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2021 (11) TMI 705 - ITAT MUMBAIDisallowance u/s 14A in respect of expenditure attributable to earning exempt income - whether or not the A.O had validly assumed jurisdiction for dislodging the disallowance that was on a suo-motto basis offered by the assessee u/s 14A and therein substituting the same by that as was computed by him by triggering the mechanism provided in Rule 8D? - HELD THAT:- AO had though observed that he was not satisfied with the correctness of the claim of the assessee that no expenditure was incurred in relation to the income which did not form part of its total income, however, he except for making general observations in context of the expenditure claimed by the assessee, viz. general administrative expenses, legal fees, employee salary, general expenses etc. had before rejecting the disallowance that was offered by the assessee on a suo-motto deemed basis, failed to give a clear finding with reference to the assessee’s accounts as to how the other expenditure that were claimed by the assessee in respect of its non-exempt income was related to its exempt income. Failure on the part of the A.O to record his satisfaction that having regard to the accounts of the assessee, as placed before him, it was not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee, therein, divests him of the jurisdiction for dislodging the claim of the assessee and substituting the same by an amount arrived at by triggering the mechanism provided in Rule 8D. Accordingly, backed by our aforesaid observations, we are unable to persuade ourselves to subscribe to the view taken by the CIT(A) who had upheld the disallowance made by the A.O u/s 14A of the Act. We, thus, set-aside the order of the CIT(A) and vacate the additional disallowance made by the A.O u/s 14A . Education cess as not allowable as a deduction u/s 40(a)(ii) - HELD THAT:- As relying on SESA GOA LIMITED [2020 (3) TMI 347 - BOMBAY HIGH COURT]“Education Cess” is not disallowable as a deduction u/s 40(a)(ii) of the Act. We, thus, direct the A.O that the “education cess” paid by the assessee during the year be allowed as a deduction under Sec. 40(a)(ii).
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