TMI Blog2021 (9) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee that it has spent for improvements to leasehold building, which is in the nature of temporary structures. Therefore, we set aside the issue and direct the Assessing Officer to re-examine the issue and decide in accordance with law. Similarly, ground taken by the assessee challenging adjustments made by the Assessing Officer towards disallowance of depreciation on leasehold improvements to book profit computed u/s. 115JB of the Act is also set aside to file of the Assessing Officer and direct him to reconsider the issue in light of our observations given hereinabove. Disallowance of interest on TDS u/s. 40(a)(ii) under MAT provisions of the Income Tax Act, 1961 - HELD THAT:- CIT(A) has set aside issue of disallowance of interest on TDS under normal provisions of the Act to the file of Assessing Officer to ascertain fact whether the assessee has debited said expenditure into profit loss account or not in light of various evidences filed by the assessee, including copy of tax audit report as well as financial statements, where no such expenditure was debited into profit loss account. Since the issue has been set aside to the file of AO, additions made towards said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS and disallowance u/s. 14A r.w. Rule 8D of Income Tax Rules, 1962. The assessee carried the matter in appeal before the first appellate authority. The learned CIT(A) for the reasons stated in his appellate order dated 31.10.2018 partly allowed appeal filed by the assessee, where he has confirmed additions made by the Assessing Officer towards disallowance of depreciation on improvements to leasehold building, disallowance of expenditure in relation to exempt income u/s. 14A r.w. Rule 8D, however, restricted disallowances to the extent of net disallowances after reducing suo motu disallowances made by the assessee at ₹ 5,52,12,116/-. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 3. The first issue that came up for our consideration from ground No. 2 of assessee appeal is disallowances u/s. 14A of the Act r.w.r. 8D of Income Tax Rules, 1962. The facts with regard to impugned dispute are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee has made huge investments in shares and securities which generate exempt income. Therefore, called upon the assessee to furnish complete details of investments a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h there is a prescribed method for disallowance of direct expenses, interest expenses and other expenses. Hence, there is no merit in the arguments taken by the ld. AR for the assessee that Rule 8D is not mandatory while computing disallowance u/s. 14 of the Act. 6. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The AR for the assessee has made three fold arguments towards disallowances u/s. 14A of the Act read with Rule 8D of the Income Tax Rules, 1962. The first and foremost argument of the ld. AR for the assessee is that there is no satisfaction from the Assessing Officer as required u/s. 14A(2) of the Act having regard to books of account of the assessee that suo motu disallowance made is not correct. We have gone through arguments advanced by the learned A.R. for the assessee in light of reasons given by the Assessing Officer for invoking Rule 8D to compute disallowance u/s. 14A of the Act and various case laws cited by the learned A.R. for the assessee. Admittedly, various High Courts, including the Hon'ble Jurisdictional High Court in the case of M/s. Marg Ltd. Vs. CIT reported in (2020) 114 Taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14A(2) of the Act, regarding satisfaction as required under law having regard to books of account of the assessee, hence, arguments taken by the assessee has been rejected. Insofar as case laws relied upon by the assessee including the decision of Hon'ble Jurisdictional High Court of Madras in the case of Marg Ltd. Vs. CIT (supra), we find that there is no dispute with regard to ratio laid down by various High Courts, including Hon'ble Supreme Court, regarding satisfaction. But, as we have already stated that satisfaction is subjective satisfaction, but not objective and it varies from case to case. In this case, the Assessing Officer has recorded satisfaction having regard to books of account of the assessee and thus, we are of the considered view that case laws relied upon by the assessee are not applicable to the facts of the present case. 8. Having said so, let us examine computation of disallowance u/s. 14A of the Act r.w.r. 8D of Income Tax Rules, 1962. It is an admitted fact that from assessment year 2008-09 onwards disallowance u/s. 14A shall be computed in accordance with Rule 8D of Income Tax Rules, 1962. In this case, the assessee has computed suo motu disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in light of Appendix-I of I.T. Rules, 1962, and we do not ourselves subscribe to arguments advanced by learned A.R. for the assessee for the simple reason that said entry covers to an amount incurred for temporary structures in the nature of building, wooden structure etc. In this case, the assessee has spent amount for interior works, air-conditioner work, air-conditioner installation and architect fee. The interior work carried out by the assessee is for improvement to structure of the building or for creation of furniture and fittings is not clear. Similarly, amounts spent for purchase of air-conditioner and a/c installation cannot be at any stretch of imagination be considered as temporary structure which comes under entry 4 in Part A(1) to New Appendix-I of I.T. Rules, 1962. The facts are not clear. Therefore, we are of the considered view that the issue needs to go back to the file of Assessing Officer to reconsider the issue in light of claim of the assessee that it has spent for improvements to leasehold building, which is in the nature of temporary structures. Therefore, we set aside the issue and direct the Assessing Officer to re-examine the issue and dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secondary and higher education cess u/s. 37(1) of the Act. The assessee has filed a petition for admission of additional grounds vide its letter dated 11th March, 2021 and claimed that issue of deduction towards education cess secondary and higher education cess is purely legal issue for which the Assessing Officer is not required to investigate any additional facts. Therefore, he argued that additional grounds filed by the assessee may be admitted. The learned DR, on the other hand, strongly opposed additional grounds filed by the assessee. 14. We have heard both the parties, perused material available on record and gone through orders of the authorities below. Admittedly, the issue of deduction towards education cess secondary and higher education cess u/s. 37(1) of the Act, is purely legal issue for which no requirement of investigation of any additional facts. It is also an admitted fact that when the assessee has taken legal issue which can be admitted at any stage including at second appellate stage as held by various High Courts including the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. reported in 229 ITR 383 (SC). Therefore, we deem it a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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