TMI Blog2012 (5) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... V of the property be taken at ₹ 11,13,700/- without deduction of any municipal taxes which were borne by the tenant and not the assessee. In this view of the matter, the impugned order is upheld and the ground raised by the assessee is dismissed. Denial of deduction towards education cess - Held that:- Education cess is nothing but additional surcharge. Since such surcharge or education cess is part of tax, the same, in our considered opinion, cannot be allowed as deduction. Such amount clearly constitutes part of tax which falls within sec. 40(a)(ii). We, therefore, uphold the impugned order on this score. Disallowance u/s.14A - Held that:- We are unable to find any reason for interfering with the impugned order on this issue b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Ltd. since 1989. The assessee was paid lease rent of ₹ 60,000/- p.m. in addition to an interest free security deposit of ₹ 75 lakhs. The assessee had shown rent at ₹ 60,000/- p.m. on the basis of which income from house property was determined. On being asked to substantiate the determination of ALV, the assessee submitted as under : The earnings attributable on renting the said premises are : Rent received 60,000 Interest on deposit @ 9% p.a. 56,250 Maintenance other charges 11,667 borne by Tenant Municipal Taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as the amount of maintenance other charges along with municipal taxes were borne by the tenant and not by the assessee. Further, the receipt of interest on deposit is an income independent of house property income. To contend that these items be considered as earnings attributable to the renting of the premises is not acceptable. However we find some force in the contention put forth that the notional rent on the amount of security deposit cannot be included in the ALV. The Hon ble jurisdictional High Court in the case of CIT vs. J.K. Investors (Bombay) Ltd. (2001) 248 ITR 723 (Bom) has held that no addition can be made to ALV for notional interest on the interest free deposit u/s. 23(1)(b). The Full Bench of the Hon ble Delhi High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes is not acceptable in view of the reason that such taxes were paid by the tenant and not the assessee. We, therefore, modify the impugned order to this extent. 6. In the result, the appeal of the assessee for this year is partly allowed. A.Y. 2005-06: 7. The first issue in this appeal is similar to the one decided for assessment year 2004-05 being the determination of ALV. Interestingly, the AO adopted municipal value as ALV at ₹ 11,13,700/- for computing the income under the head income from house property . No relief was allowed in the first appeal. 8. Having regard to the facts of the case, we find that for the immediately preceding assessment year 2004-05 we have held that the ALV of the property be taken at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of the Union, to be called the Educational Cess on income-tax , so as to fulfill the commitment of the Government to provide and finance universalized quality basic education, calculated at the rate of two per cent of such income-tax and surcharge . 11. From the above, it is clear that education cess is nothing but additional surcharge. Since such surcharge or education cess is part of tax, the same, in our considered opinion, cannot be allowed as deduction. Such amount clearly constitutes part of tax which falls within sec. 40(a)(ii). We, therefore, uphold the impugned order on this score. 12. In the result, the appeal is dismissed. A.Y. 2006-07: 13. The first ground of this appeal is against the determination of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO to work out the disallowance u/s.14A in terms of the judgment of the Hon ble jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd. vs. DCIT (2010) 328 ITR 81 (Bom). 16. Having heard the rival submissions and perused the relevant material on record, we are unable to find any reason for interfering with the impugned order on this issue because the ld. CIT(A) has directed the AO to follow the mandate of the judgment of the Hon ble jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd. (supra) on some reasonable basis. We uphold the impugned order but clarify that in no case the disallowance to be made by the AO pursuant to the order of ld. CIT(A) should exceed the original disallowance made by him. This g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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