TMI Blog2021 (9) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... ears in which the work in progress containing the amount of such interest standing as on 31.03.2013, i.e. FY 2013-14 relevant to AY 2014-15, is reversed on the sale of flats/plots. The same exercise has to be carried on for the assessment years 2014-15 and 2015-16 as well. Following the same parity of reasoning in assessee own case's decision of the Pune Bench of the Tribunal [ 2021 (8) TMI 1037 - ITAT PUNE] . 'Education cess' and 'Secondary and Higher Education Cess' - whether claim may be allowed as a deduction while computing the total income of the assessee company? - HELD THAT:- As decided in own case [ 2021 (8) TMI 979 - ITAT PUNE] matter is remanded to the file of the Assessing Officer to ascertain the exact amount of education cess and then allow a deduction for it, after allowing opportunity of hearing to the assessee. - ITA No. 276/PUN/2021 - - - Dated:- 6-9-2021 - R.S. Syal, Vice Presient And Partha Sarathi Chaudhury, Member (J) For the Appellant : Suhas Bora For the Respondents : Mahadevan A.M. Krishnan ORDER Per Partha Sarathi Chaudhury, JM This appeal preferred by the assessee emanates from the order of the Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the TPO has discussed this issue from Para 6 onwards and has given his findings at Para 16 of his order. During transfer pricing proceedings, the TPO while going through the assessee's Form 3CEB and transfer pricing report observed that it has not done the benchmarking of the payment of interest on debentures/compulsory Convertible debentures (CCDs) properly. The TPO observed that the assessee had issued Compulsory Convertible Debentures to its AEs in India and abroad against which it had claimed an interest payment of ₹ 3,92,81,275/-. In respect of the same, the TPO held that the said transaction was, in fact, a shareholder activity and that the payment of interest was nothing but a self-inflicting loss. Accordingly, a show cause notice was issued to the assessee in this regard. The assessee made a detailed submission before the TPO. The same is not being reproduced for the sake of brevity. Further, the assessee's reply was duly considered but rebutted by the TPO. It was observed by the TPO that as per the assessee's agreement dated 22.03.2012 under which the funds had been brought, the AE's were referred to as investor and not as lender. Further, as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that he has given his findings based on the Tribunal's order in assessee's own case for the assessment year 2013-14 (supra.). The Ld. DR further submitted that the Tribunal in assessee's own case for the assessment year 2014-15 had referred to its own decision in respect of the assessee immediately preceding assessment year i.e. 2013-14. 7. We have gone through the findings of the Ld. CIT(Appeal) as well as the Tribunal's order in assessee's own case for the assessment year 2014-15 in ITA No. 618/PUN/2020 ITA No. 44/PUN/2021 wherein the Tribunal at Para 5 had referred to its own order for assessment year 2013-14 in ITA No. 772/PUN/2018 and taken a decision upholding the findings of the Tribunal in assessee's own case for the assessment year 2013-14. The relevant findings of the Tribunal read as follows: 5. Having heard both the sides through Virtual Court and gone through the relevant material on record, it is seen that similar issue came up for consideration before the Tribunal in the assessee's own case for the immediately preceding assessment year 2013-14. In fact, the TPO also referred to his own decision taken for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2013-14 and its effect in this year's profitability thereof. The assessee submitted that the cost of corresponding interest booked in view of the capitalized interest in the subsequent years. In view of the reworking of WIP submitted by the assessee, the cost of interest expenses on debenture booked in FY 2015-16 relevant to AY 2016-17 of ₹ 2,75,41,987/- was added to the total income of the assessee by the Assessing Officer. 10. During the appellate proceedings, the assessee submitted detailed submissions which are not reproduced for the sake of brevity and found place on record. The Ld. CIT(Appeal) on this issue has given his findings at Para 4.3 of his order which read as follows: 4.3 I have carefully considered the facts of the case filed by the appellant. The issue is related to the giving effect to My predecessor's order dtd. 21.03.2018 for AY 2013-14 in the subsequent year's WIP re-computation. Accordingly, this addition of ₹ 2,75,41,987/- on reworking of WIP emanates from decision of my predecessor in AY 2013-14. Therefore, no interference is called on this issue. Accordingly, appeal on this ground is dismissed. 11. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove its ALP, needs to be reversed and added back to the income of that year. To exemplify, if the WIP stood at ₹ 1000 as on 31.3.2013 which included interest of ₹ 100 paid on debentures/CCDS and pursuant to the directions given by the Tribunal, the ALP of interest payment is re-determined at ₹ 75/-. In that case, the differential amount of ₹ 25/- (₹ 100 minus ₹ 75) is required to be added back proportionately to the total income as and when the corresponding amount of the work-in progress is reversed on the sale of flats/plots etc. We, therefore, overturn the impugned order on this score and hold that the amount of capitalized interest on debentures/CCDs to the work in progress for the assessment year 2013-14, as is in excess of its ALP freshly determined by the AO/TPO, should be disallowed proportionately in the years in which the work-in-progress containing the amount of such interest standing as on 31-03-2013, is reversed on the sale of flats/plots. 12. That the aforesaid order talks of the amount of capitalized interest on debentures/CCDs to the work in progress for the assessment year 2013-14 only as is in excess of its ALP freshly dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits, the issue raised through the additional ground is no more res integra in view of the judgment of Hon'ble jurisdictional High Court in Sesa Goa Lt. Vs. JCIT (2020) 423 ITR 426 (Bom.) in which it has been held that Education Cess is not disallowable expenditure u/s. 40(a)(ii) of the Income tax Act. 1961 (hereinafter also called as 'the Act'). Similar view was earlier taken by the Hon'ble Rajasthan High Court in Chambal Fertilisers and Chemicals Ltd. and Another Vs. JCIT (2018) 102 CCH 0202 (Raj-HC). We, therefore, direct the AO to ascertain the correct amount of education cess and then allow a deduction for it, after allowing opportunity of hearing to the assessee. 15. That following the same parity of reasoning under same set of facts and circumstances, after hearing the parties, the matter is remanded to the file of the Assessing Officer to ascertain the exact amount of education cess and then allow a deduction for it, after allowing opportunity of hearing to the assessee. Thus, Ground No. 3 raised in appeal by the assessee is allowed for statistical purposes. 16. Grounds No. 4 and 5 are general in nature and hence, no adjudication is required. 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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