AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 321
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.... - HTSL is not in the business of manufacturing or production of article or thing and is a service provider; - HTSL does not pay wages to its employees; and - HTSL does not employ any workmen within the definition of Industrial Disputes Act, 1947. 3. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the CIT(A). Before the CIT(A), the assessee was specifically asked to produce the appointment letters of the employees as well as the hierarchy of the employees and the management. However, according to the CIT(A), these details were not produced despite of being given repeated opportunities and time of more than 5 months. The CIT(A) observed that the above documents could only have shown as to whether these employees were working in any supervisory capacity or not. On perusal of the designation of these employees, the CIT(A) found that the same include Principal Consultants, Senior Programmer, Lead Consultants, Team Leader, Technical Leader, Senior Engineer, Senior Sourcing Engineer, Senior Consultant, Engineer, Technology Specialist etc. and the salaries paid to several of these employees exceeded Rs. 10,00,000/-. ....
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.... relation to which deduction is to be claimed. In the case under consideration, the CIT(A) found that out of these 89 employees, 68 had resigned on or before 25.01.2010, as such these employees did not complete period of 300 days in the employment and so, the salary of Rs. 1,59,48,714/- paid to these employees cannot be considered for the purpose of computation of deduction under Section 80JJAA of the Act. 3.2 Similarly in relation to deduction claimed for the first time under Section 80JJAA of the Act during A Y 2009-10, the CIT(A) observed that deduction could be claimed second time during the year under consideration. On perusal of the details furnished by the assessee vide letter dt 12.10.2017, the CIT(A) found that during the year under consideration the deduction (2nd installment) claimed by the assessee includes deduction in respect of 66 such employees in relation to A Y 2009-10, who had left employment during FY 2009-10 and the assessee had claimed deduction in relation to salary of Rs. 1,91,25,302/- paid to these 66 employees. The CIT(A) observed that as per provisions of Section 80JJAA of the Act, deduction can be claimed in respect of only such employees who satisfy ....
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.... paid to the new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to the previous year in which such employment is provided." 13. The Explanation to section 80JJAA defines regular workmen which does not include- (a) Casual worker. (b) Any other "workmen employed for a period of less than 300 days during the previous year. (c) A workmen employed through contract labour. The definition of new workmen in section along with explanation clearly provides that deduction will be available only if the new workmen is employed for a period of 300 days in the previous year and there is no reference to the new employees employed in the preceding year for eligibility u/s 80JJAA. Form No.10DA which is required for making claim u/s 80JJAA also does not have any column in respect of employee employed during the preceding year. The argument taken by Ld AR that employees employed in the preceding year who had not completed 300 days in that year should be taken in the current year when he completes 300 days is of no force. In view of the above, 'we do not see any reason to in....
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.... brief are that the assessee claimed deduction under section 80JJAA of the Act of Rs. 52,75,173. According to the Assessing Officer, the additional wages means the wages paid 10 workmen in excess of 100 workmen employed during the year. In effect the workmen employed during the year should be more than 100 and the wages paid to the worker in excess of 100 workers shall be additional wages. The Assessing Officer further noted that 236 new regular workmen were employed by the assessee during the year under consideration. He, therefore, deduction of 30 per cent of additional wages paid to 136 new workmen. 3. The matter was carried in appeal before the ld. CIT (Appeals). It was submitted that section 80JJAA of the Act was inserted by the Finance (No.2) Act, 1998 with effect from 1-4-1999 with an object to promote employment at a large scale and 10 provide tax incentives to the employers employing a large number of persons. The Assessing Officer had also not disputed the eligibility of the assessee to claim deduction under section 80JJAA of the Act. Out of Rs. 52,75,173, the amount of Rs. 7,69,770 relates to additional wages paid to the workmen employed in previous yea....
