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TMI Blog2021 (1) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... td. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] direct the AO to allow deduction in respect of amount paid by the assessee as education cess while computing total income under the normal provisions of the Act.- Decided in favour of assessee. - I.T.A. No. 87/Kol/2020 - - - Dated:- 13-1-2021 - Shri J. Sudhakar Reddy, AM And Shri A. T. Varkey, JM For the Appellant : Shri Amit Gupta, AR For the Respondent : Shri Supriyo Paul, Addl. CIT ORDER Per Shri A.T.Varkey, JM This appeal preferred by the assessee is against the order of Ld. CIT(A)-5, Kolkata dated 19.11.2019 for A Y 2013-14. 2. At the outset the Ld. AR for the assessee Shri Amit Gupta submitted that though the assessee has preferred two grounds of appeal, it is pressing only ground no. 2. And it was submitted that though ground no. 1 was preferred against the action of the Ld. CIT(A) who confirmed the action of AO wherein he disallowed the provision for leave encashment, the assessee is not pressing this ground in the light of the decision of Hon'ble Supreme Court in SLP (Civil) 22889 of 2008 in M/s. Exide Industries Ltd. Therefore, ground no.1 raised by the assessee stands dismissed. 3. Ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Appeal No. 52/Kol/2018 M/s Chambal Fertilizers Ltd vs DCIT decided on 31.07.2018 takes into account CBDT Circulated dated 18.05.1967 for holding such cess(es) to be allowable as deduction. Their lordships hold that section 40(a)(ii) applied only on taxes such than earn cess(es). We therefore reject the revenue's contentions supporting the impugned disallowance. The assessee's instant substantive ground is accepted. The AO is direction to verify all the relevant facts and allow the impugned cess(es) as deduction u/s.37 of the Act. The assessee's appeal I.T.A. No. 685/Kol/2014 is partly accepted in above terms. The Cess is specially levy imposed by the Government for certain specific purposes, The payment of cess is directly linked with Income Tax Payable and imposition sanctioned by Parliament. Under no circumstances, cess can be considered business expenditure and is more of a contribution for national development. In this regard, referenced is made Circular 3 of 2018 issued by CBDT which lays down the monetary limits for filing of second appeal to the ITAT. The Circular reads as follows: 4. For this purpose, 'tax effect' means the differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sesa Goa Ltd. Vs. JCIT (2020) 117 taxman.com 96 (Bom.) also has taken a similar view. 7. On this aspect, it would be worthwhile to have a look at the CBDT Circular No. 91/58/66-ITJ(19), which reads as under: In this regard, reliance is placed on CBDT Circular No. 91/58/66 - ITJ(19) (supra) which reads as under: 1. Recently a case has come to the notice of the Board where the Income-tax Officer has disallowed the cess paid by the assessee on the ground that there has been no material change in the provisions of section 10(4) of the 1922 Act and section 40(a)(ii) of the 1961 Act. 2. The view of the Income-tax Officer is not correct. Clause 40(a)(ii) of the Income-tax Bill, 1961, as introduced in the Parliament, stood as under: (ii) any sum paid on account of any cess, rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains. When the matter came up before the Select Committee, it was decided to omit the word cess from the clause. The effect of the omission of the word cess is that only taxes paid are to be disallowed in the assessments for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date. However, the Finance Act, 2005, w.e.f 01.04.2006 has inserted that in relation to the assessment year commencing on the 1st day of April, 2006, and any subsequent assessment year tax also includes the fringe benefit tax payable under section 115WA. From above it can be seen that education cess is not covered by the definition of tax. 11. Our attention was drawn to section 43B of the Act which says that notwithstanding anything contained in any other provisions of the Act a deduction otherwise allowable under this Act, any sum payable by the assessee by way of tax, duty, cess or fee by whatever name called under any law, is deductible upon actual payment. Hence, according to assessee education cess need to be allowed as deduction on payment basis only, irrespective of the year to which it relates. And it was pointed out that Parliament where ever it required has spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowable as deduction. Their lordships hold that section 40a(ii) applies only on taxes such than earn cess(es). We therefore reject the Revenue's contentions supporting the impugned disallowance . The assessee's instant substantive ground is accepted. The Assessing Officer is direction to verify all the relevant facts and allow the impugned cess (es) as deduction u/s 37 of the Act. The assessee's appeal I.T.A. No. 685/Ko/2014 is partly accepted in above terms. 14. From the discussion above, it can be noted that Parliament has used the word cess specifically in certain provisions of the Act (refer inter alia Section 43B of the Act). Therefore, when Section 40(a)(ii) of the Act, does not spell out cess which is paid by the assessee as not allowable as deduction and the definition of 'Tax' does not specify 'cess' as Tax, we are of the opinion that cess cannot be treated as Tax for the purpose of Section 40(a)(ii) of the Act. And in this context, the legal maxim Expressio Unius Est Exclusio Alterius comes into play which means Express mention of one implies the exclusion of another. [Refer decision of Hon'ble Supreme Court in G V K Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X
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