M/s Indian Oil Petronas Pvt. Ltd., Kolkata V. D.C.I.T.,Circle-10(1), Kolkata

MA 20/KOL/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0809 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KOL ASSESSMENT YEARS; KOL ARISING OUT OF I T A NOS
• Section: 115JB; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (VIRTUAL COURT) [BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI ABY T. VARKEY, JUDICIAL MEMBER] M.A. NOS. 20 & 21/KOL/2021 ARISING OUT OF ITA NOS. 1884 & 1885/KOL/2019 ASSESSMENT YEARS: 2013-14 & 2014-15 M/S. INDIAN OIL PETRONAS PVT. LTD...................................................................................APPELLANT [PAN: AAACI 1573 R] VS. DCIT, CIRCLE-10(1), KOLKATA.....................RESPONDENT APPEARANCES BY: SMT. PRIYANKA SALARPURIA, A/R, APPEARED ON BEHALF OF THE ASSESSEE. SMT. RANU BISWAS, ADL. CIT, APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JUNE 25 TH , 2021 DATE OF PRONOUNCING THE ORDER : JUNE 28 TH , 2021 ORDER PER J. SUDHAKAR REDDY, AM : BY THESE MISCELLANEOUS APPLICATIONS THE ASSESSEE SUBMITS THAT IN BOTH THE APPEALS FOR AY 2013-14 & 2014-15THE FIRST GROUND OF THE CROSS OBJECTION WHICH WAS ADMITTED BY THE TRIBUNAL HAS NOT BEEN DISPOSED OFF ON MERITS. SHE SUBMITTED THAT THE SAME WAS ARGUED AT LENGTH AND THAT THIS ISSUE IS SQUARELY COVERED BY VARIOUS JUDGMENTS OF THE HIGH COURTS AS WELL AS THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL. 2. THE LD. D/R SUBMITTED THAT THIS GROUND WAS NOT ADJUDICATED BY THE ITAT THOUGH ADMITTED. 3. WE FIND THAT A MISTAKE APPARENT ON RECORD HAS CREPT INTO THE ORDER OF THE TRIBUNAL REQUIRING RECTIFICATION AS GROUND NO. 1 HAS NOT DISPOSED OFF FOR BOTH THE ASSESSMENT YEARS 2013-14 & 2014-15. 4. THE GROUND READS AS FOLLOWS: FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AO BE DIRECTED TO ALLOW THE DEDUCTION FOR CESS OF RS. 81,56,589/- PAID BY THE ASSESSEE IN F.Y. 2012-13. 5. AFTER HEARING BOTH THE PARTIES, WE HOLD AS FOLLOWS. 2 M.A. NOS. 20 & 21/KOL/2021 ARISING OUT OF ITA NOS. 1884 & 1885/KOL/2019 ASSESSMENT YEARS: 2013-14 & 2014-15 M/S. INDIAN OIL PETRONAS PVT. LTD. 5.1. THIS BENCH OF THE TRIBUNAL IN THE CASE OF RECKITT BENCKISER (I) PVT. LTD. IN ITA NOS. 404/KOL/2015 & 625/KOL/2016 ORDER DATED 17.06.2020 FROM PARA-55 TO 60 HELD AS FOLLOWS: 55. THE SECOND ADDITIONAL GROUND RAISED BY THE ASSESSEE READS AS FOLLOWS: 2. DEDUCTION OF EDUCATION CESS ON INCOME TAX PAID BY THE ASSESSEE IS ALLOWABLE EXPENDITURE. THIS GROUND RELATES TO A.Y2011-12. 56. WE NOTE THAT ISSUE RAISED BY THE ASSESSEE IN THIS ADDITIONAL GROUND IS NO LONGER RES-INTEGRA. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT EDUCATION CESS IS NOT TAX AND HENCE NOT DISALLOWABLE U/S 40(A)(II) OF THE ACT. WE NOTE THAT THE CBDT CIRCULAR NO. 91/58/66 - ITJ(19) DATED 18-05- 1967, WHEREIN IT HAS BEEN CLARIFIED THAT THE EFFECT OF OMISSION OF THE WORD CESS FROM SEC. 40(A)(II) OF THE ACT IS THAT ONLY TAXES PAID ARE TO BE DISALLOWED AND NOT CESS. RELEVANT EXTRACT OF CIRCULAR IS AS UNDER:- RECENTLY A CASE HAS COME TO THE NOTICE OF THE BOARD WHERE THE ITO HAS DISALLOWED THE CESS' PAID BY THE 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. 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. 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. 