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....orkmen in excess of 100 workmen employed during the previous year. Since 236 new regular workmen were employed during the year under consideration, the wages paid to 100 regular workmen was not to be considered for the purpose of computing 30 per cent of additional wages. The deduction was available at the rate of 30 per cent of additional wages paid to the remaining 136 regular workmen. He accordingly upheld the disallowance made by the Assessing Officer in respect of a sum of Rs. 19,29,662 also. 5. Before us, the ld. AR of the assessee submitted that deduction under section 80JJAA of the Act is available to an Indian company to the extent of 30 per cent of additional wages paid to new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to previous year in which such an employment is provided. The expressions "additional wages" and "regular 'workmen" have been defined in the Explanation to section 80JJAA of the Act. The ld. counsel for the assessee further submits that under proviso to clause (i) of the Explanation in case of an existing undertaking additional wages will be NIL if the increase....
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....mation with industrial undertaking; and (ii) the assessee furnishes along with the return of income a report of the accountant giving such particulars as prescribed in the report. Explanation 10 section 80JJAA defines the terms "additional wages", "regular workman" and "workman" which reads' as under :- The language employed in the Explanation is plain and clear. For the purposes of section 80JJAA every employee is not a workman and every workman is not a regular workman. Clause (s) of section 2 of the Industrial Disputes Act, 1947 defines the term "workman" as below :- 7. On the basis of definition of word "workman" as per section 2(5) of the Industrial Disputes Act, 1947 and words "regular workman" of clause (ii) of the Explanation to section 80JJAA of the income-tax Act, 1961, all employees in an undertaking can be grouped in the following categories: (a) Employees employed in managerial or administrative capacity. It also includes employees employed in supervisory capacity and drawing salary exceeding Rs. 1,600 per month. (b) Casual workman and workman employed through contract labour but do not include employees coming in (a). (....
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....an 100. If yes, then the wages paid to new regular workmen falling in category (d) in excess of 100 workmen employed during the year has to be determined. 30 per cent of the wages determined in the second step is the amount of deduction under section 80JJAA of the Act. For computing deduction under section 80JJAA of the Act in case of an existing industrial undertaking, first we have to find out whether number of workmen [category (b) + (c) + (d )] employed during the previous year is more than 100. If answer is yes, then the number of regular workmen falling in category (d) newly employed during the year is to be determined,' and whether it is equal to or more than 10 per cent of existing number of workmen [i.e., category (b) + (c) + (d)] employed in the undertaking on the last day of the preceding year. If answer to this question is yes, then the wages paid to new regular workmen [i.e., category (d)] in excess of 100 workmen employed during the year is to be determined. 30 per cent of wages so determined will be the amount of deduction under section 80JJAA of the Act. 9. There is no dispute that the case of assessee is of an existing undertaking. Therefore, for compu....
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....loyed as on the last day of the preceding year was less than 10 per cent. From the details given in the order of the ld. CIT (Appeals) we find that the increase in the number of regular workmen employed during the year 2000-01 has been determined with reference to existing regular workmen employed as on the last day of the preceding year and not with reference to the existing number of workmen employed as on that date. The number of workmen employed discussed as above is normally higher than the regular workmen as it takes into its fold the casual workmen, the labour hired on contract basis, the workmen employed less than 300 days and also the workmen employed for 300 days or more. When the percentage increase with reference to regular 'workmen is less than 10 per cent, it will be further less when the percentage increase will be worked out with reference to the total number of workmen employed. Therefore, in any case the assessee will not be eligible for deduction in respect of regular workmen employed during the assessment year 2001-02. The order of CIT(A) is upheld in this regard. 12. In the result, the appeal filed by the assessee, is partly allowed for statistical....
