OVERSEAS POLYMERS PRIVATE LIMITED, MUMBAI V. ACIT 10(3)(1), MUMBAI

ITA 6754/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1208 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2013-2014
• Appeal Filed On: 29-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANPREET DUGGAL
• Keywords: Question of law
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6754/MUM/2018 ASSESSMENT YEAR: 2013-14 OVERSEAS POLYMERS PRIVATE LIMITED, A-41, VINMAR HOUSE, MIDC ROAD NO. 2, ANDHERI EAST, MUMBAI-400093. VS. THE ACIT-10(3)(1), MUMBAI-400021. PAN NO. AAACV1895M APPELLANT RESPONDENT ASSESSEE BY : MR. DHANESH BAFNA, AR REVENUE BY : MR. MANPREET DUGGAL, DR DATE OF HEARING : 17/12/2020 DATE OF PRONOUNCEMENT : 17/12/2020 ORDER PER N.K. PRADHAN, A.M. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, 10(3)( 1), MUMBAI U/S 143(3) R.W.S. 144C(3) OF THE INCOME TAX ACT, 1961 (THE ACT ). 2. IN THE BEGINNING OF HEARING, THE LD. COUNSEL FO R THE APPELLANT SUBMITS THAT THE 1 ST , 2 ND AND 3 RD GROUNDS OF APPEAL ARE NOT PRESSED ONLY DUE TO SMALLNESS OF THE AMOUNT. HAVING HEARD THE ABOVE CON TENTIONS AND EXAMINED THE FACTS OF THE CASE, THE ABOVE GROUNDS OF APPEAL ARE DISMISSED AS NOT PRESSED DUE TO SMALLNESS OF AMOUNT. ITA NO. 6754/MUM/2018 OVERSEAS POLYMERS 2 3. THE ASSESSEE HAS FILED AN ADDITIONAL GROUND OF A PPEAL TO CLAIM DEDUCTION FOR THE PAYMENT MADE BY IT TOWARDS EDUCAT ION CESS AND SECONDARY AND HIGHER EDUCATION CESS. THIS BEING A P URE QUESTION OF LAW, RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COUR T IN THE CASE OF NTPC LTD. V. CIT (1998) 229 ITR 383 (SC), WHEREIN IT IS HELD THAT A QUESTION OF LAW CAN BE RAISED BEFORE THE TRIBUNAL FOR THE FIRST TIM E WHICH HAS A BEARING ON THE TAX LIABILITY OF AN ASSESSEE, NOTWITHSTANDING T HE FACT THAT THE SAME WAS NOT RAISED BEFORE THE LOWER AUTHORITIES, WE ADMIT T HE ABOVE ADDITIONAL GROUND FOR ADJUDICATION. 4. BEFORE US, THE LD. COUNSEL SUBMITS THAT THE JUDI CIAL POSITION ON ADMISSIBILITY OF DEDUCTION FOR AMOUNTS PAID TOWARDS EDUCATION CESS AND SECONDARY & HIGHER EDUCATION CESS IS NOW SETTLED PU RSUANT TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SESA GOA LTD. V. JCIT (2020) 117 TAXMANN.COM 96 AND THE HONBLE RAJASTHAN HIGH C OURT IN THE CASE OF CHAMBAL FERTILIZERS & CHEMICALS LTD. V. CIT (ITA NO. 52/2018), WHEREIN IT IS HELD THAT THE EXPRESSION CESS OUGHT NOT TO BE REA D OR INCLUDED IN THE EXPRESSION ANY RATE OR TAX LEVIED AS APPEARING IN SECTION 40(A)(II) OF THE ACT. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) ARGUES THAT CESS IS NOTHING BUT TAX AND THEREFORE, THE RE IS NO QUESTION OF DEDUCTION OF AMOUNTS PAID TOWARDS CESS WHEN IT CO MES TO COMPUTATION OF INCOME CHARGEABLE UNDER THE HEAD PROFIT OR GAINS O F ANY BUSINESS OR PROFESSION. IN SUPPORT OF THE ABOVE CONTENTIONS, T HE LD. DR RELIES INTER ALIA ON THE DECISION IN TRAVANCORE TITANIUM PRODUCTS LTD. V. CIT (1966) 3 SCR 321, SMITH KLINE AMP; FRENCH (INDIA) LTD. V. CIT (1996) 219 ITR 581 (SC). