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2022 (1) TMI 94 - AT - Income TaxDisallowance of expenditure incurred on failed IPO ( failed public issue) - Whether CIT(A) erred in concluding that failed IPO expenditure are covered by section 35(D)(2) instead of section 37 or section 28/29 of Income Tax Act, 1961 - whether expenditure on failed public issue should be allowed proportionately? - HELD THAT:- The issue in the present appeal is no more res-integra as the issue is decided in assessee‟s own case[2021 (6) TMI 1082 - ITAT PUNE] following the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Nimbus Communication Ltd. [2011 (12) TMI 696 - BOMBAY HIGH COURT] and CIT Vs. M/s. Essar Oil Limited [2008 (10) TMI 649 - BOMBAY HIGH COURT] in favour of the assessee company. Disallowance u/s.14A r.w.r. 8D - HELD THAT:- As decided in own case [2021 (6) TMI 1082 - ITAT PUNE]well settled position of law that while computing the amount of disallowance under clause (iii) of Rule 8D(2) of the Rules, the average value of investments which yielded the exempt income alone to be considered for the purpose of arriving at average value of investment as envisaged therein - this ground of appeal is remitted to the file of the Assessing Officer to calculate the amount of disallowance under clause (iii) of Rule 8D(2) on the above lines indicated above. Thus, this ground of appeal is partly allowed. Deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT:- We note that the assessee paid Education Cess while computing the taxable income under normal provision of the I.T. Act. The Hon’ble High Court of Bombay in the case of Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act. That therefore, from the legal perspective, the issue of “education cess‟ is an allowable expenditure as per provisions of Section 40(a)(ii) of the Act and placing reliance on the decision of the Hon’ble Bombay High Court (supra.), we direct the Assessing Officer to allow deduction in respect of Education Cess paid by the assessee. Accordingly, the additional ground raised by the assessee is allowed.
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