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....workmen employed during the year. The CIT(A) gave an example that if the workers of category band a are 80 and regular workmen as in the category d are 30 workmen, then total number of workmen will be 110. Here, the CIT(A) observed that the benefit of deduction Section 80JJAA of the Act will be available in relation to 10 regular workmen only if condition of proviso is also satisfied. Similarly, in another example, the CIT(A) explained that if the workers of category b and c are 100 and regular workmen as in the category d are 30, then total no. of workmen will be 130. Here, according to the CIT(A), the benefit of deduction Section 80JJAA of the Act will be available in relation to all the 30 regular workmen. 4. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. The learned Authorised Representative relied on the order of the co-ordinate bench of this Tribunal in the case of Manhattan Associates (India) Development Centre Pvt. Ltd. in ITA No.150/Bang/2019 dt.23.10.2019 wherein it was held that the assessee would be eligible for deduction under Section 80JJA of the Act provided fulfillment of the following conditions : • The eligible assessee ....
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....ttracted. 4.2 In this context, the Ld. AR drew our attention to Circular No 772 dated 23-12-1998 wherein the objective of introducing section 80JJAA of the Act was explained as follows: "Despite increase in employment of new workmen, economic growth and the employment growth rate have not been high enough to absorb addition to the work-force. In order to encourage employers to create more employment opportunities, it was considered necessary to provide fiscal incentives in the Income tax Act. With this objective, a new section 80JJAA has been inserted in the Income tax Act". 4.3 Further, the Ld. AR referred to the speech of the Finance Minister while presenting the Finance (No 2) Bill, 1998 by observing as follows: - "other areas in the social sector for which new tax incentives are proposed or existing ones being increased include employment generation, improvement of environment.......... I propose to allow a new deduction to companies with a view to encourage them to employ additional work force. An amount equal to 30 per cent of additional wages paid to the new workmen will be allowed as a deduction against profits, subject to certain conditions". (Empha....
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....e benefit, the term 'worker' shall have the same meaning as 'workman' as defined in the Industrial Workers Disputes Act. Such an employee should be a regular worker and should have been employed for a period of at least 300 days in a year, and the return should be accompanied by particulars certified by the tax auditor in the prescribed form." (emphasis supplied) 4.6 Based on all of the above, the Ld. AR submitted that section 80JJAA of the Act was introduced to facilitate generation of new employment opportunities. An incentive was, therefore, offered to the assessee giving employment to a specified minimum number of employees. The Ld. AR submitted that the intention of the Parliament is to provide long term and sustainable employment in industrial undertakings and the memorandum states that an employer should employ regular workmen for a period of 300 days in a year. Therefore, according to the Ld. AR, the year must be counted from the date of employment and not as the previous year. The Ld. AR submitted that it was not the intention of the legislature to restrict or circumscribe the benefit of the workmen for 300 days in the previous year without defining the parameter while ....
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.... tested in the first year of the claim of deduction and once deduction is allowable in the first year then, 30% of such additional wages is allowable as deduction in each of the subsequent two years. As we have already discussed in the facts emerging from the record, the Assessing Officer has not disputed the completion of 300 days of employment by these new regular workmen employed by the assessee during the earlier two years and therefore once the said condition is satisfied, the condition of continuity in employment does not emanate from the provisions of section 80JJAA of the Act. Accordingly, we do not find any reason to interfere with the impugned order of the CIT (Appeals) qua this issue." 5. On the other hand, the ld. DR submitted that the claim of the assessee under Section 80JJA of the Act is in relation to the regular workmen employed during the year which needs to be disallowed as it does not specify the basic condition laid down in the proviso to Expln.2 to Section 80JJA of the Act. According to the Ld. DR, in the case under consideration, the assessee is an existing undertaking and thus it is required to satisfy the condition laid down in the proviso i.e. increase ....
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....ee's own case for Asst. Year 2007-08 in IT(TP)A No.1344/Bang/2011 dt.28.3.2013, wherein at para 36 thereof it was held as under :- " 36. We also find that the Tribunal in the case of Texas Instruments P. Ltd. In ITA No.1/Bang/2011, dt.7.9.2012, for the assessment year 2005-06, at para No.10.7, has remitted the matter back to the CIT(A) for fresh consideration. Hence, we are inclined to restore this issue back to the file of the A.O. with a direction to reduce the issue be passing a speaking order, of course, after giving effective opportunity of hearing to the assessee. The assessee is also hereby directed to co-operate with the A.O. by producing the details as called for by him. It is ordered accordingly." 11.5.2 Following the above referred decision of the co-ordinate bench of this Tribunal in the assessee's own case for A.Y. 2007-08 (supra), we are of the considered view that it would be just and fair to restore this issue, of deduction u/s. 80 JJA of the Act, back to the file of the A.O. with the direction to re-examine and re-adjudicate this issue by passing a reasoned and speaking order; only after affording the assessee adequate opportunity of being heard a....
