Education Cess allowable as Income Tax Deduction: ITAT grants Relief to LG Soft India [Read Order]

In a Relief to LG Soft India Private Limited, the Income Tax Appellate Tribunal ( ITAT ) has ruled that, Education Cess is allowable as Income Tax Deduction.

The assessee is a subsidiary of LG Electronics Inc., Korea. The assessee provides software development and convergence solutions to its holding company from its development center in India. The assessee is not a product development company. The assessee is mainly into country adaption and model development. It is a part of its parent company’s Research & Development (R&D) Centre. The assessee purchases prototypes and builds on the base software developed by LG Korea, tailoring it to the specifications/ requirements for the Indian consumers.

For the assessment year 2012-2013, the assessee had remitted education cess and secondary & higher secondary education cess of a sum of Rs.34,72,811. The assessee omitted to claim the same as an expense in its return of income. Subsequently, the assessee filed a petition dated 03.03.2021 for admission of additional grounds seeking deduction of the same while computing the total income chargeable to Income-tax. However, the income tax department rejected the plea, and therefore, the assessee approached the Tribunal for relief.

Before the Tribunal, the assessee contended that education cess ought to be allowed as a deduction in view of the judgment of the Hon’ble Bombay High Court in the case of Sesa Goa Limited v. JCIT [(2020) 423 ITR 426 (Bom.)].

While allowing relief to the assessee, the Tribunal bench comprising Accountant Member Mr. B R Bhaskaran and Judicial Member Mr. George George K observed that the Mumbai Bench of the Tribunal in the case of Voltas Limited in ITA No.6612/Mum/2018 (order dated 30.06.2020) had admitted additional ground of appeal with regard to the claim of education cess and adjudicated the matter in favour of the assessee, by following the judgment of the Hon’ble Bombay High Court in the case of Sesa Goa Limited v. JCIT (supra).

“In the light of the aforesaid judicial pronouncements, we hold that education cess is to be allowed as deduction. It is ordered accordingly” the bench concluded.

To Read the full text of the Order CLICK HERE
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