TaxTMI 
TaxTMI 
2016 (10) TMI 1115
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....ed expenses of Rs. 2,77,69,013/- related to recovery in HRSG. Under the facts and circumstances, the disallowances made deserve to be deleted and claim made by the appellant deserves to be allowed. 2. That the Ld. Assessing Officer erred in disallowing the claim of Rs. 28,12,000/- on the ground of notional interest in respect of investment in subsidiary companies without proving any nexus between investments and loans and the Ld. CIT (Appeals) further erred in confirming the same. Hence the disallowance made on this account should be deleted. 3. That the Ld. Additional Commissioner erred in not allowing the expenditure of education cess of Rs. 2,41,59,485/- from income claimed by the appellant and the Ld. CIT(Appeals) erred in confirming the same. The education cess was actually paid on income tax and is not a part of income tax as per the provisions of section 40(a)(ii) and is hence an allowable expenditure. Therefore the claim for deduction from income for expenditure of education cess should be allowed." Grounds of revenue's appeal: "On the facts and in the circumstances of the case, the Ld. CIT (A), Kota has erred in:- i) allowing de....
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....reating incentive of Rs. 2,48,82,876/- received on pre-payment of deferred sales tax liability as income for A.Y. 2005-06 and not for A.Y. 2008-09. The Assessing Officer has observed that it is seen from the computation of income that a sum of Rs. 2,48,82,876/- had been claimed as deduction on account of incentive on prepayment of deferred Sales tax liabilities allowed against fixed capital investment of unit Gadepan-I. The assessee was requested to furnish its reply. Vide letter dated 13.12.2010, it is submitted that as regard to the prepayment of sales tax liability which is in accordance with the notified scheme of Rajasthan Govt., is a capital receipt and hence not taxable as revenue receipt. The assessee has filed its submission but not found acceptable by the Assessing Officer for the following reasons: (i) Since the assessee has collected the amount of sales tax but the payment has been made after availing incentive benefit as per the scheme of the State Government as claimed, the incentive received is a business receipt and the same has to be treated accordingly. (ii) No details of scheme of the State Government have been furnished so as to verify the c....
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....d 27.3.2003, the state Govt. provided a scheme for the dealers who availed the deferment of sales tax to deposit the amount of deferred tax even before the stipulated due date of deposit. The payment is to be on the basis of net present value as specified in that notification. Net present value has been mentioned as percentage of amount payable and such percentage varies as per the period of month between the actual date of payment and the extended date of payment. However Board Circular 496 dated 25.9.87 stated that statutory liability is to be treated as paid in case the State Govt. makes an amendment that sales tax deferred under the scheme is to be treated as actually paid. Benovelent Circular of Board are mandatory. The liability is not that of sales tax but it is a liability of loan. Hence the decision of special bench in the case Sulzer India Ltd. is squarely applicable. It will be useful to reproduce Head Note in the case of Sulzer India Ltd. "Business income-Profits chargeable to tax under s.41(1)Payment of net present value against deferred sales-tax liability Assessee company obtained incentive by way of sales-tax deferral schemes of 1983 and 1988 notified by th....
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....bserved as under. "Sec.28(iv) seeks to charge the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession, as profits and gains of business or profession. Therefore, what is to be examined is whether the waiver of loan would amount to a perquisite so as to be taxable, as such, under s. 28. The Bombay High Court in the case of Mahindra & Mahindra Ltd. Vs. CIT (2003) 182 CTR (Bom) 34 : (2003) 261 ITR 501(Bom) : (2003) 128 Taxman 394 (Bom), has explained that s. 28(iv) seeks to charge the value of any benefit or perquisite, meaning thereby that the benefit must be in kind; the Court further held that waiver of loan is in respect of money transaction and, therefore, would not be in nature of any benefit or perquisite as construed in s. 28(iv). 2.21 The argument of the ld. DR that scheme of Rajasthan Govt is different is not of relevance. In the case of Maharashtra, the scheme of receipt of prepayment of loan was by a State Corporation while in Rajasthan it has been implemented by State Govt. The implementing agency may be different but the nature of the scheme is the same 2.22 We therefo....
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....he assessee has got relief from the ld. CIT(A) and also from the Hon'ble ITAT in Assessment years 2005-06 and 2007-08 and club expenses have been allowed as business expenses. The Hon'ble ITAT while deciding the appeals for A.Y. 2006-07 and 2007-08 in ITA No. 268/JP/2010 and 374, 536/JP/2010 has held that the club expenses were allowable. The Hon'ble ITAT relied on its own order in A.Y. 2005-06. Accordingly, the ld. CIT(A) had deleted the addition of Rs. 10,16,659/-. 9. Now the revenue is in appeal before us. The ld CIT DR has vehemently supported the order of the Assessing Officer but admitted that the Hon'ble ITAT in earlier years had deleted the addition made by the Assessing Officer with regard to club expenses. 10. At the outset, the ld AR has vehemently supported the order of the ld. CIT(A) and prayed to uphold the order. 11. We have heard the rival contentions of both the parties, perused the material available on the record and the earlier orders passed by the Coordinate Bench. In assessee's own case for the A.Y. 2005-06 passed in ITA No. 445/JP/2009 order dated 09/09/2011, the Coordinate Bench has held as under:- "10.2 The details of payments made to club....
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.... in consonance with those of the preceding years and are found to be in pari materia with the position in the current year. Thus, the findings given in those years apply mutatis mutandis in the current year as well. The decision of appellate authorities on this issue is being disputed further and thus have not reached finality. Therefore, donation made to DAV trust is disallowed and added to the total income of the assessee company. 13. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who had deleted the addition by following the earlier orders of the Hon'ble ITAT by observing that the Hon'ble ITAT while deciding the appeals for A.Y. 2006-07 and 2007-08 in ITA No. 268/JP/2010 and 374, 536/JP/2010 has held that payment to DAV Trust for running of school was allowable expenditure. Accordingly, the ld. CIT(A) had deleted the addition of Rs. 22,93,923/-. 14. Now the Revenue is in appeal before us. The ld CIT DR has vehemently supported the order of the Assessing Officer but admitted that the Hon'ble ITAT in earlier years had deleted the addition made by the Assessing Officer with regard to DAV Trust. 15. At the outset, ....