57. WE ALSO RELY ON THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CHAMBAL FERTILIZERS AND CHEMICALS LTD. VS. JCIT (ITA NO. 52/2018) WHICH AFTER TAKING INTO ACCOUNT AFOREMENTIONED CBDT CIRCULAR HELD THAT SEC. 40(A)(II) APPLIES ONLY TO TAXES AND NOT TO EDUCATION CESS. RELEVANT EXTRACT OF THE DECISION IS REPRODUCED FOR EASE OF REFERENCE:- 13. ON THE THIRD ISSUE IN APPEAL NO. 52/2018, IN VIEW OF THE CIRCULAR OF CBDT WHERE WORD 'CESS' IS DELETED, IN OUR CONSIDERED OPINION, THE TRIBUNAL HAS COMMITTED AN ERROR IN NOT ACCEPTING THE CONTENTION OF THE ASSESSEE. APART FROM THE SUPREME COURT DECISION REFERRED THAT ASSESSMENT YEAR IS INDEPENDENT AND WORD CESS HAS BEEN RIGHTLY INTERPRETED BY THE SUPREME COURT THAT THE CESS IS NOT TAX IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL ON ISSUE NO. 3 IS REQUIRED TO BE REVERSED AND THE SAID ISSUE IS ANSWERED IN FAVOUR OF THE ASSESSEE. 58. WE NOTE THAT COORDINATE BENCHES OF THIS TRIBUNAL IN THE FOLLOWING CASES HELD THAT EDUCATION CESS SHOULD BE ALLOWED AS AN EXPENSE. THE RELEVANT JUDGMENTS ARE GIVEN BELOW: (I) M/S ITC LIMITED -VS.-ACIT (ITA NO. 685/KOL/2014) - THE ASSESSEES ADDITIONAL LAST/ SUBSTANTIVE GROUND AVERS THAT IT IS ENTITLED FOR THE EDUCATIONS SECONDARY HIGHER EDUCATION CESS AS OVERHEAD DEDUCTION AMOUNTING TO RS. 423618317 U/S 37 OF THE ACT. WE NOTE THAT HONBLE RAJASTHAN HIGH COURTS DECISION IN DB INCOME TAX APPEAL NO. 52/KOL/2018 M/S CHAMBAL FERTILIZERS LTD, VS. DCIT DECIDED ON 31.07.2018 TAKES INTO ACCOUNT CBDT CIRCULAR DATED 18.05.1967 FOR HOLDING SUCH CESS(ES) TO BE ALLOWABLE AS DEDUCTION. THEIR LORDSHIPS HOLD THAT SECTION 40A(II) APPLIES ONLY ON TAXES SUCH THAN EARN CESS(ES). WE THEREFORE REJECT THE REVENUES CONTENTIONS SUPPORTING THE IMPUGNED DISALLOWANCE. THE ASSESSEES INSTANT SUBSTANTIVE GROUND IS ACCEPTED. THE ASSESSING OFFICER IS DIRECTION TO VERIFY ALL THE RELEVANT FACTS AND ALLOW THE IMPUGNED CESS(ES) AS DEDUCTION U/S 37 OF THE ACT. THE ASSESSEES APPEAL I.T.A. NO. 685/KO/2014 IS PARTLY ACCEPTED IN ABOVE TERMS. 3 M.A. NOS. 20 & 21/KOL/2021 ARISING OUT OF ITA NOS. 1884 & 1885/KOL/2019 ASSESSMENT YEARS: 2013-14 & 2014-15 M/S. INDIAN OIL PETRONAS PVT. LTD. (II) PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. -VS- DCIT (ITA NO. 937/KOL/2018) 37. ADDITIONAL GROUND RAISED BY THE ASSESSEE IN ITA NO.937/KOL/2018 FOR A.Y.201011 READS AS UNDER: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AUTHORITIES BELOW ERRED IN NOT ALLOWING DEDUCTION U/S 37(1) OF THE INCOME TAX ACT, 1961, ON ACCOUNT OF EDUCATION CESSES PAID BY THE ASSESSEE WHILE ARRIVING AT THE ASSESSED INCOME FOR THE YEAR UNDER APPEAL. 38. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO THE SUBMISSION OF THE PARTIES AND PERUSING THE JUDICIAL DECISIONS RELIED UPON BY THE LD. AR, WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT GROUND OF APPEAL IS NO LONGER RES-INTEGRA. THE EDUCATION CESS BEING NOT INCOME TAX IS ALLOWABLE AS DEDUCTION UNDER SECTION 37 (1) OF THE ACT. FOR THIS, WE RELY ON THE JUDGMENT OF THE COORDINATE BENCH OF IT AT KOLKATA IN THE CASE OF ITC LIMITED, ITA NO.685/KOL/2014, ORDER DATED 27.11.2018, WHEREIN IT WAS HELD THAT EDUCATION CESS IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO VERIFY ALL THE RELEVANT FACTS AND ALLOW EDUCATION CESS AS DEDUCTION UNDER SECTION 37(1) OF THE ACT. (III) TEGA INDUSTRIES -VS.