ITO Vs. Sri P. Prasen Kumar (ITAT Hyderabad)
It was noted that the tax effect of Rs. 90,000/- and education cess of Rs. 29,700/- do not form part of income tax. Vide para 6 of the order, this Bench has considered the definition of tax and relied on Co-ordinate Bench decisions particularly in the case of DCIT Vs. Dome Bell Electronics in ITA No. 2480/Mum/2012 date 22-07-2016 to conclude that surcharge and education cess should not be included, while calculating the tax effect. Since the tax thereon was Rs. 9 Lakhs only, which is less than Rs. 10 Lakhs limit prescribed, the Bench was of the opinion that there was no merit in the Miscellaneous Application filed by the Revenue.
Even otherwise on merits, if one were to consider that surcharge is part of tax effect [in fact the entire discussion on the earlier Miscellaneous Application order date 07-12-2016 is on this issue alone], then the amount of surcharge is only Rs. 90,000/- still the tax effect is less than Rs. 10 Lakhs. As far as inclusion of education cess is concerned, the same cannot be considered as part of tax, in view of the Hon jurisdictional High Court decision in the case of Srikakollu Subba Rao & Co., Vs. Union of India & Ors. [173 ITR 708], wherein the Hon’ble jurisdictional High Court held that market cess was not a tax and that the provisions of Section 43B had no application to market cess. This principle will also apply to the education cess levied, which is specifically considered by the Hon’ble Delhi High Court in the case of Dalmia Cement (Bharat) Ltd., Vs. CIT [357 ITR 419] (Delhi), the principle of which was relied in the original order dismissing the appeal date 22-12-2015. Both on facts and on law, there is no merit in the second Miscellaneous Application preferred by the Revenue. Revenue should have gone in appeal to Hon’ble High Court, if it is aggrieved on the order u/s. 254(1) or on the first Miscellaneous Application passed u/s. 254(2). We are not sure why AO repeatedly files miscellaneous applications stated to be with approval of the CIT. We advise the Revenue to be careful in future, otherwise there will be costs attracted for this un-necessary and infructuous petitions. Since an advise is given in this order, we are not considering levy of costs in this case. Any further infructuous petitions in this case or any other case will call for levy of costs, which the officers of Revenue should keep in mind herein after.
