (2020) 423 ITR 426 (Bom) in which it has been held that Education cess and Higher secondary education cess are not allowable as deduction in the year of payment and hence, the deduction is not linked with actual payment. Similar issue has been considered and decided by the Tribunal in the assessee s own case for the A.Y. 2011-12. Respectfully following the precedent, we set aside the impugned order and remit the matter to the file of the AO for making requisite verification in this regard and thereafter allow necessary deduction. 21. Ground No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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