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TMI Blog2022 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... Infinera Corp. & Infinera International Corporation, U.S. It is registered with Software Technology Park of India Scheme. It provides software development services, which include embedded network management, technical documentation and system verification test and associated hardware design for products that are conceptualized and developed by Infinera Corporation. 3. The assessee filed its return of income for the year under consideration declaring total income of Rs. 27.67 crores. In the draft assessment order, the A.O. determined the total income of the assessee of Rs. 47.11 crores. After direction given by Ld. DRP, the total income was determined at Rs. 41.99 crores. Aggrieved, the assessee has filed this appeal before us. 4. The first issue relates to addition made on account of transfer pricing adjustment. The assessee has filed a letter dated 24.9.2021 wherein the assessee has sought permission from the bench for withdrawing all grounds relating to transfer pricing adjustment in accordance with Rule 10RA of the I.T. Rules. The reason given is that it had entered into bilateral Advance Pricing Agreement (APA) for assessment years 2016-17 to 2020-21 with roll back option fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on the decision rendered in the case of City Financial, Amway, APL India & Verizon. 5.3 We heard Ld. D.R. on this issue and perused the record. Since the assessee itself is accepting that 23 items found in the list are capital in nature, the addition of above said items are confirmed. With regard to remaining 32 items, we are of the view that they require verification at the end of the A.O. in the light of decisions relied upon by the assessee. Accordingly, we restore this issue to the file of A.O. for examining the claim of assessee with regard to the 32 items found in the list. 6. The next issue relates to alternative claim of depreciation on the amount held to be capital in nature, which was disallowed from repairs & maintenance expenditure. Since this claim of the assessee is in accordance with law, we restore this issue to the file of the A.O. with a direction to allow depreciation thereon in accordance with law. 7. The next issue relates to disallowance of claim for deduction u/s 80G of the Act. The assessee had incurred following expenses on account of corporate social responsibility:- 7.1 It was submitted that the assessee disallowed the above said paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business or profession. 11. This amendment will take effect from 1/04/2015 and will, accordingly, apply to assessment year 2015-16 and subsequent years. 12. Thus, CSR expenditure is to be disallowed by new Explanation 2 to section 37(1), while computing Income under the Head 'Income form Business and Profession'. Further, clarification regarding impact of Explanation 2 to section 37(1) of the Income Tax Act in Explanatory Memorandum to The Finance (No.2) Bill, 2014 is as under: "The existing provisions of section 37(1) of the Act provide that deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. As the CSR expenditure (being an application of income) is not incurred for the purposes of carrying on business, such expenditure cannot be allowed under the existing provisions of section 37 of the Income-tax Act. Therefore, in order to provide certainty on this issue, it is proposed to clarify that for the purposes of section 37(1) any expenditure incurred by an assessee on the activities relating to corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80G(1)(i) b) Donations with 50% deduction are also available under Section 80G for all those sums that do not fall under section 80G(1)(i). Under Section 80G(2) (iiihk) and (iiihl) there are specific exclusion of certain payments, that are part of CSR responsibility, not eligible for deduction u/s80G. 14. In our view, expenditure incurred under section 30 to 36 are claimed while computing income under the head, 'Income form Business and Profession", where as monies spent under section 80G are claimed while computing "Total Taxable income" in the hands of assessee. The point of claim under these provisions are different. 15. Further, intention of legislature is very clear and unambiguous, since expenditure incurred under section 30 to 36 are excluded from Explanation 2 to section 37(1) of the Act, they are specifically excluded in clarification issued. There is no restriction on an expenditure being claimed under above sections to be exempt, as long as it satisfies necessary conditions under section 30 to 36 of the Act, for computing income under the head, "Income from Business and Profession". 16. For claiming benefit under section 80G, deductions are considered at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly it held that the education cess is not allowable as deduction. The Tribunal also noted the decision rendered by Hon'ble Bombay High Court in the case of Sesagoa Ltd. 117 Taxmann.com 96 and by Hon'ble Rajasthan High Court in the case of Chambal Fertilisers & Chemicals Ltd. Vs. JCIT (ITA No.52/2018 dated 31.7.2018), wherein it was held that the education cess is allowable as deduction. However, the Tribunal observed that the decision rendered by Hon'ble Supreme Court in the case of CIT Vs. K. Srinivasan (1972) 83 ITR 346 was not brought to the notice of the above said Hon'ble High Courts. Accordingly, the Tribunal has expressed the view that the decision rendered by Hon'ble Supreme Court in the case of K. Srinivasan (supra) shall prevail on this issue and accordingly held that the education cess is not allowable as deduction. 8.2 Following the above said decision of Kolkata bench of Tribunal in the case of Kanoria Chemicals & Industries Ltd (supra), we hold that payment of education cess including secondary and higher education cess is not allowable as deduction. Accordingly, we reject this ground of the assessee. 9. In the result, the appeal filed by the assessee is treate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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