Education Cess allowable as not fall under section 40(a)(ii)

ExLServices.com (India) Pvt. Ltd. Vs ACIT (ITAT Delhi)

Conclusion: Education cess was an allowable deduction while computing the income under the head profits and gains from business or profession as it did not fall within section 40(a)(ii).

Held: Assessee-company was engaged in the business of rendering transaction processing services and internet and voice based customer care service for its worldwide clients. The issue arose for consideration was with respect to claim of deduction of Rs.70,98,828/- on account of payment of education cess. It was held that facts of the case in the year under consideration were identical to that of the earlier years. Further no distinguishing feature in the facts of the case in the year under consideration and that of the earlier years has been pointed out by the Revenue. Following the decision in the case of Chambal Fertilisers and Chemicals Ltd. vs. JCIT D.B wherein it was held that education cess was an allowable deduction while computing the income under the head “profits and gains from business or profession” as it did not fall within section 40(a)(ii). Thus, AO was directed to allow the claim of deductibility of cess amounting to Rs.70,98,828/-.

FULL TEXT OF THE ORDER OF ITAT DELHI

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