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. ITA NO. 6754/MUM/2018 OVERSEAS POLYMERS 3 IN SESA GOA LTD. (SUPRA), THE FOLLOWING SUBSTANTIAL QUESTION OF LAW INTER ALIA WAS RAISED : (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE EDUCATION CESS AND HIGHER AND SECONDARY EDUCATION C ESS IS ALLOWABLE AS A DEDUCTION IN THE YEAR OF PAYMENT. THE HONBLE BOMBAY HIGH COURT HAS OBSERVED THAT THE LEGISLATURE IN SEC. 40(A)(II) HAS THOUGH PROVIDED THAT ANY RATE O R TAX LEVIED ON PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL NOT BE D EDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, BUT THEN THERE WAS NO REFERENCE TO ANY CESS. ALSO, THE HIGH COURT OBSERVED THAT THERE WAS NO SCOPE TO ACCEPT TH AT CESS BEING IN THE NATURE OF A TAX WAS EQUALLY NOT DEDUCTIBLE IN COMPU TING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION. IT IS FURTHER OBSERVED THAT IF THE LEGISLATURE WOULD HAD INTENDED TO PROHIBIT THE DEDUCTION OF AMOUNTS PAID BY AN ASSESSEE TOWARDS SA Y, EDUCATION CESS OR ANY OTHER CESS, THEN, IT COULD HAVE EASILY INCLUD ED A REFERENCE TO CESS IN CLAUSE (II) OF SECTION 40(A). ON THE BASIS OF ITS A FORESAID OBSERVATIONS, THE HONBLE HIGH COURT HAS CONCLUDED THAT NOW WHEN THE LEGISLATURE HAD NOT PROVIDED FOR ANY PROHIBITION ON THE DEDUCTION OF AN Y AMOUNT PAID TOWARDS CESS IN CLAUSE (II) OF SEC. 40(A), THEREFORE, HOL DING TO THE CONTRARY WOULD AMOUNT TO READING SOMETHING WHICH IS NOT TO BE FOUN D IN THE TEXT OF THE PROVISION OF SEC. 40(A)(II). ACCORDINGLY, THE HONB LE HIGH COURT HAS CONCLUDED THAT THERE WAS NO PROHIBITION ON THE DEDU CTION OF ANY AMOUNT PAID TOWARDS CESS IN SEC. 40(A)(II), WHILE COMPUT ING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION. 6.1 SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE RAJA STHAN HIGH COURT IN CHAMBAL FERTILIZERS & CHEMICALS LTD . (SUPRA), AFTER CONSIDERING THE DECISION ITA NO. 6754/MUM/2018 OVERSEAS POLYMERS 4 IN TRAVANCORE TITANIUM PRODUCTS LTD. (SUPRA) AND SMITH KLINE AMP; FRENCH (INDIA) LTD. (SUPRA). 6.2 RESPECTFULLY FOLLOWING THE DECISION IN SESA GOA LTD . (SUPRA) AND CHAMBAL FERTILIZERS & CHEMICALS LTD. (SUPRA), WE HOLD THAT THE ASSESSEE SHALL BE ENTITLED FOR DEDUCTION OF EDUCATION CESS AND HIG HER & SECONDARY EDUCATION CESS WHILE COMPUTING INCOME CHARGEABLE UN DER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. 6.3 ACCORDINGLY, THE ADDITIONAL GROUND OF APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/12/2020. SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 17/12/2020 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI