Education Cess is mandatory expenditure allowable as deduction u/s. 37

ACIT Vs PC Jewellers Ltd. (ITAT Delhi)

Facts- AO disallowed the bank guarantee commission and credit card commission u/s 40(a)(ia) on the grounds that TDS is not deducted.

AO rejected the diamond purchase from commission agent and added income @12.5% on the purchase alleging purchase as inflation of purchase price on purchases from accommodation entry providers.

Assessee took up additional ground pertaining to deduction of education cess amounting to INR 2.37 Crores

Conclusion- Held as bank is not working for the assessee but working for its customers, there is no requirement of TDS on bank charges. Hence disallowance u/s 40(a)(ia) not sustainable.

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