TMI Blog2021 (1) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... a deduction in computing income chargeable under head of profits and gains of business or profession. Education cess is not a disallowable expenditure under section 40(a)(ii) - we are of the considered opinion that education cess and secondary education cess paid on income tax is an allowable expenditure. Ground raised by the assessee is allowed. - ITA No. 205/CHD/2021 - - - Dated:- 17-1-2021 - N.K. Saini, Vice President And Sudhanshu Srivastava, Member (J) For the Appellant : T.N. Singla, CA For the Respondents : Ashok Khanna, Addl. CIT ORDER Per Sudhanshu Srivastava, Judicial Member This appeal is preferred by the assessee against the order dated 30.07.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as 'CIT(A)'] u/s. 250 of the Income Tax Act, 1961 (in short 'the Act'). 2. The brief facts of the case are that the assessee is a Private Limited company engaged in the business of manufacture of ready mix concrete, bricks, cemented blocks and construction work. The return of income was filed declaring an income of ₹ 31,16,630/-, which was processed u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT Vs. Karnataka State Coop Federation Ltd. reported in [2021] 280 taxman 452 (Karnataka) for the proposition that assessee's fresh claim before an Appellate Authority is entertainable even when the same is not claimed in the original return of income or even if the assessee had not filed the revised return to make such a claim. It was submitted that, therefore, this additional ground should be admitted for hearing. 6. Per contra, the Ld. Sr. DR submitted that this ground was never before the Ld. First Appellate Authority and, therefore, the same deserves to be dismissed. 7. Having gone through the additional ground and also having considered the arguments of both the sides on the issue of admission of additional ground, we agree with the contention of the Ld. AR that an assessee's entirely new claim before an appellate authority is entertainable even when it has not been claimed in the original return of income or even if the assessee has not filed revised return of income. The Hon'ble Apex Court in the case of Goetze India Limited Vs. CIT reported in [2006] 284 ITR 333 (SC) has held that even if the claim has not been made before the Assessing officer, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the assessee was that the issue under consideration is squarely covered vide common order dated 20/10/2021 passed by the ITAT, Chandigarh Bench in ITA Nos. 191 192/Chd/2021 for the assessment years 2017-18 2018-19 in the case of Raja Ram Vs. ITO, Yamunanagar and in the case of Sanchi Management Services Private Limited Vs. ITO, Chandigarh in ITA No. 190/Chd/2021 for the A.Y. 2018-19. 6. In his rival submissions, the Ld. DR strongly supported the orders of the authorities below and reiterated the observations made by the Ld. CIT(A) in the impugned order. 7. We have considered the submissions of both the parties and perused the material available on record. In the present cases, it is noticed that an identical issue having similar facts has already been adjudicated by the ITAT, Chandigarh Bench in the aforesaid referred to cases, wherein one of us is author of the order dated 20/10/2021. In the said order it has been held vide paras 8 to 10 in ITA Nos. 191 192/Chd/2021 in case of Raja Ram Vs. ITO, Yamunanagar as under:- 8. I have considered the submissions of both the parties and perused the material available on record. 9. In the present cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not. It appears that the Tribunal below, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol. 390 ITR 306, held that the deletion was justified. Being dissatisfied, the Revenue has come up with the present appeal. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec. 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. Such being the position, the deletion of the amount paid by the Employees' Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. 10. On an identical issue, this Bench of the Tribunal vide order dated 12.8.2021 in the case of Mohangarh Engineers and Construction Company, Jodhpur Others vs. CPC, Bangalore in ITA No. 5/Jodh/2021 and others held vide para 13 to 18 as under:- 13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its return of income, it is noted that the assessee has deposited the employees's contribution towards ESI and PF well before the due date of filing of return of income u/s. 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees's contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s. 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon'ble Rajasthan High Court starting from CIT vs. State Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return. 22. We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. 12. In the result, both the appeals of the assessees are allowed. 10. So respectfully following the aforesaid referred to order of the Coordinate Bench of the Tribunal, the disallowances sustained by the Ld. CIT(A) are deleted. 8. Since the facts involved in the present case are identical to the facts involved in the case of Raja Ram Vs. ITO, Yamunanagar (supra). So respectfully following the aforesaid referred to order of the Coordinate Bench of the Tribunal, the disallowances sustained by the Ld. CIT(A) are deleted. In the result, the appeal of the assessee is allowed. 9.1. Accordingly, ground Nos. 1 to 5 stand allowed. 10. As far as the issue of Educational Cess being deductible expenditure is concerned, we agree with the contention of the Ld. AR that the issue is covered in assessee's favour by the judgment of the Hon'ble Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts paid towards the cess are not liable for deduction in computing the income chargeable under the head profits and gains of business or profession . 