Case Law Details

Case Name : Bajaj Electricals Ltd. Vs ACIT OSD (ITAT Mumbai)
Appeal Number : M.A.No. 222/Mum/2020
Date of Judgement/Order : 08/01/2021
Related Assessment Year : 2007-08

Bajaj Electricals Ltd. Vs ACIT OSD (ITAT Mumbai)

It is a fact on record that reliance was placed by the assessee’s counsel at the time of original hearing on the decision of the Hon’ble Rajasthan High Court in the case of Chambal Fertilizers referred to supra together with various other Tribunal decisions as detailed in Miscellaneous Application. We find that this Tribunal admittedly while disposing off its appeal and more particularly in the additional ground raised in respect of deduction claimed on account of education cess, had inadvertantly lost sight of the decision of the Hon’ble Rajasthan High Court and other Tribunal decisions quoted by the assessee on the impugned issue and had rendered its decision. We are also inclined to accept to the proposition of the ld. Counsel for the assessee that when there is a particular decision of the Hon’ble Jurisdictional High Court which was rendered subsequent to the order passed by the Tribunal, the same would constitute mistake apparent from record within the meaning of Section 254(2) of the Act which is amenable to rectification thereon. It is also a fact that the Hon’ble Jurisdictional High Court in the case of Sesa Goa Ltd., referred to supra had decided the issue raised in the additional ground in favour of the assessee by holding that the education cess would be entitled for deduction as expenditure. Hence, respectfully following the said decision and in view of various other decisions relied upon by the ld. Counsel for the assessee referred to supra, we direct the ld. AO to grant deduction on account of education cess and allow the additional ground raised by the assessee for the A.Y.2007-08 in its entirety. Accordingly, the order passed by this Tribunal on 14/10/2019 in this regard disposing off the additional ground stands modified.

FULL TEXT OF THE ITAT JUDGEMENT

By virtue of this Miscellaneous Application, the assessee submits that there was an additional ground raised by the assessee towards claiming deduction on account of education cess paid by the assessee which was dismissed by the Tribunal while passing its order on 14/10/2019, as not an allowable expenditure. The ld. Counsel for the assessee submitted that in view of the recent decision of the Hon’ble Jurisdictional High Court in the case of Sesa Goa Ltd., vs. JCIT reported in 107 CCH 0376, in Tax Appeal No.17 & 18 of 2013 dated 28/02/2020, education cess paid by the assessee would be entitled for deduction. The ld. Counsel further pointed out that subsequent decision of the Hon’ble Jurisdictional High Court on a particular issue would become the basis for rectification of an order passed by the Tribunal earlier u/s.254(2) of the Act.

2. The ld. Counsel also pointed out that the Tribunal had placed reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs. K. Srinivasan 83 ITR 346 (SC) in support of its decision that education cess is part of tax and hence not an allowable deduction. In this regard, it was submitted in the Miscellaneous Application that the above decision of Hon’ble Apex Court was rendered in the context of applicability of surcharge on the salary earned by the tax payer and not in the context of allowability of deduction in respect of surcharge or education cess. The ld. Counsel also submitted that reliance was placed on the decision of Hon’ble Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd., vs. JCIT in ITA No.52/2018 dated 31/07/2018 in support of its plea that education cess would be eligible for deduction and that the said decision was not considered by this Tribunal while rendering its decision on the additional ground raised thereon. He pointed out that non-consideration of the said decision of the Hon’ble High Court would constitute mistake apparent on record warranting rectification u/s.254(2) of the Act, in support of which he placed reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Sony Pictures Networks India Pvt. Ltd., vs. Income Tax Appellate Tribunal and Others in Writ Petition No.3508 of 2018 dated 03/01/2019 and also on the decision of the Hon’ble Jurisdictional High court in the case of CIT vs. Smt. Nirmalabai K. Darekar reported in 186 ITR 242. Finally, the ld. Counsel for the assessee also placed reliance on the decision of the Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd., reported in 305 ITR 227 to drive home the point that the order of the Tribunal which is contrary to the judgement of the Jurisdictional High court, though rendered after the order passed by the Tribunal, constitutes the mistake apparent from the record.

3. Per contra, the ld. DR vehemently submitted that this decision was rendered subsequent to the decision of this Tribunal and hence, the same would not be eligible for rectification u/s.254(2) of the Act.

4. We have heard rival submissions and perused the materials available on record. It is a fact on record that reliance was placed by the assessee’s counsel at the time of original hearing on the decision of the Hon’ble Rajasthan High Court in the case of Chambal Fertilizers referred to supra together with various other Tribunal decisions as detailed in Miscellaneous Application. We find that this Tribunal admittedly while disposing off its appeal and more particularly in the additional ground raised in respect of deduction claimed on account of education cess, had inadvertantly lost sight of the decision of the Hon’ble Rajasthan High Court and other Tribunal decisions quoted by the assessee on the impugned issue and had rendered its decision. We are also inclined to accept to the proposition of the ld. Counsel for the assessee that when there is a particular decision of the Hon’ble Jurisdictional High Court which was rendered subsequent to the order passed by the Tribunal, the same would constitute mistake apparent from record within the meaning of Section 254(2) of the Act which is amenable to rectification thereon. It is also a fact that the Hon’ble Jurisdictional High Court in the case of Sesa Goa Ltd., referred to supra had decided the issue raised in the additional ground in favour of the assessee by holding that the education cess would be entitled for deduction as expenditure. Hence, respectfully following the said decision and in view of various other decisions relied upon by the ld. Counsel for the assessee referred to supra, we direct the ld. AO to grant deduction on account of education cess and allow the additional ground raised by the assessee for the A.Y.2007-08 in its entirety. Accordingly, the order passed by this Tribunal on 14/10/2019 in this regard disposing off the additional ground stands modified.

5. In the result, Miscellaneous Application of the assessee for A.Y.2007-08 is allowed.

M.A. No.223/Mum/2020 (A.Y.2008-09)

6. By virtue of this Miscellaneous Application, the assessee submits that the additional grounds raised by the assessee on account of claiming deduction of expenditure in respect of Employee Stock Option Plan (ESOP) and deduction in respect of education cess were not at all adjudicated by this Tribunal while disposing off its appeal. Non-adjudication of additional grounds would constitute mistake apparent on record warranting rectification u/s.254(2) of the Act.

7. We have heard the rival submissions and perused the materials available on record. We find that the additional grounds raised on the aforesaid two issues for A.Y.2008-09 have not been adjudicated by this Tribunal while disposing off the original appeal which is amenable to rectification u/s.254(2) of the Act.

8. With regard to deduction claimed in respect of education cess, we have already held for the A.Y.2007-08 in this order supra that the assessee would be entitled for deduction in respect of education cess. We direct the ld. AO accordingly to grant deduction for the same for A.Y.2008-09 also.

9. With regard to deduction claimed in respect of Employee Stock Option Expenditure, since the said issue was not at all adjudicated by the Tribunal, we hereby recall the order passed by this Tribunal for A.Y.2008-09 only for the limited extent of adjudication of this additional ground alone.

10. In the result, the Miscellaneous Application of the assessee for A.Y.2008-09 is allowed.

In the result, both the Miscellaneous Applications for A.Y.2007-08 & 2008-09 are allowed.

Order pronounced in open Court on 08/01/2021.

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