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....considering that law does not compel a man to do what he cannot possibly perform. She submitted that the learned CIT(A) ought to have appreciated that it was impossible for the assessee to deduct the tax on payments due to retrospective amendment in the Act and recover the same from the vendors since the payments have already been made before the amendment was introduced in the Act. She further submitted that the learned CIT(A) has erred in law in mentioning that software expenditure needs to be disallowed as prior period expenditure if the invoice relates to earlier year without appreciating that the expenditure has to be accounted on accrual basis irrespective of the year in which invoice has been raised. 9. The learned Departmental Representative submitted that the payment of AMC attracts the provisions of Section 194C/195 of the Act. The Ld. DR submitted that the assessee itself has deducted tax at source on majority of such payments. According to the Ld. DR, as regards the applicability of second proviso to Section 40(a)(ia) of the Act read with first proviso to Section 201(1) of the Act, the same is not automatic. The Ld. DR submitted that as per first proviso to Section 2....
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....xpenditure on purchase of software as revenue in nature. Since the assessee has failed to deduct tax at source on the said payment, the learned CIT(A) confirmed the disallowance made u/s 40(a)(ia) of the Act. 10. Since the revenue has not filed any appeal challenging the order passed by Ld CIT(A), the issue that requires consideration is whether the disallowance of cost of software u/s 40(a)(ia) of the Act is justified or not. The Ld A.R submitted that the decision holding that the payment made towards purchase of software is in the nature of Royalty attracting TDS provisions, was rendered by the Hon'ble Karnataka High Court in the case of Samsung Electronics Company Ltd. (supra) on 15.10.2011, whereas the impugned transaction of purchase of software has taken place before 31.03.2011. The Ld A.R submitted that the law relating to nature of software purchases was pronounced by the Hon'ble High Court only on 15.10.2011, where as the impugned transaction has taken place prior to that. She submitted that before the decision of Hon'ble High Court, the assessee was under bonafide belief with the support of certain case laws that there was no requirement to deduct tax at source f....
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....rned Authorised Representative of the assessee has submitted that prior to the decision of Hon'ble jurisdictional High Court in the case of CIT Vs. Samsung Electronics Co. Ltd. 320 ITR 209, the assessee was under the bona fide belief that the payment on account of software licenses does not fall under the definition of royalty and therefore the assessee was under no obligation to deduct tax at source on the said payment for software license. He has further submitted that there were number of judicial precedents on this issue wherein this Tribunal has held that the payment made for purchase of software does not fall under the definition of royalty provided under Section 9(1)(vi) of the Act. Thus he has submitted that a subsequent amendment or a decision cannot be thrust upon the assessee for deduction of tax in respect of a transaction completed much prior to the said decision. In support of his contention, he has relied upon decision of the co-ordinate bench of this Tribunal dt.23.11.2016 in the case of ACIT Vs. Aurigene learned Authorised Representative has submitted that disallowance made by the Assessing Officer is not justified when there was no such law or declaration of l....
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....mendment. As such, for the FY 2010-11, in light of the provisions of section 9(1)(vi) of the Act read with judicial guidance on the taxation of computer software payments, tax was not required to be deducted at source. Given the practice in prior assessment years, the assessee was of the bona fide view that the payment of software license fee was not subject to tax deduction at source under section194J/195 of the Act. It is submitted that liability to deduct tax at source cannot be fastened on the assessee on the basis of retrospective amendment to the Act (Finance Act 2012 amendment thedefinition of royalty with retrospective effect from 01.04.1976) or asubsequent ruling of a court (the Karnataka HC in CIT v Samsung Electronics Co. Ltd. (16 taxmann.com 141) was passed on October 15,2011). Courts have consistently upheld this principle as seen in: * ITO v. Clear Water Technology Services (P.) Ltd. (52 taxmann.com115) * Kerala Vision Ltd v. ACIT (46 taxmann.com 50) * Sonic Biochem Extractions (P.) Ltd v. ITO (35 taxmann.com 463) * Channel Guide India Ltd v. ACIT (25 taxmann.com 25) * DCIT v. Virola International (20 14(2) TMI 653) ....
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...., identical issue was considered and decided by the Mumbai Tribunal. Following were the relevant observations:- "The assessee purchased software, capitalized the payment to the computers account as the software came along with the hardware of computers and claimed depreciation. On the ground that purchase of software is essentially purchase of copyright which attracts tax deduction at source under section 194J, the Assessing Officer involved the provisions o f section 40(a) (i a) and disallowed the depreciation claimed . The Commissioner (Appeals), confirmed the action of the Assessing Officer on the ground that the purchase of software amounted to acquisition of intangible asset and therefore, the payment was royalty and disallowable. On appeal: Held, (i) that mere purchase of software, a copyrighted article, for utilisation of computers cannot be considered as purchase of copyright and royalty. The assessee did not acquire any rights for making copies, selling or acquiring which generally could be considered within the definition of "royalty". Explanation 2 to section 9(1)(vi) cannot be applied to purchase of a copyrighted software, which does not invol....
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....inate Bench of this Tribunal, we delete the disallowance made by the Assessing Officer." 12. Consistent with the view taken on the above case, we also hold that the assessee cannot be fastened with the liability to deduct tax at source retrospectively and accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the A.O. to delete the impugned addition." 7. In our considered view, the principles set out in the above said decisions could be applied to the instant cases also, even though the issue involved in these cases relate to the demand raised u/s 201(1) and consequent interest charged u/s 201(1A) of the Act. In the instant case also, the assessee was under bonafide belief that there was no required to deduct tax at source from the payments made for purchase of software, since there were certain decisions holding so. However, the jurisdictional High Court held that the payments made for purchase of software is in the nature of royalty and the said IT(IT)A Nos.107 to 114/Bang/2018 M/s. Acer India Private Limited, Bangalore Page 14 of 15 decision came to be pronounced on 15.10.2011. Accordingly, following the principles laid down b....
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....assessee on the ground that there has been no material change in the provisions of s. 10(4) of the old Act and s. 40(a)(ii) of the new Act. 2. The view of the ITO is not correct. Clause 40(a)(ii) of the IT Bill, 1961 as 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 years 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." In light of the above judicial development, the Appellant request your Honours to kindly accept the additional legal ground of appeal and allow deduction of education cess and secondary higher education cess paid on income-tax under section 37(1) of the Ac....
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....round relating to deduction of education cess and secondary higher education cess, the Ld. AR submitted that the assessee out of abundant caution had not claimed the said deduction in the return of income for the year under consideration in the absence of clarity in respect of the said issue. She submitted that, recently, the Bangalore Tribunal in the case of Aptean India Private Limited (ITA No.2679/Bang/2017) dated 6 November 2020 and Wipro Limited (IT(TP)A No.99/Bang/2014) dated 5 October 2020, relying on the judgement of Rajasthan High Court judgment in the case of CIT vs. Chambal Fertilisers and Chemicals Ltd. (ITA No. 52 of 2018) dated 31 July 2018, has held that education cess and secondary higher education cess is allowable as an expenditure while computing the total income. She further submitted that the above deduction of "cess" has been allowed by placing reliance on Circular No. F. No.91/58/66-ITJ(19), dated 18th May, 1967 issued by the CBDT which reads as follows :- "Interpretation of provision of s. 40(a)(ii) of IT Act, 1961- Clarification regarding BUSINESS EXPENDITURE - SECTIONS 40(a)(ii), Recently a case has come to the notice of....