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....oyees is an expenditure for the carrying on of the business. In this view of the matter, in the facts of this case, where there is no dispute about the bona fides in creation of the trusts or utilisation of the funds contributed by the assessee to the trusts, we have no hesitation in holding that the expenditure incurred by the assessee by way of contribution to the welfare trust of the employees was rightly held to be deductible under section 37 of the Income- tax Act." By respectfully following the order of the Coordinate Bench in assessee's own case for the A.Y. 2006-07, we uphold the order of the ld. CIT(A) for this assessment year. Accordingly, this ground of the Revenue's appeal is dismissed. 17. Ground No. 5 of the Revenue's appeal is against deleting the addition of Rs. 11,71,382/- on account of depreciation disallowed on catalyst. This issue came up for discussion/deliberation during the assessment proceedings for the earlier assessment years where the facts are found to be similar to those of the assessment year under consideration. The assessee's appeal for earlier years has been allowed by the CIT (A) and the department is in further appeal before the Hon'ble ITAT....
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....7,657/- on account of leave encashment, water cess and gratuity. However, from perusal of copy of ledger account, it is not possible to link whether the claim so made has been disallowed in the earlier years and nature of reason for disallowing the same during the course of assessment. Thus, in absence of relevant and proper details, this claim of the assessee is not verifiable, therefore, the same is disallowed which works out to Rs. 3,49,57,657/- and added to the total income. 23. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who had deleted the addition by observing as under:- The assessee vide letter dated 19.09.2011 submitted as under: "Our submission in this regard is as under:- The deduction for certain statutory liabilities covered u/s 43B is allowable on payment basis only, so above referred amount was disallowed in respective earlier years due to non-payment. There are multiple dates of payment in case of leave encashment and bonus. We have enclosed a year wise break up of unpaid statutory liabilities covered u/s 43B as on 01.04.2007 and the same was not allowed in the respective....
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....t any defect simply brushed aside the claim of assessee. It was seen that assessee did not claim these expenditure and made payment of part of the expenditure in the current year and also written back part of the expenditure as discussed in Ground No. 7." The said findings of the ld CIT(A) remain uncontroverted before us. The ld CIT(A) has carried out the necessary verification of the assessee's claim which is also certified by the Tax Auditor. We therefore do not find any infirmity in the order of ld CIT(A) and accordingly uphold the said order. Accordingly, this ground of the Revenue's appeal is dismissed. 27. Ground No. 7 of the Revenue's appeal is against allowing rent paid for flat of Rs. 10,80,000/- to a person specified U/s 40A(2)(b), the Assessing Officer has observed that the assessee company has paid rent @ Rs. 90,000/- per month to the specified person u/s 40A(2)(b). Vide para No. 10 of this office letter dated 06.12.2010, the assessee was asked to give the details. In response to above, the assessee has filed reply as per point No. 10 vide letter dated 13.12.2010, which is reproduced as under:- "In this regard we wish to submit before your goodself that refe....
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....A). 31. We have heard the rival contentions of both the parties and perused the material available on the record. The ld CIT(A) has given a finding that the employees of the assessee company stayed at the guest house in respect of which an amount of Rs. 10,80,000 has been paid as rent. Further, the Revenue has not brought on record any material evidence to suggest that the rent paid was excessive vis-à-vis an accommodation of same size and facility in the same locality. We therefore confirm the order of the ld CIT(A) who has allowed the rent payment as incurred for the purposes of the assessee's business. Accordingly, this ground of the Revenue's appeal is dismissed. 32. Ground No. 8 of the Revenue's appeal is against deleting the expenses of Rs. 89,41,361/- for payment made to Zuari Investment Ltd. The Assessing Officer has made a table regarding payment to the different companies, which is reproduced hereunder:- Voucher No. Date Amount Remarks 1900006179 31.08.2007 28,09,000/- Consultancy charges to ZIL for enhancing WC limit 1900011258 19.12.2007 6,06,702/- Brokerage charges from 03.04 to 19.11.2007 1900011534 27.12.2007 ....
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....nt of his business in connection with the extension of his industrial undertaking or in connection with his setting up a new industrial unit, the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years beginning with the previous year in which the business commences or, as the case may be, the previous year in which the extension of the industrial undertaking is completed or the new industrial unit commences production or operation. Provided that where an assessee incurs after the 31st day of March, 1998, any expenditure specified in subsection (2), the provisions of this sub-section shall have effect as if for the words "an amount equal to one tenth of such expenditure for each of the ten successive previous years", the words "an amount equal to one-fifth of such expenditure for each of the five successive previous years" had been substituted. (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of the following clauses, namely:- (a) Expenditure in c....
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....nditure in relation to extension of industrial undertaking or expenditure incurred before commencement of business for setting up new unit. The A.O. did not bring anything on record to show that these expenditures were incurred before commencement of business or after commencement of business in relation to extension of industrial undertaking or for setting up new unit. In view of the above, the A.O. is directed to delete addition of Rs. 89,41,361/-." 34. Now the revenue is in appeal before us. The ld. CIT DR has vehemently supported the order of the Assessing Officer. 35. At the outset, the ld AR of the assessee has supported the order of the ld. CIT(A) and reiterated the submissions made before the ld CIT(A). 36. We have heard the rival contentions of both the parties and perused the material available on the record. For the purposes of invocation of section 35D, two conditions are prescribed. Firstly, the nature of expenditure should be as specified in section 35(2) and secondly, the expenditure should be incurred either before the commencement of the business, or where the business has been commenced, in connection with the extension of the undertakin....
