TMI Blog2021 (2) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... enses for the purpose of earning dividend income We direct the ld. AO to compute the disallowance in accordance with the ratio laid in para 12 of the aforesaid order u/s.14A of the Act for the purpose of computing income under normal provisions of the Act. The same figure shall be utilized for making disallowance under clause f of Explanation to section 115JB of the Act while computing the book profits as they are actual expenses incurred on proportionate basis for the purpose of earning exempt income. Accordingly, the grounds raised by the assessee in cross objections and ground Nos.1-4 raised by the Revenue are disposed off in the aforesaid manner. Allowing ESOP discount as a deduction - as per AO the said expenditure is only incurred on a contingent basis and the same has not been incurred by the assessee and accordingly disallowed the same while completing the assessment - HELD THAT:- We find that the ld. CIT(A) had placed reliance on the Special Bench of Bangalore Tribunal in the case of Biocon Ltd.[ 2013 (8) TMI 629 - ITAT BANGALORE] , M/S KOTAK MAHINDRA BANK LTD. [ 2018 (1) TMI 320 - ITAT MUMBAI] AND M/S. PVP VENTURES LIMITED [ 2012 (7) TMI 696 - MADRAS HIGH COURT] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed through e-mail on 22/06/2020 by the assessee and hard copy was again filed on 01/12/2020. Hence, it was pleaded that there was no delay of 250 days as pointed out by the Registry and that the delay was effectively only for 58 days from 26/04/2020 to 22/06/2020 which had ultimately happened due to lockdown announced by the nation. We find this explanation to be reasonable and hold that assessee was prevented by a reasonable cause in not filing the cross objections in time. In these circumstances, we are inclined to condone the delay and admit the cross objections preferred by the assessee for adjudication. 3. The ground Nos. 1-4 raised by the Revenue and the grounds raised by the assessee in the cross objections are with regard to disallowance made u/s.14A of the Act r.w.Rule 8D(2) of the Rules both under normal provisions of the Act as well as in the computation of book profits u/s.115JB of the Act. 3.1. We have heard rival submissions and perused the materials available on record. We find that assessee is engaged in the business of construction, developing, sale, leasing, dealing in and operate commercial complexes, business centres, properties and also providing project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under third limb of Rule 8D(2) of the Rules, he restricted the disallowance to ₹ 97.65 lakhs under normal provisions of the Act. The ld. CIT(A) also directed the ld. AO to add 10% of dividend income as amount to be disallowed under Clause-f of Section 115JB of the Act towards expenses incurred for earning exempt income. 3.5. Aggrieved by this action, the Revenue is in appeal before us only on the restriction of disallowance to ₹ 97.65 lakhs under third limb of Rule 8D(2) of the Rules and assessee has preferred cross objections stating that no disallowance of administrative expenses should be made under the third limb of Rule 8D(2) of the Rules. The assessee is also in cross objection before us against the disallowance of expenses made @10% of exempt income under Clause- f of Section 115JB while computing the book profits. There is no dispute regarding the applicability of computation mechanism provided in Rule 8D(2) of the Rules in the instant case. 3.6. We find that the law now is very well settled that as far as the disallowance of indirect expenses under third limb of Rule 8D(2) of the Rules, the only those investments which had actually yielded exempt income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision, we direct the ld. AO to compute the disallowance in accordance with the ratio laid in para 12 of the aforesaid order u/s.14A of the Act for the purpose of computing income under normal provisions of the Act. The same figure shall be utilized for making disallowance under clause f of Explanation to section 115JB of the Act while computing the book profits as they are actual expenses incurred on proportionate basis for the purpose of earning exempt income. 3.8. Accordingly, the grounds raised by the assessee in cross objections and ground Nos.1-4 raised by the Revenue are disposed off in the aforesaid manner. 4. The ground Nos. 5-8 raised by the Revenue are with regard to action of the ld. CIT(A) in allowing ESOP discount of ₹ 20,32,000/- as a deduction. 4.1. We have heard rival submissions and we find that during the year, the assessee claimed ESOP expenses of ₹ 20,32,000/- as deduction. The assessee company had granted Employee Stock Option Scheme (ESOP) in the Financial Year 2008-09. The assessee company, being a listed company, is mandated to follow the accounting system of Employees Stock Purchase Scheme as per SEBI (Employees Stock Option Scheme and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Respectfully following the said decision, we hold no infirmity in the order of ld. CIT(A) granting relief to the assessee. Accordingly, the ground Nos.5-8 raised by the Revenue are dismissed. 5. We find that assessee has raised an additional ground of appeal for claiming deduction towards education cess and secondary higher education cess paid by it. 5.1. We find that this issue is covered in favour of the assessee by the decision of the Hon ble Jurisdictional High Court in the case of Sesa Goa Ltd., vs. JCIT in Income Tax Appeal No.17 and 18 of 2013 dated 28/02/2020 wherein the Hon ble Jurisdictional High Court categorically held that education cess paid by the assessee is entitled for deduction. We find that the additional ground raised by the assessee goes to the root of the matter and does not involve any verification of facts and hence, we are inclined to admit the same and allow the same by respectfully following the decision of the Hon ble Jurisdictional High Court referred to supra. 6. In the result, appeal of the Revenue as well as the Cross Objections of the assessee are partly allowed. Order pronounced on 23/02/2021 by way of proper mentioning in the notice ..... 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