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....on, calculated at the rate o[two per cent o[such income-tax and surcharge. " 15.1 The Ld. DR submitted that Finance Act, 2020, has introduced "Health and Education Cess", as under: "(11) The amount of income-tax as specified in sub-sections (1) to (3) and as increased by the applicable surcharge, for the purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for the purposes of the Union, to be called the "Health and Education Cess on income-tax", calculated at the rate of four per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance quality health services and universalised quality basic education and secondary and higher education. (12) The amount of income-tax as specified in sub-sections (4) to (10) and. as increased by the applicable surcharge, for the purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for the purposes of the Union, to be called the "Health and Education Cess on income-tax", calculated at the rate of four per cent of such income-tax and surcharge so ....
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....re in the first place, as it is nothing but distribution of profits/application of income. The Ld. DR relied on the judgment of the Supreme Court in the case of Indian Aluminium Co. Ltd. 84 ITR 735, wherein while dealing with the issue whether wealth tax paid on business assets would be allowable as a deduction or not, the Supreme Court observed that where profits, the net gains of business determined after making all deductions, are taxed, the disbursements to meet such taxes cannot be deducted. However, the Supreme Court observed, that where the tax was levied, OR capital assets used for the purpose of earning profits, it was a permissible deduction. The Ld. DR relied on the judgment of the Hon'ble Calcutta High Court in the case of Molins of India Ltd. 144 ITR 317 wherein it was held that surtax is of the same character as that of income tax and similar treatment would follow for surtax too and therefore, it cannot be held that it is incurred wholly and exclusively for the purpose of business. Similar view has been taken by the Hon'ble Gujarat High Court in the case of S.L.M Maneklal Industries Ltd. 172 I1R 176, where it was held that the question of payment of surtax wo....
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....8 for the Assessment Year 2012-13, the Mumbai Bench of Tribunal vide order dt.30.06.2020 observed in para 7 as under : " 7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, and also the judicial pronouncements relied upon by them. We shall first adjudicate the additional ground of appeal raised by the assessee. Insofar the claim of the Ld. A.R that unlike "rates" and "taxes" the amount paid by an assessee towards "Education Cess" or any "other cess" viz. the Secondary and Higher Education Cess is not a disallowable expenditure u/s 40(a)(ii) of the Income-tax Act, 1961, we find that the said issue is squarely covered by the recent order of the Hon'ble High Court of Bombay in the case of Sesa Goa Limited vs. Joint Commissioner of Income-tax (2020) 107 CCH 375 (Bom). In the case before the Hon‟ble High Court the following substantial question of law was inter alia raised : "iii. Whether on the facts and in the circumstances of the case and in law, the Education Cess and Higher and Secondary Education Cess is allowable as a deduction in the year of payment." ....
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....levied includes and shall be deemed always to have included any sum eligible for relief of tax under section 90 or, as the case may be, deduction from the Indian income-tax payable under section 91.] [Explanation 2.-For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, any sum paid on account of any rate or tax levied includes any sum eligible for relief of tax under section 90A;] 17. Therefore, the question which arises for determination is whether the expression "any rate or tax levied" as it appears in Section 40(a)(ii) of the IT Act includes "cess". The Appellant - Assessee contends that the expression does not include "cess" and therefore, the amounts paid towards "cess" are liable to be deducted in computing the income chargeable under the head "profits and gains of business or profession". However, the Respondent - Revenue contends that "cess" is also included in the scope and import of the expression "any rate or tax levied" and consequently, the amounts paid towards the "cess" are not liable for deduction in computing the income chargeable under the head "profits and gains of business or profession". ....
