TMI Blog2020 (3) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the effect that assessee s claim of expenditure of lesser amount having regard to its account is incorrect. In this case, the Assessing Officer without discussing the issue has merely stated in the assessment Order that appropriate disallowance should be made u/s.14A of the Act and accordingly, disallowed the additional amount u/s 14A of the Act which was deleted by the Ld. CIT(Appeals) - No infirmity with the findings of the Ld. CIT(Appeals) and relief provided to the assessee by the Ld. CIT(Appeals) is hereby sustained - Decided against revenue Allowable deduction while computing the taxable income - education cess and secondary higher education cess paid on the Income Tax and Surcharge - Claim raised for the first time before the Tribunal and they have not claimed this deduction in the return of income also - HELD THAT:- We find the ground raised by assessee in cross objection is legal in nature, hence, the same is admitted in line with the decision of Hon'ble Supreme court of India in the case of NTPC Ltd. Vs. CIT [ 1996 (12) TMI 7 - SUPREME COURT] We find this issue has already been adjudicated by the Pune Bench of the Tribunal in the case of DCIT Vs. Baja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of appellate proceedings. 2. The assessee has preferred cross objection in CO No.40/PUN/2019 for assessment year 2013-14 against the appeal filed by the Revenue. First, we would take up Revenue s appeal in ITA No.1232/PUN/2017 for adjudication. ITA No.1232/PUN/2017 ( By Revenue) A.Y.2013-14 3. Ground No.1 raised in Revenue s appeal pertains to deletion of disallowance u/s.10AA(9) r.w.s.80IA(10) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) of ₹ 2,33,23,142/-. 4. The brief facts on the issue are that during the year under consideration, the Assessing Officer observed that the assessee Company has earned profit of 31.27% as against the average net margin of the comparable companies of 11.34%. According to the Assessing Officer the average net margin of the comparable companies of 11.34% represents 'ordinary profit' whereas, the assessee's net margin of 31.27% is more than, ordinary profit' within the meaning of section 10AA(9) r.w.s 80-IA(10). Accordingly, the Assessing Officer denied the assessee the deduction claimed u/s.10AA(9) r.w.s 80-IA(10) of the Act on the amount of the net profit equivalent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(Appeals) that identical disallowance made in earlier assessment years 2009-10, 2010-11 2011-12 in assessee s own case and the Ld. CIT(Appeals) has placed reliance on the decision of the Pune Bench of the Tribunal in assessee s own case in ITA Nos.946 to 948/PN/2013 dated 23.12.2016 which was decided in favour of the assessee. The crux of the decision of the Tribunal held in favour of the assessee was that mere existence of the close connection and 'more than ordinary profits' are not enough to assume an arrangement as contemplated u/s. 80-IA(10) of the Act. The Assessing Officer is also required to prove any such arrangement existing which resulted in more than ordinary profits. The learned AO has not proved any arrangement between the parties in the facts of the case. Therefore, following the decision of the Pune Bench of the Tribunal in assessee s own case (supra.), we are of the opinion that the order of the Ld. CIT(Appeals) is fair and reasonable and it does not call for any interference. Hence, relief provided to the assessee by the Ld.CIT(Appeals) is hereby sustained. Thus, Ground No.1 raised in appeal by the Revenue is dismissed. 7. Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of expenditure of a lesser amount having regard to its accounts is incorrect. The learned AO without discussing the issue has merely stated in tile assessment Order that appropriate disallowance should be made u/s.14A Accordingly, he has disallowed the additional amount of ₹ 1,26,64,970 u/s 14A. 2.3.6 It is settled that the computation of disallowance under Rule 8D is not automatic but after the AO is satisfied that the Appellant s claim is incorrect. In this case, the learned AO ought to have discussed as to how he considers the Appellant s claim of expenditure of a lesser amount to be incorrect. In the absence of the satisfaction of this mandatory pre-condition for invoking the provisions of the Rule 8D, the disallowance made by the learned AO cannot be sustained. Accordingly, I delete the additional disallowance of ₹ 1,26,64,970/- made u/s.14A. 10. We have perused the case records and heard the rival contentions. We have also analyzed the facts and circumstances in this case. The facts are that the assessee has stated, he has not incurred any specific direct expenditure to earn the exempt income of ₹ 16,58,44,817/-. Therefore, the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of any new fact or change of circumstances. Neither any basis has been disclosed establishing a reasonable nexus between the expenditure disallowed and the dividend income received. That any part of the borrowings of the assessee had been diverted to earn tax free income despite the availability of surplus or interest free funds available (₹ 270.51 crores as on 1.4.2001 and ₹ 280.64 crores as on 31.3.2002) remains unproved by any material whatsoever. While it is true that the principle of res judicata would not apply to assessment proceedings under the Act, the need for consistency and certainty and existence of strong and compelling reasons for a departure from a settled position has to be spelt out which conspicuously is absent in the present case. In this regard we may remind ourselves of what has been observed by this Court in Radhasoami Satsang vs. Commissioner of Income-Tax[6]. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been raised for the first time before the Tribunal and they have not claimed this deduction in the return of income also. The Ld. AR of the assessee further submitted that since it is a legal ground, it does not require any fresh verification of facts. The Ld. AR has also filed an application praying for admission of this ground based on the decision of the Hon ble Supreme Court of India in the case of NTPC Vs. CIT reported in 229 ITR 383 (SC) where the ITAT is empowered to admit such ground. 16. The Ld. DR did not raise any objection with regard to admission of the ground raised in cross objection by the assessee for adjudication. 17. Having heard the submissions of both the parties herein, we find the ground raised by assessee in cross objection is legal in nature, hence, the same is admitted in line with the decision of Hon'ble Supreme court of India in the case of NTPC Ltd. Vs. CIT (supra.) 18. At the time of hearing, the Ld. AR of the assessee submitted that the issue of deduction of education cess and secondary higher education cess is squarely covered by the decision of the Pune Bench of the Tribunal in the case of DCIT Vs. Bajaj Allianz Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X
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