Case Law Details
Sesa Goa Limited Vs JCIT (Bombay High Court)
The issue under consideration is whether the Education Cess and Higher and Secondary Education Cess is allowable as a business expenses?
In the present case, Revenue contends that ‘cess‘ is also included in the scope and import of the expression “ any rate or tax levied” as it appears in Section 40(a)(ii) of the IT Act and consequently, the amounts paid towards the ‘cess‘ are not liable for deduction in computing the income chargeable under the head ‘profits and gains of business or profession’.
High Court states that 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 the income chargeable under the head “profits and gains of business or profession”. There is no reference to any “cess”. Obviously therefore, there is no scope to accept contention that “cess” being in the nature of a “Tax” is equally not deductable in computing the income chargeable under the head “profits and gains of business or profession”. Acceptance of such a contention will amount to reading something in the text of the provision which is not to be found in the text of the provision in Section 40(a)(ii) of the IT Act. If the legislature intended to prohibit the deduction of amounts paid by a Assessee towards say, “education cess” or any other “cess”, then, the legislature could have easily included reference to “cess” in clause (ii) of Section 40(a) of the IT Act. The fact that the legislature has not done so means that the legislature did not intend to prevent the deduction of amounts paid by a Assessee towards the “cess”, when it comes to computing income chargeable under the head “profits and gains of business or profession”.
Hence, Education Cess and Higher and Secondary Education Cess is allowable as a business expenses.
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