Secondary and Higher Secondary Education Cess are Part of Tax; No Deduction Available: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, held that secondary and higher secondary education cess are part of tax and hence that no deduction is available.

The aforesaid observation was filed by the Kolkata ITAT, when an appeal was preferred before it by the assessee, as against the order of the Assistant Commissioner of Income Tax, Kolkata, dated 25.01.2022 for the AY 2017-18.

The ground of the assessee’s appeal being the confirmation of addition of Rs. 84,76,769/- by DRP, made by the AO/TPO, on account of TP adjustment with respect to the international transactions, without appreciating the fact that TP provisions are not applicable as the assessee’s income was chargeable to tax as per Tonnage Tax Scheme, the brief facts of the case were that the assessee had filed its return of income on 30.11.2017, declaring total income of Rs. 17,07,17,340/- which was selected for scrutiny under CASS and statutory notices were duly issued and served on the assessee.

One of the reasons for selection of the case for scrutiny was, examination of TP parameters and huge amount of international transactions of Rs. 8.80Crores and specified domestic transactions (SDT) to the tune of Rs. 33.08 crores.

Accordingly, a reference was made to the AO/TPO. And, the TPO passed the order u/s 92CA (3), proposing the upper adjustment on account of transfer pricing adjustment of Rs. 84,76,769/- and accordingly the same was added to the income of the assesse in the assessment framed u/s 143(3) read with Section 144C (13) of the Act dated 25.01.2022 inter alia making other additions.

In the appellate proceedings also, the DRP dismissed the appeal of the assessee by recording its observations, and it is being aggrieved by the same, that the assesseee has preferred the instant appeal before the Kolkata ITAT.

Hearing the opposing contentions of either sides as submitted by Arati Agarwal and Rosy Banjerjee, the A.Rs on behalf of the appellant, and by G.Hukugha Sema, the CIT, on behalf of the Revenue, the ITAT Panel of Sonjoy Sarma, the Judicial Member and Rajesh Kumar, the Accountant Member, held:

“We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, and have also considered the judicial pronouncements that have been relied upon by them in context of the issue in hand and also explanation 3 as inserted by Finance Act ,2022 to section 40(ii) of the Act. In terms of the said explanation, it has been provided tax shall include and shall be deemed to have always included any surcharge or cess by whatever name called on such tax. Considering the above position, we are of the considered view that education cess and Secondary and higher Secondary Education cess are also part of the tax and not deduction is available to the assesse. Accordingly, the ground raised by the assesse is dismissed.”

To Read the full text of the Order CLICK HERE

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