TMI Blog2018 (12) TMI 1828X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2018 - Shri S.S. Godara, JM And Dr. A.L. Saini, AM Revenue by: Shri R. Chowdhury, Addl. CIT, Assessee by: Shri D. Mukherjee And A. Goenka, Ld. AR ORDER Dr. A. L. Saini, The captioned appeal filed by the Revenue, pertaining to Assessment Year 2012-13, is directed against an order passed by ld. Commissioner of Income Tax (Appeals)-6, Kolkata, dated 24.02.2017. 2. The grievances raised by the Revenue are as follows: 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the RE Cess and PE Cess aggregating to ₹ 49,99,13,357/- without appreciating the facts of the case in the light of clear cut provision made u/s 43B of the I.T. Act, 1961. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in appreciating the clear provisions of Section 115JB of the I.T. Act by deleting the disallowance under section 14A. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by deleting the disallowance of ₹ 49,66,000/- of the assessee without considering the provision of Section 14A read with Rule 8D and the relevant Circular No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when more so the provisions of section 43B of the Act itself specifically states that amounts payable under the relevant law shall be allowed as deduction only on payment basis. Hence in these facts and circumstances, the decision of the Hon ble Apex Court in the case of Chowringhee Sales Bureau Pvt. Ltd. vs CIT reported in 87 ITR 542 (SC) is not applicable to the facts of the assessee . In the facts of the instant case, the assessee had commenced its operation from A.Y.2003-04 and in the very first year, this issue was taken up for disallowance and the case was deleted by the Learned CIT(A) and the Revenue chose not to file an appeal before this tribunal. The next scrutiny assessment was made for A.Y. 2006-07 wherein no addition on this account was made. This goes to prove that the revenue had already accepted to the contentions of the assessee on the impugned issue and satisfied that the cess collected from customers have been duly remitted in the succeeding year in accordance with the provisions of the West Bengal Rural Employment and Production Act,1976 and the West Bengal Primary Education Act, 1973 and was also satisfied with the manner of treatment of the same by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked Rule 8D of IT Rules. While rejecting the claim of assessee with regard to expenditure in relation to exempt income, the Learned AO has to indicate cogent reasons for the same. We find that the earned AO had straight away embarked upon computing disallowance under Rule 8D(2) of the Rules. We find that the case laws relied upon by the Learned AR on the decision of the Jurisdictional High Court are directly on this point and in favour of the assessee. CIT vs Ashish Jhunjhunwala In G.A.No. 2990(2013 in ITAT No. 157 of 2013 dated 8.1.2014 rendered by Calcutta High Court While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. From the facts of the present case, it is noticed that the AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at % of the total value. In view of the above and respectfully following the coordinate bench decision in the case of JK Investors (Bombay) Ltd., supra, we uphold the order of CIT (A) . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 313 ITR 340) (Bom) in support of our view that if the own funds are available and if the same are more than the investments made by the assessee, then it has to be presumed that the investments were made out of own funds borrowed funds. Hence we hold that no disallowance u/s 14A of the Act could be made in these circumstances. 2.6.2. We also find that the investments made in subsidiaries by the assessee are only strategic investments and were made with a primary object to acquire controlling interest in group concerns and not for earning any income out of that investment. Reliance in this regard is placed on the decision of the co-ordinate bench of this tribunal in the case of -DCIT vs Selvel Advertising P Ltd reported in (2015) 58 taxmann.com 196 (Kolkata Trib.), We hold that even on this count, no disallowance U/S 14A of the Act could be made by the Learned AO. 2.6.3. We also find that the investments that did not yield any dividend income needs to be excluded from the computation of disallowance-, if any, u/s 14A of the Act read with Rule 8D of the Rules 'as the basic intention behind introduction of section 14A itself is only to disallow the expenditure incurred for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material to controvert the aforesaid findings of the Division Bench. We find no reason to interfere in the said order of the ld CIT(A), and the same is hereby upheld and therefore ground no 3 raised by the revenue is dismissed. 10. In ground no 2 and 4 raised by the assessee relates to disallowance of ₹ 51,22,210/- under section 14A of the Income Tax Act, 1961 in computation of book profit u/s 115JB of the Act. 11. At the outset itself, the learned counsel for the assessee submitted before us that grounds no. 2 and 4 raised by the revenue are squarely covered by the judgement of the Hon ble ITAT Kolkata in assessee s own case in ITA No. 1146/Kol/2012, for A.Y. 2008-09, order dated 30.11.2015 wherein the Tribunal held as follows: 3. The next ground to be decided in this appeal is that whether the disallowance u/s 14A of the Act could be made to the book profits computed u/s 115JB of the Act. The assessee has raised the following ground before us: 1(d) That the finding recorded by the learned CIT(Appeals) in the appellate order while confirming the action of the Assessing Officer in making the impugned further disallowance of expenditure amounting to INR 44,91468/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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