Case Law Details
Overseas Polymers Private Limited Vs ACIT (ITAT Mumbai)
Legislature in Sec. 40(a)(ii) has though provided that ‘any rate or tax levied’ on ‘profits and gains of business or profession’ shall not be deducted in computing the income chargeable under the head ‘profits and gains of business or profession’, but then there was no reference to any ‘cess’. Also, the High Court observed that there was no scope to accept that “cess” being in the nature of a tax was equally not deductible in computing the income chargeable under the head “profits and gains of business or profession”. It is further observed that if the legislature would had intended to prohibit the deduction of amounts paid by an assessee towards say, “education cess” or any other “cess”, then, it could have easily included a reference to “cess” in clause (ii) of Section 40(a). On the basis of its aforesaid observations, the Hon‘ble High Court has concluded that now when the legislature had not provided for any prohibition on the deduction of any amount paid towards “cess” in clause (ii) of Sec. 40(a), therefore, holding to the contrary would amount to reading something which is not to be found in the text of the provision of Sec. 40(a)(ii). Accordingly, the Hon‘ble High Court has concluded that there was no prohibition on the deduction of any amount paid towards “cess” in Sec. 40(a)(ii), while computing the income chargeable under the head “profits and gains of business or profession”.
Similar view has been taken by the Hon’ble Rajasthan High Court in Chambal Fertilizers & Chemicals Ltd. (supra), after considering the decision in Travancore Titanium Products Ltd. (supra) and Smith Kline amp; French (India) Ltd. (supra).
Respectfully following the decision in Sesa Goa Ltd. (supra) and Chambal Fertilizers & Chemicals Ltd. (supra), we hold that the assessee shall be entitled for deduction of education cess and higher & secondary education cess while computing income chargeable under the head “profits and gains of business or profession”.
FULL TEXT OF THE ITAT JUDGEMENT
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