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2022 (4) TMI 1018 - AT - Income TaxDisallowance of claim of exemption of profit on sale/redemption of investment - HELD THAT:- This issue also stands squarely covered in favour of the assessee in the light of the Hon”ble Calcutta High Court decision for A.Y. 2005-06 in the case of National Insurance Co. Ltd. [2017 (3) TMI 1054 - CALCUTTA HIGH COURT] wherein it has been held that in view of the deletion of Rule 5(b) and having regard to the legislative intent specified in the CBDT circular No. 528/1988 (being binding on the Tax Department), the profits on sale of investments should not be taxed. The Pune Bench of the Tribunal has taken cognizance of the said decision while passing order for A.Y. 2009-10 and 2010-11 - Before us, the ld. D.R also fairly accepted that this issue has been consistently held in favour of the assessee by its own order and that the view stipulated in the judgment of the Hon”ble Calcutta High court is also in support of the assessee. Respectfully following the aforesaid judicial pronouncements Ground No. 1 of the assessee’s appeal is allowed while ground No. 2 of the Department’s appeal is dismissed. Disallowance of contribution to environment relief fund u/s 43B - HELD THAT:- The assessee is covered in favour of the assessee in view of the decision by the Coordinate Bench Pune in assessee”s own case, the lead year being A.Y. 2006-07 [2019 (1) TMI 1332 - ITAT PUNE] The said appeal was filed by the assessee in the second round of proceedings before the Tribunal, wherein in earlier round the matter was set aside to the file of the A.O. In the second round of assessment proceedings, the ld. A.O continued with disallowance u/s 43B of the Act. The CIT(A) upheld the order of the A.O. However, the Tribunal decided this issue in favour of the assessee vide its order dated 21-1-2019 [2019 (1) TMI 1332 - ITAT PUNE] Disallowance of Risk Inspection Charges - Sr. Counsel submitted that on a conjoint reading of the orders of the Tribunal for A.Y. 2008-09, 2009-10, 2010-11 and 2011-12 there were no evidences of payments to Mr. S.K. Gupta and Mr. Sandeep Sitani and thus no disallowance was made and that further no disallowance can be made on an adhoc basis by the revenue authorities - HELD THAT:- That in the Tribunal”s order for A.Y. 2009-10 [2017 (9) TMI 1981 - ITAT PUNE] the Tribunal gives a categorical finding that there is merit in the plea of the assessee that in the absence of any adverse evidences collected during the year no disallowance can be made in the hands of the assessee in the instant assessment year. This signifies that there cannot be any disallowance on adhoc basis. Taking totality of the facts and circumstances and the rationale imbibed in the decision of the Tribunal in assessee”s own case for other assessment years, we hold that no disallowance on adhoc basis is permissible in the realm of direct tax statutes. Hence, the disallowance of ₹ 5.00 crores made on adhoc basis by the A.O which was restricted by the ld. CIT(A) is hereby deleted. Hence, ground No. 3 of assessee’s appeal is partly allowed and the ground No. 6 of the Department’s appeal is dismissed. Disallowance made u/s 14A - Suo moto disallowance - HELD THAT:- Even if the assessee had made a suo moto disallowance that itself should not preclude the said assessee to make a prayer before the judicial forum that no disallowance be made. Before us, the ld. D.R accepted that the issue is covered in favour of the assessee by its own order of the Tribunal in earlier assessment years.A.O could not have travelled beyond sec. 44A of the Act in the First Schedule of the Act. Respectfully following the principles laid down by the Hon”ble Delhi High Court in the case of Principal CIT Vs. Oriental Insurance Co. Ltd [2020 (3) TMI 507 - DELHI HIGH COURT] - Ground No. 3 to 5 of the Department’s appeal are dismissed. Deduction in respect of Education Cess - HELD THAT:- As per Finance Act 2022, Education Cess is included as a tax component and is chargeable to income-tax. Health and Education Cess is to be levied at the rate of four percent on the amount of income tax so computed, inclusive of surcharge wherever applicable, in all cases. Thus, the previous position of claiming deduction on education cess now no longer holds good. In fact, as per clause 13 of the Finance Bill 2022, an amendment to sec. 40 of the Act has taken place, as effected now, by inserting new Explanation (3) to sub-clause (ii) of clause (a) of the said section to clarify that for purposes of sub-clause (ii) the term “tax” shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax. This amendment shall take effect retrospectively from 1st April 2005 and will, accordingly apply in relation to the assessment years 2005- 06 and subsequent assessment years. In view thereof, we hold education cess is not allowed as deduction and it has to be charged to income-tax. The additional ground raised by the assessee is dismissed.
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