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....xpenditure on the ground that the expenses were covered u/s 35D and therefore only 10% was allowed in the current year. The assessee on the other hand that the expenditure were paid to ISG Novasoft Technology for software consultancy services. The A.O. mentioned in his order that no supporting vouchers were produced. I fail to understand how he reached to the conclusion that the same was covered by section 35D. Section 35D applies on expenditure in relation to extension of industrial undertaking or expenditure incurred before commencement of business or for setting up new unit. The A.O. did not bring anything on record to show that these expenditure were incurred before commencement of business or after commencement of business in relation to extension of industrial undertaking or for setting up new unit. In view of the above, the A.O. is directed to delete addition of Rs. 24,39,596/-. 39. Now the revenue is in appeal before us. The ld CIT DR has vehemently supported the order of the Assessing Officer. 40. At the outset, the ld AR of the assessee has relied on the order of the ld. CIT(A). 41. We have heard the rival contentions of both t....
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....ion in NCA by Rs. 93,77,295/- as against the provisional NCA, which was considered at the time of agreement signing on November 7, 2007. A copy of the report submitted by M/s V Sankar Aiyar & Co. and M/s Grant Thornton was provided during the course of assessment hearing. Further, one more adjustment of Rs. 2,19,250/- in NCA was agreed by both the parties towards additional ex-gratia liability towards FPU employees. Based on the above changes in NCA, a supplementary agreement dated March 04, 2008 was entered between CFCL and TFL towards final determination of the sale consideration of Rs. 22,63,18,455/-. The provisions of section 50B of the IT Act are applicable for computation of capital gains in the case of slump sale. As required by the provisions of section 50B, the assessee has submitted a report of Chartered Accountant in the Form No. 3CEA certifying the computation of the net worth of the food processing division and its correctness. The working of short term capital gain of Rs. 1,35,21,415/- computed in accordance with the provisions of section 50B of the IT Act is as under:- Particulars Amount Amount Sale consideration as per Business Purchase agreement date....
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....er but no deduction was allowed for Net Current Assets which again is against the provisions of law. Thus in the Assessment order and profit on slump sale has been worked out as under:- Particulars Amount in Rs. Total sales consideration as received (As per original agreement) 2359.15 lacs Less: WDV of Fixed Assets as per depreciation chart 1083.77 lacs Profit on sale 1275.38 lacs In the Assessment Order, the Ld. Assessing Officer has made an addition of Rs. 11,48,87,000 computed as under:- Rs.1275.38 lacs - Rs. 126.51 lacs (wrongly considered instead of Rs. 135.21 lacs) = Rs. 1148.87 lacs. It is thus humbly submitted that the addition of Rs. 1148.87 lacs made by the Ld. Assessing Officer which is clearly against the provisions of section 50B may kindly be deleted." 43. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who had deleted the addition of Rs. 11,48,87,000/- by observing as under:- "The assessee during the year sold its food processing unit (FPU) on slump sale basis and computed the capital gain u/s 50B. The A.O. computed the capital gain o....
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.... provisional NCA as per the agreement signed on November 7, 2007. Subsequently, as per the joint report submitted by M/s V. Sankar Aiyar & Co. and Grant Thornton respectively on the assets and liabilities of FPU on the date of sale transaction, there was a reduction in NCA by Rs. 93,77,295/- as against the provisional NCA, which was considered at the time of original agreement signing on November 7, 2007. Further, one more adjustment of Rs. 2,19,250/- in NCA was agreed by both the parties towards additional ex-gratia liability towards FPU employees. Based on the above changes in NCA, a supplementary agreement dated March 04, 2008 was entered between CFCL and TFL towards final determination of the sale consideration of Rs. 22,63,18,455/-. The Assessing officer has taken cognizance of the supplementary agreement and noted that Para 4 of the said agreement states that "after considering the final value of NCA, the slump sale consideration works out to Rs. 22,63,18,455 against Rs. 23,59,15,000 as stated in the BPA. Accordingly, there is differential amount of Rs. 95,96,545 payable in favour of the purchaser." Having taken cognizance of the supplementary agreement, the AO noted that sin....
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....tion 50B has not been disputed by the Revenue. As per the provisions of section 50B, any profit or gains arising from the slump sale effected in the previous year shall be chargeable as long term capital gains or short term capital gain, as the case may be depending on the holding period, and shall be deemed to be the income of the previous year in which the transfer took place. In a slump sale the "net worth" of the undertaking or the division is to be taken as "cost of acquisition". As per explanation 2, the "Net worth" for this purpose is the aggregate value of the total assets of the undertaking/division as reduced by the value of liabilities of such undertaking/division as appearing in the books of account. The aggregate value of total assets of such undertaking/division shall be: (a) written down value of block of assets determined in accordance with the provisions contained in sub-item (c) of section 43(6)(c)(i) in the case of depreciable assets and (b) the book value for all other assets. In light of this, we confirm the finding of ld CIT(A) that "as per the provisions of section 50B deduction for all other assets has to be allowed as per book val....
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....ributable to the plant has been made on the basis of the market value computed as per JWNL invoices. Apparently the assessee was not deriving any income from the industrial undertaking (The Captive Power Plant) to be entitled for the claim of deduction u/s 80IA. Therefore, during the course of assessment proceedings, the assessee company was asked to justify its claim in the fight of the provisions of the Income Tax Act. The assessee further argued that as per section 80IA(2), this claim is correct for which it has also filed separate working of profit as required. All the arguments of the assessee company have been considered carefully but are not found to be correct for the reasons that the issue of deduction u/s 80IA has been verified m accordance to the legal as well as factual aspect of the claim and it has been held that neither the assessee's captive power plant can be said to be an independent industrial undertaking entitled for the deduction nor has any profit been derived from it so as to be entitled for the deduction u/s 80IA of the IT Act. Further, earning of income, if any, can be from others and no income can be earned by dealing with one self as held in numerous c....
