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2021 (12) TMI 96 - AT - Income TaxDisallowance u/s 14A - Suo moto disallowance made by assessee - AO has recorded the primary facts regarding the investment made by the assessee in the shares/mutual funds as on 31.03.2013 - AO noted that the working of suo moto disallowance by the assessee u/s 14A was considered but no basis was explained by the assessee to arrive at the said figure - excluding the investment made in the subsidiary company while computing the average investment for the purpose of disallowing the indirect administrative expenses under Rule 8D(2)(iii) - HELD THAT:- No substance or merits in the objection of the assessee regarding non recording of satisfaction by the AO while making the disallowance u/s 14A. Excluding the investment made in the subsidiary company while computing the average investment for the purpose of disallowing the indirect administrative expenses under Rule 8D(2)(iii) of the Income Tax Rules the issue is now covered by the decision of Hon’ble Supreme Court in the case of Maxopp Investment Vs. CIT [2018 (3) TMI 805 - SUPREME COURT] AND own case [2021 (3) TMI 157 - ITAT DELHI] Accordingly, this issue is decided against the assessee and in favour of the Revenue and to that extent the order of the CIT(A) is set aside. The AO is directed to re-compute the disallowance by including the investment made in the subsidiary company. Disallowance made on account of interest expenditure - Revenue has not disputed the fact that the assessee has taken the loans for specific purpose and the AO has not brought any material or fact on record to say that the assessee has diverted the loan to the investment made in the shares and mutual funds. Further, during the year under consideration, though there is a change in the investment portfolio, however, the total investment as on 31.03.2013 is less than the investment as on 31.03.2012. Accordingly, there is no extra fund utilized by the assessee during the year for making the investment in shares or securities but the sale proceeds of the existing investment is more than the purchases, if any made during the year. AO has not made any disallowance on account of interest expenditure u/s 14A of the I.T. Act in the preceding years. Therefore, when no fresh investment is made other than the proceeds of the sale of existing investment then the disallowance of interest expenditure is not warranted. Hence, we do not find any error or illegality in the impugned order of the CIT(A) qua this issue of deleting the disallowance made by the AO u/s 14A of the Act on account of interest. Deduction in respect of ‘Education Cess’ and ‘Secondary and Higher Education Cess’ - HELD THAT:- We follow the earlier order of this Tribunal in assessee’s own case for the AY 2012-13[2021 (3) TMI 157 - ITAT DELHI] - AO is directed to consider the claim of deduction of Education Cess as per law in the same terms as directed by this Tribunal in the earlier decision.
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