In a major relief to the Karur Vysya Bank, the Chennai Bench of Income Tax Appellate Tribunal (ITAT) allowed a deduction in respect of Education Cess.
The appellant bank is a private sector bank carrying on banking business, filed its return of income for the assessment year 2013-14 declaring total income of Rs.546,50,55,480/- and said return was subsequently revised and declared a total income of Rs.523,99,52,160/- & Rs.516,82,49,970/- respectively. The issue raised was in respect of deductibility of Education Cess and Secondary & Higher Education Cess.
The assessee has filed a petition for admission for additional ground and argued that the issue raised in the petition is purely a legal issue, which can be raised at any stage of proceedings including appellate proceedings before the Tribunal. In this regard, placed his reliance on the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd., vs. CIT.
The revenue on the other hand strongly opposed the petition filed by the assessee for admission of additional ground and argued that the assessee has failed to prove the fact, of all relevant materials available before the AO to admit additional ground and hence, additional grounds filed by the assessee may be rejected.
“we find that a similar issue has been considered by the Hon’ble Bombay High Court in the case of Sesa Goa Ltd., vs. JCIT, 2020 (3) TMI 347, where the Hon’ble Bombay High Court held that Education Cess and Secondary & Higher Education Cess is deductible u/s.37 of the Act. Therefore we are of the considered view that Education Cess and Secondary & Higher Education Cess is deductible u/s.37(1) of the Act. But, facts remain that the assessee has taken this issue for the first time by filing additional ground and the fact with regard to said claim was not before the AO at the time of assessment proceedings. Therefore, we are of the considered view that this issue needs to go back to the file of the AO to consider the issue in light of the decision of Hon’ble Bombay High Court in the case of Sesa Goa Ltd., vs. JCIT, supra. Hence, we set aside the issue to the file of the AO and direct him to reconsider the issue in accordance with law and also by considering the ratio laid down by Hon’ble Bombay High Court,” the coram of Judicial Member, V. Durga Rao, and Accountant Member G. Manjunatha ruled.
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