TaxTMI 
TaxTMI 
2020 (11) TMI 943
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....rred to as Act) dated 09/03/2015 by the ld. Dy. Commissioner of Income Tax, Circle- 3(1)(1), Mumbai (hereinafter referred to as ld. AO). 2. The first issue to be decided in this appeal is with regard to disallowance u/s.14A of the Act r.w.r.14A of the Act r.w.r. 8D of the Rules. 3. We have heard the rival submissions and perused the materials available on record. We find that assessee is a Non-Banking Finance Company (NBFC) duly registered with Reserve Bank of India (RBI) and is engaged in the business of financing of bill discounting. The return of income for the A.Y.2012-13 was filed on 19/09/2012 declaring total income of Rs. 2,16,21,270/-. We find that assessee had earned dividend income of Rs. 9,84,75,987/- and claimed the same a....
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.... recorded his satisfaction as to why the computation mechanism provided by the assessee is incorrect and also had applied the computation mechanism provided in Rule 8D(2)(iii) of the Rules by considering all the investments. We find that the special Bench of Delhi Tribunal in the case of Vireet Investments vs. ACIT reported in 165 ITD 27 categorically held that only those investments which had actually yielded exempt income should be considered for the purpose of working out the disallowance under third limb of Rule 8D(2) of the Rules. We find that the assessee had furnished the workings for the same on without prejudice basis in page 7 of the paper book. The ld. AO is directed to go through the same and re-compute the disallowance u/s.14A ....
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....he profits or gains of any business or profession '. In the corresponding Section 40(a)(ii) of the IT Act, 1961 the expression "cess" is quite conspicuous by its absence. In fact, legislative history bears out that this expression was in fact to be found in the Income Tax Bill, 1961 which was introduced in the Parliament. However, the Select Committee recommended the omission of expression "cess" and consequently, this expression finds no place in the final text of the provision in Section 40(a)(ii) of the IT Act, 1961. The effect of such omission is that the provision in Section 40(a)(ii) does not include, "cess" and consequently, "cess" whenever paid in relation to business, is allowable as deductable expenditure. 29. In Kang....
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....on or calculated on the basis of business profits may be allowed in computing such profits under this Act. 30. The Division Bench of the Rajasthan High Court (Jaipur Bench) in Income Tax Appeal No.52/2018 decided on 31st July, 2018 (Chambal Fertilisers and Chemicals Ltd. Vs CIT Range-2, Kota ), by reference to the aforesaid CBDT Circular dated 18th May, 1967 has held that the ITAT erred in holding that the "education cess" is a disallowable expenditure under Section 40(a)(ii) of the IT Act. Ms. Linhares was unable to state whether the Revenue has appealed this decision. Mr. Ramani, learned Senior Advocate submitted that his research did not suggest that any appeal was instituted by the Revenue against this decision, which is direct....
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....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 IT Act. The mode of collection, is really not determinative in such matters. 34. Ms. Linhares, has relied upon M/s Unicorn Industries Vs Union of India and others, 2019 SCC Online SC 1567 in support of her contention that "cess" is nothing but "tax" and therefore, there is no question of deduction of amounts paid towards "cess" when it comes to computation of income chargeable under the head profits or gains of any business or profession. 35. The issue involved in Unicorn Industries....
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....an be of no assistance to the Respondent - Revenue in the present matters." 5.1. Respectfully following the same, the additional ground raised by the assessee is allowed. 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 27/11/2020 by way of proper mentioning in the notice board. ============= Document 1 BARODA INDUSTRIES PVT. LTD. ACCOUNTING YEAR ENDED: 31ST MARCH, 2012 ASSESSMENT YEAR: 2012-2013 WORKING OF DISALLOWANCE UNDER SECTION 14A OF THE ACT Particulars Sohan Lad Salary for 12 month PF Contribution 4,95,600 59,472 LTA Exp 82,600 Medical Exp 41,300 Bonus paid 99,120 Leave Encahsment 41,300 8,19,392 Aircondining charg....