TMI Blog2021 (7) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment years 2009-10 and 2010-11 in assessee s own case rendered a finding the disallowance made by the assessee on account of expenditure relating to exempt income is fair and reasonable. Though the said order is not applicable to the year under consideration but however no contrary finding brought on record by the ld. AR in this regard. Therefore, the disallowance made by the AO as upheld by the CIT(A) is deleted and we hold that the disallowance made by the assessee on its own is justified. Thus, grounds raised by the assessee are allowed Education Cess under Finance Act while computing the taxable income - HELD THAT:- We note that the assessee paid Education Cess while computing the taxable income under normal provisions of the I.T. Act. 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. Thus 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. - ITA No.3098/PUN/2017 (Assessment Year : 2012-13) - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording any satisfaction to the disallowance made by the assessee on its own mechanically invoked Rule 8D(2) to compute the disallowance of expenditure for the purpose of Section 14A of the Act which is not warranted. Further, he pointed out that the disallowance made under proportionate interest paid of ₹ 3,436/- is also not required as the assessee has share capital and reserves and surplus more than the investments made and referred to page No. 1 of the paper book of Balance Sheet. Further, the ld. AR referred to page No. 23 of the paper book and submitted on similar issue constituting the same identical facts this Tribunal upheld the disallowance of expenditure at 15% in assessee s own case for A.Ys. 2009-10 and 2010-11 and prayed to allow the grounds raised by the assessee. 5. The ld. DR, Shri Vitthal Bhosale relied on the order of CIT(A) and prayed to dismiss the grounds raised by the assessee. 6. Having heard arguments of both the sides, we note that the assessee on its own allocated at 15% of expenses relating earning exempt income, are also other than which can be directly attributable to manufacturing expenses which means remaining 85% were allocated to the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee is not acceptable, in our opinion, the Assessing Officer requires to render satisfaction recorded why the computation of assessee is not correct. The provision u/s 14A of the Act mandates satisfaction of the Assessing Officer is to be recorded why the accounts of expenditure relating to exempt income is not correct. It is settled principle that the adoption of methodology contemplated in Rule 8D(2) is not mechanical proceeding which requires the satisfaction of the Assessing Officer. In this case as discussed above already, there was no satisfaction of the Assessing Officer regarding the expenditure disallowed by the assessee on its own. Therefore, the disallowance made by the Assessing Officer without recording satisfaction is liable to be deleted. Regarding the order of this Tribunal in earlier years involving the assessment years 2009-10 and 2010-11 in assessee s own case rendered a finding the disallowance made by the assessee on account of expenditure relating to exempt income is fair and reasonable. Though the said order is not applicable to the year under consideration but however no contrary finding brought on record by the ld. AR in this regard. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business or profession . There is no reference to any cess . Obviously therefore, there is no scope to accept Ms. Linhares s contention that cess being in the nature of a Tax is equally not deductable in computing the income chargeable under the head profits and gains of business or profession . Acceptance of such a contention will amount to reading something in the text of the provision which is not to be found in the text of the provision in Section 40(a)(ii) of the IT Act. 23. If the legislature intended to prohibit the deduction of amounts paid by an Assessee towards say, education cess or any other cess , then the legislature could have easily included reference to cess in clause (ii) of Section 40(a) of the IT Act. The fact that the legislature has not done so means that the legislature did not intend to prevent the deduction of amounts paid by the assessee towards the cess , when it comes to computing income chargeable under the head profits and gains of business or profession . The Hon ble Bombay High Court observing on the impugned order of the ITAT has reasoned at Para 33 of the said order that the Tribunal has observed that since cess is coll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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