2022 (12) TMI 1098 - SCH - Income Tax

Education cess as a disallowable expenditure u/s 40(a)(ii) - assessee states that in view of the amendment vide the Finance Act, 2022 with retrospective effect from 01.04.2005 to Section 40(a) (ii) of the Income Tax Act, 1961, the present appeal has to be allowed. HELD THAT - In view of the statement made, we direct that the Education cess paid by the respondent-assessee would not be allowed as an expenditure under Section 37 read with 40 (a) (ii) of the Income Tax Act, 1961. Assessee states that they have also paid the applicable tax on the disallowance. Recording the above, the appeal is allowed in the aforesaid terms, without any order as to costs.

Summary

The Supreme Court allowed the appeal stating that Education cess paid by the respondent-assessee cannot be treated as an expenditure under Section 37 read with 40(a)(ii) of the Income Tax Act, 1961. The appeal was allowed without any order as to costs.