18. In relation to taxing statute, certain principles of interpretation are quite well settled. In New Shorrock Spinning and Manufacturing Co. Ltd. Vs. Raval, 37 ITR 41 (Bom.), it is held that one safe and infallible principle, which is of guidance in these matters, is to read the words through and see if the rule is clearly stated. If the language employed gives the rule in words of sufficient clarity and precision, nothing more requires to be done. Indeed, in such a case the task of interpretation can hardly be said to arise : Absoluta sententia expositore non indiget. The language used by the Legislature best declares its intention and must be accepted as decisive of it. 19. Besides, when it comes to interpretation of the IT Act, it is well established that no tax can be imposed on the subject without words in the Act clearly showing an intention to lay a burden on him. The subject cannot be taxed unless he comes within the letter of the law and the argument that he falls within the spirit of the law cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 24. The legislative history bears out that the Income Tax Bill, 1961, as introduced in the Parliament, had Section 40(a)(ii) which read as follows: (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. 25. However, when the matter came up before the Select Committee of the Parliament, it was decided to omit the word cess from the aforesaid clause from the Income Tax Bill, 1961. The effect of the omission of the word cess is that only any rate or tax levied on the profits or gains of any business or profession are to be deducted in computing the income chargeable under the head profits and gains of business or profession . Since the deletion of expression cess from the Income Tax Bill, 1961, was deliberate, there is no question of reintroducing this expression in Section 40(a)(ii) of IT Act and that too, under the guise of interpretation of taxing statute. 26. In fact, in the aforesaid precise regard, reference can usefully be made to the Circular No. F. No. 91/58/66-ITJ(19), dated 18th May, 1967 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch omission is that the provision in Section 40(a)(ii) does not include, cess and consequently, cess whenever paid in relation to business, is allowable as deductable expenditure. 29. In Kanga and Palkhivala's The Law and Practice of Income Tax (Tenth Edition), several decisions have been analyzed in the context of provisions of Section 40(a)(ii) of the IT Act, 1961. There is reference to the decision of Privy Council in CIT Vs. Gurupada Dutta 14 ITR 100, where a union rate was imposed under a Village Self Government Act upon the assessee as the owner or occupier of business premises, and the quantum of the rate was fixed after consideration of the 'circumstances' of the assessee, including his business income. The Privy Council held that the rate was not 'assessed on the basis of profits' and was allowable as a business expense. Following this decision, the Supreme Court held in Jaipuria Samla Amalgamated Collieries Ltd. Vs. CIT [82 ITR 580] that the expression 'profits or gains of any business or profession' has reference only to profits and gains as determined in accordance with Section 29 of this Act and that any rate or tax levied upon pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no appeals were instituted by the Revenue against the aforesaid decisions of the ITAT. 33. The ITAT, in the impugned judgment and order, has reasoned that since cess is collected as a part of the income tax and fringe benefit tax, therefore, such cess is to be construed as tax . According to us, there is no scope for such implications, when construing a taxing statute. Even, though, cess may be collected as a part of income tax, that does not render such cess , either rate or tax, which cannot be deducted in terms of the provisions in Section 40(a)(ii) of the IT Act. The mode of collection, is really not determinative in such matters. 34. Ms. Linhares, has relied upon M/s. Unicorn Industries Vs. Union of India and others, in support of her contention that cess is nothing but tax and therefore, there is no question of deduction of amounts paid towards cess when it comes to computation of income chargeable under the head profits or gains of any business or profession. 35. The issue involved in Unicorn Industries (supra) was not in the context of provisions in Section 40(a)(ii) of the IT Act. Rather, the issue involved was whether the 'education cess, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did the Appellant - Assessee file any revised return of income, according to us, this was no bar to the Commissioner (Appeals) or the ITAT to consider and allow such deductions to the Appellant - Assessee in the facts and circumstances of the present case. The record bears out that such deduction was clearly claimed by the Appellant - Assessee, both before the Commissioner (Appeals) as well as the ITAT. 39. In CIT Vs. Pruthvi Brokers Shareholders Pvt. Ltd. 349 ITR 336, one of the questions of law which came to be framed was whether on the facts and circumstances of the case, the ITAT, in law, was right in holding that the claim of deduction not made in the original returns and not supported by revised return, was admissible. The Revenue had relied upon Goetze (supra) and urged that the ITAT had no power to allow the claim for deduction. However, the Division Bench, whilst proceeding on the assumption that the Assessing Officer in terms of law laid down in Goetze (supra) had no power, proceeded to hold that the Appellate Authority under the IT Act had sufficient powers to permit such a deduction. In taking this view, the Division Bench relied upon the Full Bench decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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