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2020 (7) TMI 729 - AT - Income TaxLong Term Capital Loss on transfer of Government Securities - applying cost inflation index on transfer of assessee’s government securities - HELD THAT:- As decided in own case [2019 (12) TMI 958 - ITAT KOLKATA] we note that as per Section 2(42A) expression 'security’ shall have meaning assigned to Clause 11 of Securities Contracts Regulation Act, 1956 which includes government securities. The facts of this case are squarely applicable to the present case of the assessee. Respectfully following the judgment of Sundararn Finance Limited [2017 (7) TMI 661 - ITAT CHENNAI] we note that it is abundantly clear that Government Securities are entitled to Indexation Benefits. Therefore, we note that Government Securities are different from Bond and Debenture for the purpose of the 3rd proviso to Sec. 48 of the Act (4th proviso after amendment) and therefore the benefit of indexation should be granted to the assessee on the redemption of these Government Securities. - Decided in favour of assessee. Set off of brought forward long term capital loss against the short term capital gain computed u/s 50 - HELD THAT:- Assessee’s long term capital loss in issue arose on sale / transfer of the relevant block of assets i.e. its that building only. It had also claimed depreciation thereupon in the preceding assessment years. Its computation of the consequential capital gains came to be covered u/s 50 resulting in short term capital loss as a special provision arising on sale of depreciable assets. The Revenue’s only plea during the course of hearing is that such capital gains or loss; which are computed u/s 50 of the Act are not eligible for set off against long term capital gains brought forward. We find no merit in the Revenue’s instant stand. Hon'ble Bombay high court’s decision in Commissioner of Income Tax vs. Ace Builders [2005 (3) TMI 36 - BOMBAY HIGH COURT] as upheld in V.S.Dempo Company Ltd. [2016 (10) TMI 62 - SUPREME COURT] holds that the impugned deeming fiction treating long term capital gains / losses as short once are applicable in specified circumstances only u/s 50 of the Act. And also that they are very much eligible for all other deduction provisions under the Act - Such capital gains are very much entitled to be set off against the brought forward long term capital loss as held on unabsorbed depreciation. We see no reason to interfere with the CIT(A)’s findings accepting assessee’s set off claim therefore. The Revenue fails in the instant second substantive ground. Disallowance u/s 14A r.w. Rule 8D(2)(ii) & (iii) - HELD THAT:- This tribunal’s co-ordinate bench decisions right from assessment year(s) 2008-09 to 2010-11, 2013-14 and 2015-16 have consistently held that the impugned proportionate interest disallowance does not apply in case of interest free funds having been invested in exempt income yielding investments. We also reiterate that this assessee has rather earned exempt interest income as well (supra). We therefore go by judicial consistency to affirm the CIT(A)’s appellate order under challenge. The Revenue’s case is not is no different qua the third head of administrative expenditure as well since the CIT(A) has only directed the Assessing Officer to compute the same after considering the exempt income yielding investment only as per this tribunal’s order in RIE Agro Ltd. vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA]as upheld in jurisdictional high court [2013 (12) TMI 1517 - CALCUTTA HIGH COURT] - We thus reject the Revenue’s instant third substantive ground as well. Disallowance u/Sec.40(a)(ia) - assessee’s failure in deducting TDS on payments made to various parties - HELD THAT:- As from a perusal of the case file as well as in CIT(A)’s appellate order’s detailed discussion that the assessee’s impugned payments pertain to either outright purchases of raw material or without involving any contractual relationship nor they exceeds amounts exceeding threshold limit of ₹30,000/- for deducting TDS. This tribunal’s co-ordinate bench decision in assessment year 2013-14 [2019 (12) TMI 1281 - ITAT KOLKATA] has declined the Revenue’s similar argument as well. We thus adopt judicial consistency qua this issue in absence of any distinction on facts or law pinpoint as Revenue’s behest. Educational cess disallowance u/s 40(a)(ii) - Addition made in the course of assessment and deleted in the lower appellate proceedings - HELD THAT:- We notice that hon'ble Bombay high court’s decision in Sesa Goa Limited [2020 (3) TMI 347 - BOMBAY HIGH COURT]as well as in Chambal Fertilisers and Chemicals Ltd. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] hold that the clinching expression “cess” does not form part of sec. 40(a)(ii) of the Act so as be disallowed. We adopt the very reasoning mutatis mutandis hold the CIT(A)’s appellate action deleting the impugned addition - Revenue’s appeal is dismissed.
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