TaxTMI 
TaxTMI 
2020 (8) TMI 719
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....Assessee has raised following grounds of appeal:- 1. The learned CIT(A) erred in rejecting the claim of cess of Rs. 21,72,114/- incurred during the year under consideration and which was claimed during the assessment proceedings. That on the facts of the case and in law the appellant is entitled to deduction of cess which is prayed to be now allowed. 2. The appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessary so arises. 3. Brief facts of the case as culled out from the records are that the appellant company is engaged in the business of coal trading and operates in most of the states of India. The appellant ....
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.... in the return of income. (i) Hon'ble Apext Court in the case of CIT Vs. Mahalaxmi Sugar Mills Co. Ltd 58 CTR 0138. (ii) Hon'ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers & Shareholders (P) Ltd 349 ITR 0336 - Goetz India (iii) Hon'ble Indore I.T.A.T.in the case of ACIT vs. Admanum Finance Limited, Indore in ITA No.389/Ind/2012, 807 & 808/Ind/2014. (iv) Hon'ble Punjab and Haryana High Court in the case of CIT V/s Ramco International (2011) 332 ITR 306. For the proposition that the cess is an allowable expenditure and is not hit by the disallowance contemplated u/s 40(1)(ii) of the Act. (v) Hon'ble Rajasthan High Court in the case of Chambal Fertilizers a....
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.... & 24/Ind/2019 wherein we have decided in favour of the assessee allowing the claim of education cess to be allowed as an expenditure after relying the judgment of Hon'ble High Court of Rajasthan in the case of Chambal Fertilizers and Chemicals Limited (supra) observing as follows:- 38. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments relied by the Ld. Counsel for the assessee. The other issue commonly raised by the assessee for Assessment Year 2013-14 is that whether the education cess paid by the assessee along with the income tax and surcharge is deductible as expenditure u/s 37 or it is not deductible as per provisions of Section 40(a)(ii) of the Act which ref....
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.... introduced in the Parliament stood as under: "(ii) any sum paid on account of any cess, rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains". When the matter came up before the Select Committee, it was decided to omit the word 'cess' from the clause. The effect of the omission of the word 'cess' is that only taxes paid are to be disallowed in the assessments for the year 1962-63 and onwards. 3.The Board desire that the changed position may please be brought to the notice of all the ITOs so that further litigation on this account may be avoided." Reliance were placed by the Ld. Counsel for the asse....
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....fore, one needs to read the words "expenditure incurred" in Section 14A in the context of the scheme of the Act and, if so read, it is clear that it disallows certain expenditure incurred to earn exempt income from being deducted from other income which is includible in the "total income" for the purpose of chargeability to tax. The views expressed in Walfort Share and Stock Brokers P.Ltd (supra), in our considered opinion, year again militate against the plea urged on behalf of the assessee. 34. For the aforesaid reasons, the first question formulated in the appeal has to be answered against the Appellant-Assessee by holding that Section 14A of the Act would apply to dividend income on which tax is payable Under Section 1....