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2019 (12) TMI 980 - AT - Income TaxDisallowance u/s 14A - assessee submitted before the AO that the investments in SBI Mutual Fund were made out of own surplus funds and no funds were borrowed for this purpose - AO after recording reasons and following CBDT Circular No. 5/2014 dated 11.02.2014 made disallowance - HELD THAT:- Keeping in view the judgment of Hon’ble Delhi High Court in the case Cheminvest Ltd. Vs CIT Claim of Excise Duty subsidy and interest subsidy - capital receipt OR revenue receipt - HELD THAT:- The similar subsidy has been allowed as capital receipt and also the issue of computation of profits u/s 115JB has been examined by the Co-ordinate Bench of Tribunal in M/s Dhanuka Agritech Ltd. Claim of education cess as an allowable expenditure - Allowable deduction u/s 37 - HELD THAT:- The similar issue of allowability of cess u/s 37 has been examined in ITC LTD. [2019 (4) TMI 1574 - ITAT KOLKATA] wherein the amount of the cess paid has been held to be an allowable deduction. We find that in the case of Chambal Fertilizers and Chemicals Ltd. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] held that in view of the Circular of CBDT where the word ‘cess’ is deleted, the claim of the assessee for deduction is acceptable. In that case, the Hon’ble High Court held that there is difference between the cess and tax and cess cannot be equated with the cess. Hence, keeping in view the provisions of the Act, Circular of the CBDT and judicial pronouncements, we hereby hold that the assessee is eligible to claim the deduction of the ‘cess’ as per the provisions of Section 37 of the Income Tax Act.
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