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2020 (8) TMI 560 - AT - Income TaxDisallowance u/s 40(a)(ii) - tds on cess on income tax - Whether the aforesaid amount is towards the cess on income tax and is not allowable u/s 40(a)(ii)? - HELD THAT:- Hon’ble Bombay High Court in the case of Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT] has held that education cess and higher and secondary education cess to be eligible for deduction while computing income chargeable under the head of Profit and Gains of Business. The Hon’ble High Court has held that though cess may be collected as part of income tax but that does not render such cess either rate or tax which cannot be deducted in terms of provision of section 40a(ii) of the Act. We further find that Hon’ble High Court while arriving at the aforesaid conclusion had also considered the CBDT Circular No. F. No. 91/58/66-ITJ(19), dated 18.05.1967. Revenue has not placed any contrary binding decision in its support. In such situation, we, relying on the decision of Hon’ble Bombay High Court in the case of Sesa Goa (supra) hold that the AO was not justified in disallowing the amount of cess paid on income tax. We therefore, direct its deletion. Thus, ground of appeal of the assessee is allowed.
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