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....head "profits and gains of business or profession". There is no reference to any "cess". Obviously therefore, there is no scope to accept Ms. Linhares's contention that "cess" being in the nature of a "Tax" is equally not deductable in computing the income chargeable under the head "profits and gains of business or profession". Acceptance of such a contention will amount to reading something in the text of the provision which is not to be found in the text of the provision in Section 40(a)(ii) of the IT Act. 23. If the legislature intended to prohibit the deduction of amounts paid by a Assessee towards say, "education cess" or any other "cess", then, the legislature could have easily included reference to "cess" in clause (ii) of Section 40(a) of the IT Act. The fact that the legislature has not done so means that the legislature did not intend to prevent the deduction of amounts paid by a Assessee towards the "cess", when it comes to computing income chargeable under the head "profits and gains of business or profession". 24. The legislative history bears out that the Income Tax Bill, 1961, as introduced in the Parliament, had Section 40(a)(ii) which read as ....
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....upon the authorities under the IT Act like Assessing Officer and the Appellate Authority. The CBDT Circular is quite consistent with the principles of interpretation of taxing statute. This, according to us, is an additional reason as to why the expression "cess" ought not to be read or included in the expression "any rate or tax levied" as appearing in Section 40(a)(ii) of the IT Act. 28. In the Income Tax Act, 1922, Section 10(4) had banned allowance of any sum paid on account of 'any cess, rate or tax levied on the profits or gains of any business or profession'. In the corresponding Section 40(a)(ii) of the IT Act, 1961 the expression "cess" is quite conspicuous by its absence. In fact, legislative history bears out that this expression was in fact to be found in the Income Tax Bill, 1961 which was introduced in the Parliament. However, the Select Committee recommended the omission of expression "cess" and consequently, this expression finds no place in the final text of the provision in Section 40(a)(ii) of the IT Act, 1961. The effect of such omission is that the provision in Section 40(a)(ii) does not include, "cess" and consequently, "cess" whenever paid in....
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....fact pointed out three decisions of ITAT, in which, the decision of the Rajasthan High Court in Chambal Fertilisers and Chemicals Ltd.(supra) was followed and it was held that the amounts paid by the Assessee towards the 'education cess' were liable for deduction in computing the income chargeable under the head of "profits and gains of business or profession". They are as follows :- (i) DCIT Vs Peerless General Finance and Investment and Co. Ltd. (ITA No.1469 and 1470/Kol/2019 decided on 5th December, 2019 by the ITAT, Calcutta; (ii) DCIT Vs Graphite India Ltd. (ITA No.472 and 474 Co. No.64 and 66/Kol/2018 decided on 22nd November, 2019 )by the ITAT, Calcutta; (iii) DCIT Vs Bajaj Allianz General Insurance (ITA No.1111 and 1112/PUN/2017 decided on 25th July, 2019) by the ITAT, Pune. 32. Again, Ms. Linhares, learned Standing Counsel for the Revenue was unable to say whether the Revenue had instituted the appeals in the aforesaid matters. Mr. Ramani, learned Senior Advocate for the Appellant submitted that to the best of his research, no appeals were instituted by the Revenue against the aforesaid decisions of the ITAT. 33. The ITA....
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....he present matters and therefore, the decision in Unicorn Industries ( supra ) can be of no assistance to the Respondent - Revenue in the present matters. 37. Ms. Linhares, learned Standing Counsel for the Revenue however submitted that the Appellant - Assessee, in its original return, had never claimed deduction towards the amounts paid by it as "cess". She submits that neither was any such claim made by filing any revised return before the Assessing Officer. She therefore relied upon the decision of the Supreme Court in Goetze (India) Ltd. Vs Commissioner of Income Tax (2006) 284 ITR 323 (SC) to submit that the Assessing Officer, was not only quite right in denying such a deduction, but further the Assessing Officer had no power or jurisdiction to grant such a deduction to the Appellant - Assessee. She submits that this is what precisely held by the ITAT in its impugned judgments and orders and therefore, the same, warrants no interference. 38. Although, it is true that the Appellant - Assessee did not claim any deduction in respect of amounts paid by it towards "cess" in their original return of income nor did the Appellant - Assessee file any revised return of....