DY CIT 3 (2)(1), MUMBAI V. LAXMI ORGANIC INDUSTRIES LTD, MUMBAI

MA 215/MUM/2022

AI Insights

The case revolves around the Income Tax Appellate Tribunal's (ITAT) earlier decision in ITA No. 38/MUM/2020, where it was held that education cess is deductible under Section 40(a)(ii) of the Income Tax Act, relying on a decision by the Hon'ble Bombay High Court in Sesa Goa Ltd Vs. JCIT. However, following the amendment by the Finance Act, 2022, which retrospectively disallowed the deduction of education cess, the Deputy Commissioner of Income Tax (DCIT) filed a Miscellaneous Application (MA No. 215/MUM/2022) to recall the ITAT's order, citing the amendment as a basis for the recall. The Tribunal, upon reviewing the amendment and the Supreme Court's decision in Chambal Fertilizer, acknowledged the error in the earlier order and allowed the recall.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113096 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-01-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-10-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 10-08-2022
• Other Referred Cases: Sesa Goa Ltd Vs. JCIT, Chambal Fertilizer
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: KRU TI J AI N
• Section: 37; 22

Judgement Text

I N THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRASHANT MAHARISHI, AM M A No. 215/M UM/20 22 Ar isi ng Ou t of I T A 3 8/M UM /2020 (Ass es sme nt Ye ar 2 0 12-13) DCI T 3 ( 2)(1) Aay a kar B hav an, M.K . Marg, Mum ba i-40 0 0 20 Vs. L axmi Or ga nic I n dus trie s L t d Base me nt C ha nd erm ukh i R am na th Goe nk a M arg, Nar im an P oi nt, Mum ba i-40 0 0 21 (Appellant) (Respondent) PAN No. AAACL2435R Assessee by : Ms. Kru ti J ai n Revenue by : Shri. Ma noj Ku mar Si nha, Sr. AR Date of h ea r ing: 14.1 0.20 22 Date of pronouncement : 13.01. 20 23 O R D E R PER PRASHANT MAHARISHI, AM: 01. This MA Application is filed by the ACIT 3(2)(1) Mumbai in ITA No. 38/MUM/2020 for A.Y. 2012-13 submitting that while passing the aforesaid order, the co-ordinate bench has held that provisions of Section 40(a)(ii) does not include cess and cess whenever paid is allowable as deductable expenditure relying on decision of Hon’ble Bombay High Court in Sesa Goa Ltd Vs. JCIT 117 taxmann.com 96, is suffering from an error apparent from the record because vide amendment of Finance Act, 2022 it has provided that education cess is not an allowable expenses and would be part of the total income of the assessee. This amendment is retrospective in nature and would be applicable to the issue, therefore the order of the co-ordinate bench suffers from mistake therefore, should be recalled. 02. At the time of hearing, the ld. DR reiterated the same. Page | 2 MA No. 215/MUM/2020 Arising Out of ITA No 38/MUM/2020 Laxmi Organic Industries Ltd.,A.Y. 2012-13 03. The ld. AR submitted that, there is no error in the order of the co-ordinate bench. 04. We have carefully considered the rival contentions and find that explanation 3 to Section 40(a)(ii) has been inserted with retrospective effect from 01.04.2005 by the Finance Act, 2022 and therefore the term ‘tax’ shall include cess. 05. Further, Hon’ble Supreme Court in case of Chambal Fertilizer in 145 taxmann.com 420 by held that cess paid by the assessee could not allowable as an expenditure u/s. 37 r.w.s. 40(a)(ii) of the Income Tax Act. In view of this, the order of the co-ordinate bench is suffering from an error. 06. Accordingly, the ITAT order in ITA No. 38/ MUM/2020 is recalled . 07. In the result, MA is allowed. Order pronounced in the open court on 13.01.2023. Sd/- Sd/- (Vikas Awasthy ) (Prashant Maharishi) (Judic ial me mber ) (Ac c oun ta n t Me mber) Mumbai, Dated: 13.01.2023 Uday Mugal, Stenographer 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// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai