TaxTMI 
TaxTMI 
2024 (2) TMI 278
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....absence of recording of valid satisfaction u/s 14A(2) & (3) which is sine qua non for invoking Rule 8D, the consequential disallowance is illegal and arbitrary. (iii) That the entire investment being out of interest free funds and in absence of incurring of any expenses in relation of exempt income or any nexus between borrowed funds and investments yielding exempt income, the disallowance of Rs. 81,01,633/- is on mechanical basis and not sustainable under the law. 2(i) That on facts and circumstances of the case, the Ld. CIT(A) has grossly erred in confirming addition of Rs. 1,52,45,000/- u/s 69 on the alleged ground of unexplained investment in total disregard to facts and submissions of the appellant. (ii) That the addition being based on dumb document having no evidentiary value, the upholding of addition was illegal and not sustainable on facts and under the law. (iii) That the seized annexure being an uncorroborated document and assessing officer having failed to establish the allegation of cash payment with some independent material, the addition u/s 69 is misconceived and without any basis. (iv) That there being no case of any un....
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....ax Act regarding claim of education cess which does not form part of income tax as referred u/s 40(a)(ii), the non acceptance of claim is on arbitrary basis and without justification. (iii) That education cess paid during the year being an eligible deduction u/s 37(1) of the Act and also liable to adjusted from book profit u/s 115JB, the rejection of claim is illegal and not in accordance with law. (iv) That the decision of Ld. CIT(A) is contrary to settled legal position and scheme of the Income tax Act. 3. The orders passed by lower authorities are not justified on facts and are bad in law. 4. That the appellant craves leaves to add, alter, amend, forgot any of the grounds of appeal at the time of hearing." ITA No.1928/Del/2020 for A.Y. 2014-15 (Revenue) "1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in restricting the addition to Rs. 81,01,633/- (to the extent of dividend income) as against Rs. 6,10,36,000/-, made u/s 14A by the AO, without appreciating the detailed reasons given in the assessment order. 2. That on the facts and in the circumstances of the case, the....
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....of Rs. 26,33,12,680/- (interest subsidy under TUFS of Rs. 26,33,12,680/- as capital receipt,) without appreciating the detailed reasons given in the assessment order. On similar issue in the case of M/s Nitin Spinners Ltd., Department has filed SLP in Hon'ble Supreme Court. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,68,18,318/- (interest subsidy under RIPS of Rs. 2,68,18,318/- as capital receipt,) without appreciating the detailed reasons given in the assessment order. On similar issue in the case of M/s Nitin Spinners Ltd., Department has filed SLP in Hon'ble Supreme Court. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 6,74,06,326/- (subsidy under SHIS of Rs. 6,74,06,326/- as capital receipt,) without appreciating the detailed reasons given in the assessment order. On similar issue in the case of M/s Nitin Spinners Ltd., Department has filed SLP in Hon'ble Supreme Court. 6. That the order of Ld. CIT(A) is erroneous and is not tenable on facts and in law. 7. That t....
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....d that education cess was not deducted out of total income, which should be considered as an allowable expenditure, however, learned AO rejected the claim stating that it is not acceptable as it was not claimed in original return as well as in return filed u/s 153A of the Act and further held education cess is part of income tax which is not allowable expenditure under Income Tax Act, 1961. 5. Aggrieved by the assessment order dated 30.12.2018, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 17/09/2020 upheld the disallowance to the extent of Rs. 81,01,633/- u/s 14A read with Rule 8D of the Income Tax Rules, 1962. Further confirmed the addition of Rs. 1,52,45,000/- made u/s 69 of the Act on account of unexplained investment. Further, rejected the claim of education cess of Rs. 81,43,988/-. As against the above said sustained additions/disallowance, the assessee preferred appeal in ITA No.145/Del/2021 and as against the deletion of the partial additions, the Department of Revenue preferred an appeal in ITA 1929/Del/2020 on the grounds mentioned above. 6. Ground No.1 of both Assessees and Revenue are regarding disallowance made u/s 14A r.w.Rule-....
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....5.78 10. The said issue has been decided in Assessee's own case for A.Y.2011- 12, 2012-13 in ITA No.142-143/Del/2021 dated 03/07/2023 and for A.Y.2013-14 in ITA No.71/Jodh/2018 dated 23/01/2023. By respectfully following the orders of the Co-ordinate Bench in assessee's own case, we are of the opinion that disallowance under Rule-8D(2)(ii) of the IT Rules should not have made by the AO, thus, the disallowance made by the AO is hereby deleted. Further, we direct the AO to compute the disallowance u/s 14A r.w.Rule-8D(2)(iii) of the Rules by considering only investment from each exempt income is earned. Accordingly, ground No.1 of the Revenue and the assessee are disposed off. 11. The Ground No.2 of Assessee's appeal, is regarding addition of Rs. 1,52,45,000/- made on account of unexplained investment. Brief facts are that the assessee had purchased land during the captioned assessment years. A search was conducted on the assessee on 04/08/2016, wherein an estimated working was seized from the Laptop of the employee of the assessee containing details of certain land which was registered in the name of the assessee. The assessee was asked by the A.O to file details of land purcha....
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....recorded u/s 132(4) of the Income Tax Act, 1961 during search proceedings that any cash payment was made in acquisition of land. 10.6. During the search and post search enquires, the investigating officer has not found any source of generation of cash to substantiate the cash payments. 10.7 The company has filed registration deeds of land and source of payment to acquire the land during the assessment proceedings u/s 153A of the Income Tax Act, 1961 which clearly evident that no cash payment is made in purchase of land. 10.8 The investigation officer/learned assessing officer has not made enquiry from the seller of the land/registering authority to substantiate that cash payment is made in transferring the land. 10.9 In light of above submission we request your goodself that the additions made of Rs. 1,52,45,000/- on account of cash payment in purchase of land is purely on the wrong interpretation of seized information, therefore, may we request your goodself to delete the same." 13. The Ld. Counsel for the assessee submitted that, the addition has been made based on the loose papers which cannot be sustained under the law in the absence of an....
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.... from the laptop was 'incomplete estimation' and not ending final shape as certain information still to be required to complete the said estimation. The AO even after considering the said material as 'estimated uncompleted working', made as basis for making the addition u/s 69 of the Act. The Investigating Officer observed that Rs. 1,52,45,000/- mentioned in the seized sheet pertaining to cash payment made to acquire the land and the said inference of the Investigating Officer is neither supported by any material evidence nor the employee Mr. Vineet Agarwal has accepted the said inference in his statement recorded during the search. The Investigating Officer had not found any evidence in support of the said inference that the payment were made in cash to acquire the land. There is no confirmation from any of the sellers or the employees in their statement recorded u/s 132(4) of the Act during the search proceedings to substantiate that the cash payment was made to acquire the land by the assessee. The investigation does not reveal any source generation of cash to substantiate the allegation of cash payment. On the contrary, as per the registered sale deed of the land depicts that n....
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....the parties and perused the material available on record. The issue regarding allow-ability of education Cess has been considered by the ITAT Kolkata in the case of Kanoria Chemicals and Industries Ltd. ITA No. 2184/Kol/2018 (TS-1129-ITAT 2021 Kol) wherein it is held that the Cess is not allowable deduction the relevant portion of the order are as under:- "9.1. The above additional ground and submissions of the assessee are carefully considered, The appellant assessee in its above submission has stated that 'cess' being not covered within the ambit of section 40(a)(ii) of the Act, and is legally allowable as a deduction u/s 37(1) of the IT Act. The appellant assessee has also relied on the decision Hon'ble Rajasthan High Court in Chambal Fertilizers Ltd. reported in 107 taxmann.com 484 (Raj.) and decision of the Hon'ble Bombay High Court in Sesa Goa Ltd. [423 ITR 426 (Bom.)] in which both have concluded that it is not covered and hence is allowable as deduction u/s 37(1) of the Act. 9.2. With respect to the above decision, attention is also drawn to the latest decision of jurisdictional Hon'ble ITAT of Kolkata in the case of 'Kanoria Chemicals & Industries Ltd' IT....
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....e." 22. The provisions of the Finance Act 2011 relevant to the Assessment Year under consideration i.e. 2012-13 are also relevant. For the sake of ready reference, the same is reproduced hereunder:- 2(11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the "Education Cess on income-tax", calculated at the rate of two per cent, of such income-tax and surcharge, so as to fulfill the commitment of the Government to provide and finance universalized quality basic education. 23. A perusal of the aforesaid provisions of the Finance Act and Finance Act 2011 would show that it has been specifically provided that 'education cess' is an additional surcharge levied on the income-tax. Therefore, in the light of the decision of the Hon'ble Supreme Court in the case of "CIT Vs. K. Srinivasan" (supra) the additional surcharge is part of the income-tax. The aforesaid decision of the Hon'ble Apex Court and the provisions of Finance Act, 2004 and the relevant ....
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....e for Assessment Year 2013-14 by the order of the Co-ordinate Bench in ITA No. 71/Jodh/2018 dated 23/01/2023 and also relied on the various judicial pronouncements. 23. Heard. It is found that the issue of claim of FPS/FMS as capital receipt received as per foreign trade policy in computing total income has been dealt and decided by the Co-ordinate Bench of the Tribunal in Assessee's own case for Assessment Year 2013-14 in favour of the assessee. Apart from the same, the Hon'ble High Court of Rajasthan in the case of Principal Commissioner of Income Tax, Ajmer Vs. Nitin Spinners Ltd. vide order dated 19/09/2019 reported in 2019 (2020) 116 Taxman.com 26 (Rajasthan held as under:- "As far as the question with regard to Focus Marketing Scheme was concerned, apparently the Central Government gave the subsidy to enhance Indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. The ITAT took note of judgment in Ponni Sugars & Chemicals Ltd. (supra) and held that the amount was not an export incentive, but rather capital receipt and therefore, not taxable. This Court is of t....
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....am Lal Bansal (supra) the Punjab and Haryana High Court observed as follows: "6. The purpose of scheme under which the subsidy is given, has been discussed by the Tribunal. To TUFS sustain and prove the competitiveness and overall long term viability of the textile industry, the concerned Ministry of Textile adopted the TUFS scheme, envisaging technology upgradation of the industry. Under the scheme, there were two options, either to reimburse the interest charged on the lending agency on purchase of technology upgradation or to give capital subsidy on the investment in compatible machinery. In the present case, the assessee has taken term loans for technology upgradation and subsidy was released under agreement dated 12-7-2005 with Small Industry Development Bank of India. The relevant clause of the agreement under which the subsidy was given is as under:- Para 8. to prevent mis-utilization of capital subsidy and to provide an incentive for repayment, the capital subsidy will be treated as a non interest bearing term loan by the Bank/Fis. The repayment schedule of the term loan however will be worked out excluding the subsidy amount and subsidy will be adjusted a....