Education cess not allowable as expenditure under Section 37 read with Section 40(a)(ii) after retrospective Finance Act 2022 amendment

The SC held that education cess paid by the respondent-assessee is not allowable as an expenditure under Section 37 read with Section 40(a)(ii) of the Income Tax Act, 1961, having regard to the Finance Act, 2022 amendment applied retrospectively from 01.04.2005. The appeal was allowed to record that the education cess would be disallowed; the assessee stated it had paid the applicable tax on the disallowance. The matter was disposed of without any order as to costs.

---

---

The Supreme Court allowed the appeal stating that Education cess paid by the respondent-assessee cannot be treated as an expenditure under Section 37 read with 40(a)(ii) of the Income Tax Act, 1961. The appeal was allowed without any order as to costs.

---