ITAT Dismisses Revenue's Challenge on Education Cess Deduction, Case Remanded to CIT(A) for Proper Review [Read Order]

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the appeal filed by the Income Tax Department against AVR Storage Tank Terminals Pvt. Ltd. in a matter concerning deduction of education cess and higher education cess.

The Tribunal observed that the appeal had become infructuous since the very order challenged by the department had already been remanded to the Commissioner of Income Tax (Appeals) for fresh adjudication.

The appellant in this case is the Deputy Commissioner of Income Tax, Circle-11(1), Kolkata, who had filed an appeal against the order dated 17 April 2024 passed by the CIT (Appeals) under Section 250 of the Income Tax Act for the assessment year 2020–21. The department had challenged the CIT(A)'s order on grounds that it wrongly allowed deduction of education cess, allegedly in disregard of the Supreme Court’s decision in PCIT v. Chambal Fertilizers & Chemicals Ltd. (2022).

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However, during the hearing, it was brought to the Tribunal’s notice that the impugned CIT(A) order had already been challenged by the assessee in a separate appeal, and the Tribunal had previously set aside that order on 6 December 2024. It was noted that the CIT(A) had ruled on issues which were not even raised by the assessee, leading to an earlier remand for adjudication on the correct grounds.

The counsel for AVR Storage Tank Terminals Pvt. Ltd. further clarified that the assessee had voluntarily disallowed the education cess in its tax computation during the assessment proceedings, and therefore, there was no live dispute on the matter at this stage.

Considering the submissions from both sides and reviewing the records, the ITAT Bench comprising Sonjoy Sharma (Judicial Member) and Rakesh Mishra (Accountant Member) concluded that since the original CIT(A) order dated 17 April 2024 had already been nullified and sent back for fresh decision, the present revenue appeal could not be sustained.

In Conclusion, the appeal was dismissed as infructuous.

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