Deduction of surcharge or cess not allowable as deduction u/s 40(a)(ii)

DCIT Vs Vinati Organics Ltd. (ITAT Pune)

ITAT Pune held that surcharge or cess being part of income tax is not allowable as deduction under section 40(a)(ii) of the Income Tax Act.

Facts- The assessee has raised additional ground of appeal before CIT(A) that AO be directed to exclude the sale tax subsidy amounting to Rs. 1,49,39,458/- as capital receipt while computing the total income under the provisions of the Income Tax Act.

The assessee has also made additional claim of deduction in respect of education cess of Income Tax of Rs.67,83,793/- and education cess on dividend distribution tax of Rs.4,66,570/- before the ld. CIT(A). The CIT(A) has allowed the claim of the assessee.

Conclusion- In assessment year 2015-16 the assessee has treated the sale tax subsidy received as capital receipt and same has been accepted by the A.O in the assessment order. In the light of the above facts and findings we don’t find any force in the ground of appeal of the revenue, therefore, this ground of appeal stand dismissed.

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