INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Allowability - Education cess -

Assessee claimed deduction of Education Cess and Secondary Higher Education Cess in respect of income offered to tax. AO disallowed deduction.Held: Unlike income tax and surcharge which are levied for general purpose, education cess is admittedly levied for specific purpose that is to fulfill the commitment of government to provide quality health services and finance universalized quality basic education and secondary and higher education. Every year Finance Act provides for the rate of tax applicable for relevant assessment year. The levy of education cess on income-tax is distinct from that of an income-tax. Unlike surcharge which was an exclusive component of income tax, education cess as introduced vide Finance Act, 2004 was also imposed as additional levy on indirect taxes namely Customs, Excise and Service Tax. Education cess does not part take care of being a component of income tax per se as levied under provisions of the Act. Accordingly, education cess was allowable as deduction under section 37(1).

Followed:Sesa Goa Ltd. v. Jt.CIT (2020) 117 Taxman.com 96 (Bom) : 2020 TaxPub(DT) 1546 (Bom-HC). Distinguished:Goetz (India) Ltd. v. CIT(A) (2006) 284 ITR 323 (SC) : 2006 TaxPub(DT) 1528 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

INCOME TAX ACT, 1961

Section 80-IC

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