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2021 (10) TMI 1153 - AT - Income TaxDisallowance u/s 14A r.w.r.8D - disallowance as per formula prescribed under the aforesaid Rules - HELD THAT:- CIT(A) deleted the disallowance under Rule 8D(2)(ii) made out of interest expenditure observing that the loan taken by the assessee was for specific purposes and further that the assessee had sufficient own funds in the shape of share capital and surplus to make the investments. He, therefore, relied on the decision in the case of “CIT Vs. REI Agro Industries Ltd” [2013 (12) TMI 1517 - CALCUTTA HIGH COURT]. DR could not point out any error in the above findings of the Ld. CIT(A). Disallowance made under Rule 8D(2)(iii) - CIT(A) relying on the decision in the case of ‘CIT Vs. REI Agro’ (supra) and in the case of “ACB India Ltd [2015 (4) TMI 224 - DELHI HIGH COURT] directed the Ld. AO to consider only those investments upon which exempt income had been earned by the assessee. The Ld. DR could not point out any contrary decision on this issue. In view of this, this ground of appeal of the revenue is dismissed. Disallowance being the payment of premium on redemption of FCCB( Foreign Currency Convertible Bonds) - HELD THAT:- DR has fairly admitted that the accounting entries are made as per Companies Act, 1956. The expenditure claimed on account of premium is otherwise admissible as per relevant provisions of the Income Tax Act. DR has further admitted that this issue has been decided in favour of the assessee in the earlier assessment year by the Co-ordinate Bench of this Tribunal. In view of this, this ground of the revenue’s appeal is hereby dismissed. Claim of bad debts written off from the Renukoot Unit, which was already sold out/transferred - slump sale - HELD THAT:- We are not convinced by his argument. The Renukoot Unit in question was sold out by way of slump sale on 23/05/2011, whereas, the assessee has calculated the net worth of the unit as on 31.03.2011 and claimed bad debts in the relevant A.Y 2012-13 - on slump sale, the assets/liabilities get transferred to the purchaser. In our view the assessee deliberately kept the entries continued in its accounts so as to claim the aforesaid loss on account of bad debts at the end of the year, which in our view is not at all justified. This ground of appeal of appeal is accordingly allowed in favour of the department and the order of the Ld. AO on this issue is restored. Deduction of Education Cess - Whether an allowable deduction while computing the income chargeable under the heads of profits and gains of business or profession? - HELD THAT:- A perusal of the provisions of the Finance Act 2004 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”1971 (11) TMI 2 - SUPREME COURT] 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 provisions of section 2(11) & (12) of the subsequent Finance Acts have not been brought into the knowledge of the Hon’ble High Courts in the cases of ” Sesa Goa Ltd” & “Chambal Fertilisers” [2020 (3) TMI 347 - BOMBAY HIGH COURT]. Since the decision of the Hon’ble Supreme Court prevails over that of the Hon’ble High Courts, therefore, respectfully following the decision of the Hon’ble Supreme Court in the case of “CIT Vs. K. Srinivasan” (supra), this issue is decided against the assessee.
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