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Issues: (i) Whether the Revenue's appeal was liable to be dismissed on account of low tax effect under the CBDT monetary limit circulars; (ii) whether education cess was allowable as a deduction in computing income.
Issue (i): Whether the Revenue's appeal was liable to be dismissed on account of low tax effect under the CBDT monetary limit circulars.
Analysis: The tax effect in the Revenue's appeal was below the enhanced monetary limit prescribed by the CBDT circulars governing departmental appeals before the Tribunal. The circular dated 08.08.2019 amended the earlier instruction and raised the threshold to Rs. 50 lakhs. In the absence of any applicable exception being established, the appeal could not be entertained on merits.
Conclusion: The Revenue's appeal was dismissed as barred by the low tax effect limit.
Issue (ii): Whether education cess was allowable as a deduction in computing income.
Analysis: The assessee's claim was supported by the cited High Court ruling and the CBDT circular dated 18.05.1967, which treated cess as not falling within the disallowance in the manner contended by the Revenue. The issue was treated as settled in favour of the assessee.
Conclusion: Deduction of education cess was allowed in favour of the assessee.
Final Conclusion: The Revenue's appeal failed, while the assessee succeeded on the substantive cross-objection relating to education cess deduction, resulting in a partial allowance of the cross-objection.
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