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2021 (2) TMI 1138 - AT - Income TaxDisallowance u/s. 14A r.w. Rule 8D(2) - disallowance offered by the assessee suo-moto - HELD THAT:- Assessee reflects the share capital, reserves and surplus to an extent of ₹ 32,38,52,976/- which is admittedly more than the investments made. Further, we note that Note No. 9 in Assets clearly discloses the Non-Current Assets to an extent of ₹ 16,18,55,626/- showing that the assessee made investments during the year under consideration out of which ₹ 1,00,00,000/- invested in government bonds. It is needless to say that the investments made in government bonds yield no dividend but only interest. It is a settled proposition that if the own funds are more than the investments made should be presumed that the assessee made investments from its own funds. As discussed above, the assessee made investments to the tune of ₹ 15.18 crores in the year under consideration, to which the Balance Sheet as on 31-03-2012 clearly shows as non-current investments, and also shows own funds at ₹ 32,38,52,976/- which is more than the investments made. Therefore, the interest expenses disallowed under Rule 8D(2)(ii) is not maintainable. The disallowance relating to 0.5% of investments to the tune of ₹ 6,47,273/- is confirmed. Thus, suo-moto disallowance made by the assessee under Rule 8D(2)(ii) of ₹ 12,20,303/- and the enhanced disallowance made by the Assessing Officer of ₹ 3,31,763/- totaling to ₹ 15,52,067/- requires to be deleted for the reasons indicated above and the disallowance under Rule 8D(2)(iii) is confirmed. Thus, the order of CIT(A) is set aside and the ground Nos. 1 to 4 raised by the assessee are partly allowed. Deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT:- The Hon’ble High Court of Bombay in the case of Sesa Goa Limited [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. - we direct the AO 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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