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.... if the transfer had been made at the market value of such goods. In view of the above, it is held that assessee was eligible for deduction under section 80IA. I have examined the facts and I have already held that assessee was entitled for deduction u/s 80IA, however, in my opinion, the quantum of deduction u/s 80IA needed detailed examination for the reason that assessee has claimed profit of Rs. 41,59,57,420/- on sale [deemed sale u/s 80IA(8)] of Rs. 71.54 crore giving net profit rate of 58.14%. Accordingly, I examined the details in relation to profit of Captive Power Plant and the same is discussed hereunder:- Market value of goods (electricity) supplied by assessee As per explanation to section 801 A(8), the market value in relation to goods or services means the price that such goods or services would fetch in the open market. The assessee took this value equal to Rs. 4.52 per unit on the basis that assessee was purchasing power from Jaipur Vidhyut Vitran Nigam Ltd. at this price (excluding taxes). However, this price cannot be treated as market value as this represents purchase price by the assessee but does not represent sale price in th....
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.... However, as per the details furnished by assessee by reconciling the energy consumed on steam generation and recovery from capital power plant/HRSG the recovery from HRSG was equivalent to 26801446 SM^3 of natural gas. Thus, assessee has over calculated the recovery from HRSG by 304718 SM^3 of natural gas this resulted in understatement of cost of gas consumed in captive power plant by Rs. 20,83,589/- (detailed working of process is placed on record which is highly technical). The assessee claimed that steam worth Rs. 18,51,26,755/- was generated through HRSG by recovering energy from exhaust of turbine of Captive Power Plant, however, no expenditure of HRSG was attributed to the same. In my opinion, for recovery of energy in HRSG sum expenditure must have been incurred to recover such huge amount of energy. In my opinion at least 15% of the above amount can be attributed to recovery of energy worth Rs. 18,51,26,755/-. This amount comes to Rs. 2,77,69,013/-. It is held that assessee has under stated the expenditure by this amount also. Conclusion The assessee claimed excess price of sale of power by Rs. 64,02,938/- and under stated the cost of gas by Rs.....
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....e has put restrictions on establishment of power generating units and their functioning. The power generating units are allowed to use power for captive consumption and the surplus available, if any, is to be sold transferred to the State Electricity Boards. Section 43 of the Electricity (Supply) Act, 1948 only authorizes the State Electricity Board to enter into arrangements for purchase and sale of electricity under certain conditions. Section 43A of the Electricity (Supply) Act, 1948 also lays down rules and conditions for determining the tariff for the sale of electricity by a generating company to the State Electricity Boards. A perusal of the same reveals that the tariff is determined on the basis of various parameters contained therein. From the aforesaid, it is evident that on one hand it is only upon granting of specific consent that a private person can set up a power generating unit having restrictions on the use of power generated and at the same time the tariff at which a power generating unit can supply power to the Electricity Board is also liable to be determined in accordance with the statutory requirements. In this context it can be safely deduced that determinati....
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....o operate in the market is beyond my comprehension." From the aforesaid, an analogy that can be safely deduced is that the market value cannot be the result of a transaction which has been entered into between a buyer and a seller in a situation where one of the parties is carrying the compulsive mandate of the Legislature. The situation before us is such wherein the aforesaid analogy can be usefully applied. As we have seen earlier, the price at which the power is supplied by the assessee to the Board is determined entirely by the Board in terms of the statutory regulations. Such a price cannot be equated with the market value as understood for the purposes of section 80-IA(8) of the Act. The stand of the Revenue to the aforesaid effect cannot be approved. 18. Having held so, the natural corollary is to ascertain whether the price recorded by the assessee at Rs. 3.72 pet unit can be considered to be the market value for the purposes of section 80-IA(8) of the Act. The answer, to our mind, is in the affirmative. This is for the reason that the assessee as an industrial consumer is also buying power from the Board and the Board supplies such power at the rate of Rs....
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....in ground No. 8 is what should be the transfer price for the purpose of computing the deduction under section 80-IA within the ambit and parameter of sub-section (8) of section 80-IA. Section 80-IA(8), provides that, where any goods or services held for the purposes of eligible business are transferred to any other business carried on by the assessee, the consideration if any, for transfer, does not correspond to the market value of such goods or services as on the date of transfer, then the Assessing Officer can make adjustments in the profits after determining the market value of such transfer. The said section in other words, empowers the Assessing Officer where the transfer of goods and services as recorded in the accounts of the eligible business does not correspond to the market value, then the profits declared for the eligible business can be adjusted by the Assessing Officer on such basis so as to ensure that the goods and services are transferred to its own unit at the market value of such goods and services. In the Explanation to section 80IA(8), the "market value" has been defined as a price that such goods or services would ordinarily fetch in the open market. Fetching ....
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....ket price because the terms and conditions in which the Karnataka Electricity Board is procuring the electricity from such parties is not known. Further the market price has to be seen as a price at which the customers are getting the electricity in the open market. That should be the criteria for benchmarking the "market price" under section 80-IA(8). As pointed out by learned counsel that in the earlier years, there are two different opinions and conclusions drawn by the Tribunal. First, in the assessment years 1997-98 and 1998-99 which are in favour of the assessee and has attained finality as no further appeal has been filed by the Department and other in the assessment years 1999-2000 and 2000-01. In the subsequent orders, the Tribunal has not taken note of the decision of the earlier orders. Further, the provisions of section 80-IA(8) has also not been considered for arriving at a different conclusion. Under these facts and circumstances, we are rendering our decision purely on the basis of our interpretation of statutory provisions, sans going by any earlier year precedence. Thus, in our opinion, we have to follow the provisions as contained in section 80-IA(8) for determini....
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....r to Electricity Board and not Rs. 3.50 per unit at which assessee, in turn, purchased the power from the Electricity Board for its yarn manufacturing unit. In terms of Electricity (Supply) Act, 1948, legislature has put restrictions on establishment of power generating units and their functioning. Power generating concerns are allowed to use power for captive consumption of their other units, and the surplus, if any, has to be supplied or transferred to State Electricity Boards. Section 43 of Electricity (Supply) Act, 1948 authorizes State Electricity Board to enter into arrangements for purchase and sale of electricity under certain conditions mentioned therein. Section 43A of the said Act also lays down rules and conditions for determining tariff for the sale of electricity by a generating company to State Electricity Boards. The tariff is determined on the basis of various parameters mentioned therein. A private person requires a specific consent to set up a power generating unit and it has to comply with the restrictions for use of power generated and the tariff at which the power can be supplied to Electricity Board. Thus the determining of tariff between assessee and Electri....
