Case Law Details
Piaggio Vehicles Private Limited Vs ACIT (ITAT Pune)
Whether education cess can be allowed as deduction?
The Ld. Senior Counsel for the assessee has placed strong reliance on the decision of the Hon’ble Bombay High Court in the case of Sesa Goa Limited Vs. Joint Commissioner of Income Tax, (2020) 107 CCH 0376 MumHC, Tax Appeal 17 of 2013/18 of 2013 wherein the question raised before the Hon‟ble High Court was “whether Education Cess and Higher and Secondary Education Cess collectively referred to as “cess” is allowable as a deduction in year of its payment. It was held and observed by the Hon‟ble High Court that “legislature in section 40(a)(ii) has provided that “any rate or tax levied” on profits and gains of business or profession shall not be deducted in computing income chargeable under head “profits and gains of business or profession”. There is no reference to any “cess”. Obviously, therefore, there is no scope to accept that “cess” being in nature of a tax is equally not deductable in computing income chargeable under head “profits and gains of business or profession”. If legislature intended to prohibit deduction of amounts paid by a assessee towards “education cess” or any other “cess” then legislature could have easily included reference to „cess‟ in clause (ii) of Section 40(a) of the Act. The fact that legislature has not done so means that legislature did not intend to prevent deduction of amounts paid by the assessee towards “cess” when it comes to computing income chargeable under head “profits and gains of business or profession”. Though the claim for deduction was not raised in original return or by filing revised return, assessee had indeed addressed a letter claiming such deduction before assessment could be completed. However, even if Court proceed on basis that there was no obligation on Assessing Officer to consider claim for deduction in such letter, the Commissioner (Appeals) or ITAT, before whom such deduction was specifically claimed was duty bound to consider such claim.
This substantial question of law was answered in favour of the assessee stating that the amount paid by the assessee towards education cess has to be allowed as deduction.
The Ld. Senior Counsel for the assessee submitted that since main grounds of this appeal have been remanded to the file of the Assessing Officer, similarly this ground may also be remanded to the file of the Assessing Officer.
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