- ACIT (ITA NO. 404/KOL/2017)- WE FURTHER TO NOTICE THAT ASSES SEE HAS RAISED AN IDENTICAL ADDITIONAL GROUND IN BOTH CASES SEEKING TO CLAIM EDUCATION CESS ON PROVISION FOR INCOME-TAX AMOUNT OF RS. 71,65,049/- AND RS. 77,76,699 (ASSESSMENT YEAR WISE); RESPECTIVELY AS ALLOWABLE IN COMPUTING TOTAL INCOME OTHER THAN MAT U/S. 115JB OF THE ACT. HONBLE APEX COURTS LAND MARK DECISION NATIONAL THERMAL POWER CORPORATION LTD (NTPC) V/S. CIT (1998) 229 ITR 383 (SC) AS CONSIDERED BY THIS TRIBUNALS SPECIAL BENCH ORDER M/S. ALL CARGO GLOBAL LOGISTICS LTD V/S. DCIT (12) 137 1TD 26 (MUM.) SETTLES THE LAW THAT WE AN VERY WELL ENTERTAIN SUCH A LEGAL QUESTION IN ORDER TO DETERMINE THE CORRECT TAX LIABILITY WHEN ALL THE RELEVANT FACTS FORM PART OF RECORDS. WE THUS ALLOW ASSESSEES ADDITIONAL GROUND TO BE RAISED. 12. COMING TO MERITS OF THE HONBLE RAJASTHAN HIGH COURTS DECISION IN CHAMBAL FERTILISERS& CHEMICALS LIMITED V/S. JCIT (D.B INCOME TAX APPEAL NO. 52/2018, DATED 31-07-2018 TAKING NOTE OF CBDTS CIRCULAR NO. 91/58/66 DATED 18-05-1965 AS WELL AS CO-ORDINATE BENCHS ORDER IN FTC LIMITED V/S. ACIT( ITA NO. 685/KO1/2014 DATED 27-11-2018 HOLD THAT SUCH A CLAIM OF EDUCATION CESS IS VERY MUCH ALLOWABLE IN COMPUTING TOTAL INCOME UNDER THE PROVISIONS OF THE ACT. 59. THE LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE EARLIER DECISION OF ITAT DATED 27- 02- 2019, WHEREIN THIS TRIBUNAL HAD DISALLOWED THE CLAIM ON THE BASIS OF TWO CONTENTIONS: (I) EDUCATION CESS IS AN ADDITIONAL SURCHARGE AND HENCE FORMS OF INCOME TAX AND (II) DECISION OF KALIMATI INVESTMENT COMPANY LTD. -VS.- ITO (ITA NO.2706,4508/M/2010,2552,2553/M/2011) AND SESA GOA LTD. -VS.- JCIT (ITA NO. 72/PNJ/2012) SQUARELY APPLICABLE AGAINST THE ASSESSEE. 60. WE ACCEPT THE SUBMISSIONS OF THE ASSESSEE CONCURRING WITH THE DECISIONS OF RAJASTHAN HIGH COURT AND BINDING FAVOURABLE DECISIONS OF JURISDICTIONAL TRIBUNAL AND THUS WE ALLOW THE CLAIM OF THE EDUCATION CESS. THE AO IS DIRECTED TO ALLOW THE CLAIM OF EDUCATION CESS IN COMPUTING TOTAL INCOME OF THE ASSESSEE COMPANY. THIS ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 5.2. THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF SESA GOA LTD. VS. JCIT IN TAX APPEAL NOS. 17 & 18 OF 2013 DATED 28.02.2020 HELD THAT EDUCATION CESS IS ALLOWABLE EXPENDITURE AS THE WORD CESS IS CONSPICUOUSLY ABSENT UNDER THE PROVISION OF SECTION 40(A)(II) OF THE ACT. 6. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THIS GROUND NO. 1 OF THE CROSS OBJECTION FOR BOTH THE ASSESSMENT YEARS. 4 M.A. NOS. 20 & 21/KOL/2021 ARISING OUT OF ITA NOS. 1884 & 1885/KOL/2019 ASSESSMENT YEARS: 2013-14 & 2014-15 M/S. INDIAN OIL PETRONAS PVT. LTD. 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION NOS. 20 & 21/KOL/2021 ARE ALLOWED. KOLKATA, THE 28 TH JUNE, 2021. SD/- SD/- [ABY T. VARKEY] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28.06.2021 BIDHAN COPY OF THE ORDER FORWARDED TO: 1. M/S. INDIAN OIL PETRONAS PVT. LTD., ACROPOLIS, 12 TH FLOOR, UNIT-I & II, 1858/1, RAJDANGA MAIN ROAD, KOLKATA-700 107. 2. DCIT, CIRCLE-10(1), KOLKATA. 3. CIT(A)-4, KOLKATA. (SENT THROUGH E-MAIL) 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH E-MAIL) TRUE COPY BY ORDER SR. PS / DDO ITAT, KOLKATA BENCHES