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....g to Captive Power Plant. Following that order, we hold that ld CIT(A) was justified in deleting the disallowance of deduction u/s 80IA of the Act." 52. We have heard the rival contentions of both the parties and perused the material available on the record. Firstly, as regards the eligibility to claim of deduction under section 80IA in respect of the Captive Power plant, the same is covered in favour of the assessee by the earlier orders of the Coordinate Bench including that of AY 2007-08 as referred supra. 52.1 Now, coming to the quantum of deduction claimed under section 80IA, the ld CIT(A) has stated that the assessee claimed excess price of sale of power by Rs. 64,02,938/- and under stated the cost of gas by Rs. 20,83,589/- and expenses of Rs. 2,77,69,013/- related to recovery in HRSG were not provided which has resulted in excess claim of 80IA by Rs. 3,62,55,540/-. Firstly, regarding expenses of Rs. 2,77,69,013/-, the assessee has claimed that steam worth Rs. 18,51,26,755/- was generated through HRSG by recovering energy from exhaust of turbine of Captive Power Plant, however, no expenditure of HRSG was attributed to the same. In the opinion of ld CIT(A), for recove....
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....uction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date : Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. Explanation.-For the purposes of this sub-section, "market value", in relation to any goods or services, means the price that such goods or services would ordinarily fetch in the open market We also refer to the amendment brought in by the Finance Act, 2009 in section 80A of the Act where sub-section 6 has been specifically brought on the statue book by the legislation which reads as under: Amendment of section 80A. 29. In section 80A of the Income-tax Act,- (a) after sub-section (3), the following sub-sections shall be inserted, and shall be deemed to have been inserted with effect from the 1st day of April, 2003, namely:- '(....
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....ied, means the price that such goods or services would fetch if these were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or regulatory restrictions, if any; (ii) in relation to any goods or services acquired, means the price that such goods or services would cost if these were acquired by the undertaking or unit or enterprise or eligible business from the open market, subject to statutory or regulatory restrictions, if any. We now refer to the Notes to the clauses to the Finance Bill 2009 and the relevant notes in relating to section 80A(6) reads as under: "The proposed sub-section (6) provides that notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of Chapter VIA under the heading "C-Deductions in respect of certain incomes", where any goods or services held for the purposes of the undertaking or unit or enterprise or eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to....
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....ductions under the various provisions referred to in (i) above, shall not exceed the profits and gains of the undertaking or unit or enterprise or eligible business, as the case may be; (iii) no deductions under the various provisions referred to in (i) above, shall be allowed if the deduction has not been claimed in the return of income; These amendments will take effect retrospectively from the 1st April, 2003, and will accordingly apply in relation to assessment year 2003-04 and subsequent years. Further it is also proposed to amend section 80A to provide that the transfer price of goods and services between the undertaking or unit or enterprise or eligible business and any other undertaking or unit or enterprise or business of the assessee shall be determined at the market value of such goods or services as on the date of transfer. Further, the expression "market value" has been defined to mean,- (a) in relation to any goods or services sold or supplied, means the price that such goods or services would fetch if these were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or r....
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....2009, assessment order was thereafter passed on 31.12.2010 and subsequently, the order of the ld CIT(A) was passed on 30.03.2012. Accordingly, the proceedings for the impunged assessment year were pending before the Assessing officer and the provisions of section 80 A(6) will apply in the instant case. It is however noted that the authorities below have not examined the matter after taking into consideration the provisions of section 80A(6) of the Act. As we have stated above, the provisions of section 80A(6) will override the provisions of section 80IA(8) read with the explanation thereto. If we examine and compare the provisions of section 80IA(8) and 80A(6), it is noted are as follows: 1) Unlike section 80 IA(8), section 80A(6) starts with non obstante clause and provides that notwithstanding anything contrary contained in chapter VI-A, application of arm's length price is mandatory for computing profits eligible for deduction, of the eligible unit. 2) Market value, in section 80-IA(8) is defined commonly both for transfer and acquisition by the eligible unit. Section 80A(6) provides for separate market value with reference to transfer or acquisition by the ....
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....market rate at which the power plant of the assessee could have sold its production in the open market. In the open market the buyer would obviously be a distribution company or a company engaged both in generation and distribution. Therefore, the rate at which electricity is sold to any such company can only be the market rate contemplated by the section. The judgment in the case of Thiru Arooran Sugars Ltd. (supra) has no manner of application for the simple reason that the Court in that case was concerned with the question as to the market value of sugarcane grown by the assessee at home. The Supreme Court was of the opinion that the sugarcane grown at home would be deemed to have been sold to the sugar mill at the same rate at which sugar cane was purchased by the sugar mill. That obviously is correct because if the sugarcane grown at home had not been sold to the sugar mill of the assessee itself, the sugarcane would have been sold in the open market. The rate of sale in the open market would be the same at which sugarcane was purchased by the sugar mill of the assessee. But in the case before us the electricity generated by the assessee could not be sold to anyone other than ....
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....examine the matter a fresh taking into consideration the above discussions. 52.3 In light of above discussions, common ground no. 1 of the Revenue's appeal as well as assessee's appeal are partly allowed for statistical purposes. 53. The 2^nd ground of the assessee' appeal is against disallowing the claim of Rs. 28,12,000/- on the ground of notional interest in respect of investment in subsidiary companies without providing any nexus between investments and loans. The Assessing Officer has observed that as per details filed, it is seen that the assessee company has made huge investment with subsidiary company. The assessee submitted that the investment during the year were made out of cash surplus earned by the company during the year and has been shown as investment. In support of above contention, the assessee has filed copy of annual accounts of all the three companies. The reply of the assessee was considered by the AO and he observed that the assessee company has made further investment with subsidiary company. As the subsidiary company is a separate entity and doing its own business the investment made by assessee company without charging any interest is not allowabl....
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....ction 40(a)(ii) of the Act. The facts and the submissions of the assessee before the ld. CIT(A) is as under:- "That the assessee has debited the Profit and Loss Account for the year ended on 31.03.2008 by an amount of Rs. 9490.53 lac under the head "Income Tax", the break-up of which is as under:- Sl. No. Description Income Tax Surcharge Education Cess Secondary & Higher Education Cess Total Education Cess Grant Total (Tax surcharge & Cess) (1) (2) (3) (4) (5) (6) 7=(5)+(6) (8)=(3)+(4)+(7) 1 Current tax 8331.61 833.16 183.29 91.65 274.94 9439.71 2 Tonnage tax 44.85 4.49 0.99 0.49 1.48 50.82 3 Total 8376.46 837.65 184.28 92.14 276.42 9490.53 The assessee is of the considered opinion that the education cess and secondary & higher education cess (collectively called as education cess) are not a "tax" and hence not disallowable u/s 40(a)(ii) of the Act on the basis of following submission:- (1) That on a plain reading of the above provision of section 40(a) (ii), it is evident that a sum paid of any rate or tax is expressly disallowed by thi....
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....er this Act in respect of (a) any sum payable by the assessee by way of 'tax, duty, cess or fee' ...., which makes it very clear that the cess is allowable. However, it is allowable on payment basis as prescribed. (5) That the work 'cess' is generally used when the levy is for some special purpose, which may be named as health cess, education cess, road cess etc. (6) That the term "tax" has been defined in section 2(43) of the Act to include income tax and from the assessment year 2006-07 also fringe benefit tax payable under section 115W. Section 4 deals with charge of income tax and it says that where any Central Tax enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of this Act in respect of the total income. Apparently, education cess cannot be said to be in the nature of income tax or additional income-tax for the purpose of the Act for the purpose of section 40(a)(ii). (7) That education cess is a levy under the Finance Acts for the spec....
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.... Education cess is dealt separately in sub-section (11) of section 2 of the Finance Act, 2006 [2006] 282ITR (St.) 14 at page 20, which reads as under: "(11) The amount of income-tax as specified in sub-section (1) to (10) and as increased by a surcharge for purpose of the Union calculated in the manner provided therein, shall be further increased by an additional income-tax', so as to fulfill the commitment of the Government to provide and finance universalized quality basic education, calculated at the rate of two per cent of such income-tax and surcharge." It may be noted that the surcharge on income-tax finds place in the First Schedule [2006] 282 ITR (St.) 14 at page 67, but that is not the case so far education cess is concerned. Therefore, education cess on this reasoning also cannot be treated as tax. It cannot at all be treated as tax leviable on the basis of the profit of the business within the meaning of section 40(a)(ii). Based on the above discussion the assessee's claim for deduction of Education cess of Rs. 2,41,59,485/- computed as under should be allowed as a deduction from Total Income:- Sl. No. Description Amount in Rs. ....
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....n that a cess cannot be disallowed by invoking section 40(a)(ii). If there was any doubt, the same is set at rest by CBDT Circular No.91/58/66 ITJ(19) dt. 18-5-1967 wherein it has been clarified that the effect of the omission of the word "cess" from sec. 40(a)(ii) is that only taxes paid are to be disallowed in the assessment for the years 1962-63 onwards. Thus, as per the said Circular, the education cess cannot be disallowed and as the circular binds the tax authorities a position contrary thereto could not have been taken by the revenue. 2. Case of Duncans Industries Ltd. vs. Joint Commissioner of Income-tax [2003] 87 ITD 457 (Kol.): In the above case, the Kolkata Bench of Hon'ble Tribunal held that a cess does not fall within the prohibitory items of deduction under section 40(a)(ii) and also that a cess levied under the West Bengal Rural Employment Production Act, 1976 and the West Bengal Primary Education Act, 1973 is permissible as a deduction in computing the income from business. The Tribunal in the said decision has dealt with the issue in great details with reference to section 10(4) of the 1922 Act, the Circular being F. No. 91/58/66/- ITJ(19), dated ....
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....ance of deduction in respect of payment of tax, duty, cess or fee by whatever name called. This section reads as under:- "43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) to (f) ** ** ** shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him:" Since under section 43B the payment of cess is also provided to be allowed as a deduction in the year of payment, by implication it becomes abundantly clear that cess is permissible as a deduction in computing the profits and gains of business of which deduction is regulated under section 43B." In Para 17 of the said decision it has been stated - "17. The issue as to whether the tax is levied by the State Government in respect of the tea grow....
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....oor children of India." Attributing a different intent other than what had already been specified by Finance Minister with great respect is not correct. 4. Section 43B: The amendment brought about in section 43B is also indicative of the distinction the Act makes between a tax and a cess. Section 43B of the IT Act, 1961 (Act) as it now stands provides that notwithstanding anything contained in any other provision of the Act, any sum payable by the assessee by way of tax, duty, cess or fee by whatever name called under any law, is deductible upon actual payment. Hence, education cess can be deducted on payment basis only irrespective of the year to which it relates. Further section 43B starts with a non-obstante clause notwithstanding anything contained in any other provision of this Act a deduction otherwise allowable under this Act in respect of (a) any sum payable by the assessee by way of "tax, duty, cess or fee" ...which makes it very clear that a cess is allowable as a deduction in computing the business income. However it is now allowable only on a payment basis. When the section was inserted by the Finance Act 1983, it only provided for an allowance on a ca....
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.... union rate was imposed under a Village Self Government Act upon the assessee as the owner or occupier of business premises, and the quantum of the rate was fixed after consideration of the circumstances of the assessee, including his business income. The Privy Council held that the rate was not assessed on the basis of profits and was allowable as a business expense. Following this decision, the Supreme Court held in Jaipuria Samla Amalgamated Collieries Ltd vs. CIT 82 ITR 580 (SC) that the expression profits or gains of any business has reference only to profits and gains as determined in accordance with section 29 of this Act and that any rate or tax levied upon profits calculated in a manner other than that provided by that section could not be disallowed under the sub-clause. Similarly this sub-clause is inapplicable and a deduction should be allowed, where a tax is imposed by a District Board on business with reference to 'estimated income' or by a municipality with reference to 'gross income'. Besides, unlike section 10(4) of the Income-tax Act, 1922, this sub-clause does not refer to cess and, therefore, even if a cess is levied upon or calculated on the basis of business p....
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....of taxable income, it has specially provided for the same. The instances are amounts paid as wealth-tax, securities transaction tax and fringe benefit tax in section 40 of the IT Act. For example if fringe benefit tax is also a tax within the meaning of section 40(a)(ii), then there was no necessity of specifically mentioning it for disallowance in section 40(a)(ic). Likewise security transaction tax is disallowable under the specific provisions of section 40(a)(ib). Had there been any intention of disallowing education cess, such provision would have been specifically been enacted which has not been done. 13. Education cess is also on Indirect Taxes and is also allowed: "Education cess" in consonance with Finance Minster's speech mentioned supra in para 6 above, is not only recovered based on the income-tax computed on the total income but also on indirect taxes such as customs duty, excise duty and service tax. In the absence of specific provisions in the Income-tax Act, the education cess computed as a percentage of the income-tax is not disallowable as the education cess on Indirect Taxes is also allowed. 14. Separate payment details of education cess....
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.... UNION subject to the provisions of sub sections (2) and (3): Section 2 (1) of the Finance Act, 2006 provides that subject to the provisions of SUBSECTIONS (2) & (3) for the assessment year commencing on the first day of April INCOME-TAX shall be charged at the rates specified in Part I of the First Schedule and such TAX SHALL BE INCREASED BY A SURCHARGE FOR THE PURPOSES OF THE UNION calculated in each case in the manner provided therein. Now it may be noted that subsections (2) and (3) of section 2 of the Finance Act as also Part I of the First Schedule do not deal with education cess on Income-Tax. In fact it is the First Schedule which prescribes the rate of Income Tax as also surcharge. The Education Cess is dealt separately in sub sections (11) of section 2 of the Finance Act, 2006 [282 ITR (St.) 14 at page 20], which reads as under : "(11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the "Education Cess on income tax", so as to fulfil the commitment of the Governm....
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....a double advantage. Conclusion: Based on the above, we are of the view that the claim of the assessee in respect of education cess is allowable while computing the taxable income. It is not a tax but a special levy for education and hence cannot be disallowed. 61. At the outset, the ld. CIT DR has submitted as under:- "1. Regarding the assessee's ground that the amount of education cess is deductible, it is humbly stated that the background relating to introduction of the said cess needs to be examined. The said cess was introduced by Finance Bill, 2004-05, the relevant portion of which is as follows: CHAPTER VI EDUCATION CESS "81.1 Without prejudice to the provisions of sub-section (11) of section!, there shall be levied and collected, in accordance with the provisions of this chapter as surcharge for purposes of the Union, a cess to be called the Education Cess, to fulfill the commitment of the Government to provide and finance universalized quality basic education." It is clear that the said cess is introduced as a SURCHARGE, which is admittedly not deductible. Copy of relevant portion of the Finance Bill is enclosed as Annexur....
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....the total amount of penalty does not exceed the amount of tax in arrears." The above said provision makes it clear that penalty is leviable in case of default in payment of "tax". Such tax includes any demand relating to unpaid cess also, indicating that unpaid cess is treated as unpaid tax and is visited with all consequences of non-payment of demand. There is no separate machinery in the Act for recovery of unpaid cess and imposition of interest and penalty in case of default in payment of unpaid cess. This indicates that cess is a part of tax and all recovery mechanisms & consequences pertaining to recovery of tax apply to recovery of cess also without explicit mention of the word "cess" in the foregoing provisions. Hence, drawing a parallel, no explicit mention of "cess" is required in sec. 40a(ii) for making disallowance thereof. 5. In view of the above submissions, it is humbly requested not to allow the appellant's plea for deduction of the amount of Education cess." 62. We have heard the rival contentions of both the parties and perused the material available on the record. In order to appreciate the alternate contentions raised by both the parties,....
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....ax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) shall be increased by a surcharge for purposes of the Union calculated in each case in the manner provided therein. (2) In the cases to which Paragraph A of Part I of the First Schedule applies, where the assessee has, in the previous year, any net agricultural income exceeding five thousand rupees, in addition to total income, and the total income exceeds fifty thousand rupees, then,- (a) the net agricultural income shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricultural income were comprised in the total income after the first fifty thousand rupees of the total income but without being liable to tax], only for the purpose of charging income-tax in respect of the total income; and (b) the income-tax chargeable shall be calculated as follows:- (i) the total income and the net agricultural income shall be aggregated and the amount of income-tax shall be determined in respect of the aggregate income at the rates specified in the said Paragraph A, as if such aggregate income were the total income; (ii) the net agri....
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....b-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of ten per cent of such income-tax. In cases in which tax has to be charged and paid under section 115-O or sub-section (2) of section 115R of the Income-tax Act, the tax shall be charged and paid at the rate as specified in those sections and shall be increased by a surcharge for purposes of the Union, calculated at the rate of two and one-half per cent of such tax. In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 194BB, 194D and 195 of the Income-tax Act, at the rates in force, the deductions shall be made at the rates specified in Part II of the First Schedule and shall be increased, by a surcharge for purposes of the Union, calculated in each case, in the manner provided therein. (6) In cases in which tax has to be deducted under sections 194C, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194LA, 196B, 196C and 196D of the Income-tax Act, the deductions shall be made at the rates specified in those sections and shall be increased by a surcharge for purposes of the Union, calculated,- (a) in the case of every individual, Hindu undivided fam....
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.... computed at the rate or rates specified in Part III of the First Schedule and such tax as reduced by the rebate of income tax calculated under Chapter VIII-A of the said Act shall be increased by a surcharge for purposes of the Union, calculated in each case in the manner provided therein: Provided that in cases to which the provisions of Chapter XII or Chapter XII-A or section 115JB or sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act apply, "advance tax" shall be computed with reference to the rates imposed by this subsection or the rates as specified in that Chapter or section, as the case may be: Provided further that the amount of "advance tax" computed in accordance with the provisions of section 111A or section 112 of the Income-tax Act shall be increased by a surcharge for purposes of the Union as provided in Paragraph A, B, C, D or E, as the case may be, of Part III of the First Schedule: Provided also that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115E and 115JB of the Income-tax Act, "advance tax" computed under the first ....
