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2024 (2) TMI 278 - AT - Income TaxDisallowance made u/s 14A r.w.Rule-8D - HELD THAT:- As disallowance under Rule-8D(2)(ii) of the IT Rules should not have made by the AO, thus, the disallowance made by the AO is hereby deleted. Further, we direct the AO to compute the disallowance u/s 14A r.w.Rule-8D(2)(iii) of the Rules by considering only investment from each exempt income is earned. Accordingly, ground No.1 of the Revenue and the assessee are disposed off. Unexplained investment - Additions on the basis of said loose paper - credibility of dumb documents - search was conducted on the assessee wherein an estimated working was seized from the Laptop of the employee of the assessee containing details of certain land which was registered in the name of the assessee - assessee submitted that, the assessee has not been provided with opportunity to cross examine the person from whose laptop the document has been seized - HELD THAT:- It is well settled law that the dumb documents having no evidentiary value cannot be taken as sole basis for determination of undisclosed income of the assessee. If the Department of Revenue wants to make use of dumb documents, then the onus on the Revenue Department to collect cogent corroborative evidences. The Hon’ble High Court of Allahabad in the case of Kumar Trading Co. [2007 (9) TMI 284 - HIGH COURT OF JUDICATURE AT ALLAHABAD] held that, it is settled principle of law that if the Revenue wants to rely upon the entries of the document, seized from the premises of third party, the burden lies upon the Revenue Authorities to prove the genuineness and authenticity of the said entries to connect the said entry with the dealer. Further, it is found that the person from who’s possession the seized document is recovered, was not subject to the cross examination of the assessee and no opportunity of cross examination has been given to the assessee. Therefore, for the detailed discussion made above, in our considered opinion, the Ld. AO as well as the Ld. CIT(A) have committed error in making the addition u/s 69 of the Act which deserves to be deleted. Accordingly, the ground No.2 of the assessee is allowed and the subject addition sustained by the Ld. CIT(A) is deleted. Allowability of claim of education Cess - assessee raised claim the education Cess as eligible business expenditure u/s 40(a)(ii) and contention of the assessee that prohibition contained in section 40(a)(ii) of the Act is only with reference to payment of Income Tax and same does not apply to claim of education Cess paid along with Income Tax - HELD THAT:- The issue regarding allowability of education Cess has been considered in the case of Kanoria Chemicals and Industries Ltd.[2021 (10) TMI 1153 - ITAT KOLKATA] wherein it is held that the Cess is not allowable deduction - thus we hold that the education Cess can’t be allowed as an allowable expense, accordingly, we find no merit in Ground No. 3 of the assessee and the Ground No. 3 of the assessee is dismissed. Nature of receipt - claim of FPS/FMS received as per foreign trade policy in computing the total income of the assessee - revenue or capital receipt - HELD THAT:- This issue of claim of FPS/FMS as capital receipt received as per foreign trade policy in computing total income has been dealt and decided by the Co-ordinate Bench of the Tribunal in Assessee’s own case for Assessment Year 2013-14 [2023 (7) TMI 1357 - ITAT DELHI] in favour of the assessee. Apart from the same, in the case of Nitin Spinners Ltd. vide [2019 (9) TMI 1154 - RAJASTHAN HIGH COURT] as affirmed by SC [2021 (9) TMI 430 - SC ORDER] as held that apparently the Central Government gave the subsidy to enhance Indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. The ITAT took note of judgment in Ponni Sugars & Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT) and held that the amount was not an export incentive, but rather capital receipt and therefore, not taxable. Characterization of receipt - revenue or capital receipt - interest subsidy under TUFFS - HELD THAT:- The allow-ability of claim of interest subsidy under TUFFS and RIPS have been decided by the Hon'ble High Court of Rajasthan in the case of PCIT vs. Nitin Spinners Ltd.[2019 (9) TMI 1154 - RAJASTHAN HIGH COURT] concluding the amount was received as capital stream and therefore, not taxable.
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