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....tural income as so increased at the rates specified in the said Paragraph A, as if the net agricultural income were the total income; (iii) the amount of income-tax or "advance tax" determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax or, as the case may be, "advance tax" determined in accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax or, as the case may be, "advance tax" in respect of the total income: Provided that the amount of income-tax or "advance tax" so arrived at, as reduced by the rebate of income-tax calculated under Chapter VIII-A of the said Act, shall be increased by a surcharge for purposes of the Union calculated in each case, in the manner provided therein. (11) The amount of income-tax as specified in sub-sections (4) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the "Education Cess on income-tax", so as to fulfill the commitment of the Government to provide and finance universalised quality basic education, calcula....
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....r purposes of the Union. Further, in case of a firm, a local authority, a co-operative society and a company, the tax so computed shall be enhanced by a surcharge of two and one-half per cent for purposes of the Union. II. Rates for deduction of income-tax at source during the financial year 2004-05 from income other than "Salaries" The rates for deduction of income-tax at source during the financial year 2004-05 from incomes other than "Salaries" have been specified in Part II of the First Schedule to the Bill and apply to income by way of interest on securities, interest other than "interest on securities", insurance commission, winnings from lotteries or crossword puzzles, winnings from horse races and income of non-residents (including nonresident Indians). The rates are the same as those specified in Part II of the First Schedule to the Finance Act, 2003. The tax deducted at source in each case shall be increased by a surcharge for purposes of the Union to be calculated as follows: (i) in the case of every individual, Hindu undivided family, association of persons and body of individuals at the rate of ten per cent, of such tax where the income or th....
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....r sub-section (11) of section 2 and this Chapter for the purposes specified in sub-section (1), as it may consider necessary. Education Cess on excisable goods. 83. (1) The Education Cess levied under section 81, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), being goods manufactured or produced, shall be a duty of excise (in this section referred to as the Education Cess on excisable goods), at the rate of two per cent, calculated on the aggregate of all duties of excise (including special duty of excise or any other duty of excise but excluding Education Cess on excisable goods) which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue), under the provisions of the Central Excise Act, 1944 (1 of 1944) or under any other law for the time being in force. (2) The Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 (1 of 1944) or any other law for the time being in force. (3) The provisions of the Central Excise Act, 1944 (1 of 1944) and the rules made ther....
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....tion Cess on taxable services) at the rate of two per cent, calculated on the tax which is levied and collected under section 66 of the Finance Act, 1994 (32 of 1994). (2) The Education Cess on taxable services shall be in addition to the tax chargeable on such taxable services, under Chapter V of the Finance Act, 1994 (32 of 1994). (3) The provisions of Chapter V of the Finance Act, 1994 (32 of 1994) and the rules made thereunder, including those relating to refunds and exemptions from tax and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Education Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules, as the case may be. We now refer to the Hon'ble Finance Minister's speech while introducing the Finance Bill 2004 in the Parliament: "22. In my scheme of things, no issue enjoys a higher priority than providing basic education to all children. The NCMP mandates Government to levy an education cess. I propose to levy a cess of 2 per cent. The new cess will yield about Rs. 4000 - 5000 crore in ....
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....t taxes as well as indirect taxes on goods and services, education cess has been defined as tax. The speech of the Finance Minister therefore has to be read and understood in the context of the Finance Bill which we have discussed above. Though the levy has been termed as a education cess, what is relevant to determine is its exact nature rather than its nomenclature. The nature of education cess is clearly tax and nothing else. Now looking at the issue from the angle of recovery of education cess, there is no separate machinery in the Income tax Act for recovery of unpaid education cess and imposition of interest and penalty in case of default in payment of unpaid cess. This also clearly indicates that cess is a part of tax and all recovery mechanisms & consequences pertaining to recovery of tax apply to recovery of cess also without explicit mention of the word "education cess". Infact, clause 83 (3) of the Finance Bill 2004 makes this position crystal clear when it states that "the provisions of the Central Excise Act, 1944 and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in ....
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....on or is assessed at a proportion of or on the basis of such profits or gains. In other words, sub-section (4) was meant to exclude a tax or a cess or rate the assessment of which would follow the determination or assessment of profits or gains of any business, profession or vocation in accordance with the provisions of section 10 of the Act." "The road cess and public works cess are to be assessed on the annual net profits under sections 72 to 76 of the Cess Act, 1880. The net annual profits have to be calculated on the average of the net profits for the last three years of the mine or the quarry and if the annual net profits of the property cannot be ascertained in the aforesaid manner then it is left to the Collector to determine the value of the property first in such manner as he considers expedient and determine 6 per cent. on that value which would be deemed to be the annual net profits. The Cess Act of 1930 follows the same pattern so far as the ascertainment of annual net profits is concerned. These profits arrived at according to the provisions of the two Cess Acts can by no stretch of reasoning be equated to the profits which are determined under section 10 of t....
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....n and assessment is based on the profits or gains of business, computed in accordance with the provisions of the Income tax Act, could not be allowed as a deduction under section 40(a)(ii) of the Act. The above view also find supports from the decision of the Coordinate Bench in case of Sesa Goa Ltd Vs JCIT [2013] 60 SOT 121 (Panaji) wherein it was held as under: "35. We heard the rival submissions and carefully considered the same. In our opinion, education cess and secondary higher education cess levied by the assessee has been collected as part of the income-tax and the provisions of section 40(a)(ic) & (ii) are clearly applicable and the assessee is not entitled for the deduction. The said payment is not a fee but is a tax. In case of fees, payment is made against getting certain benefit or services while tax is imposed by the Government and is levied for which the person who pay the tax is not promised in return to get any benefit or service. The assessee is not getting any benefit or services in return by making the payment towards the education cess and secondary higher education cess. Therefore, it cannot be said that it is an expenditure incurred wholly and exc....