The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘E’, adjudicated on the appeal filed by Maral Overseas Ltd, a company based in West Nirmar, Madhya Pradesh, against the orders of the CIT(A)-30, New Delhi. The appeal, registered as ITA No. 324/DEL/2021, pertains to the assessment year 2016-17. The primary issue at hand was the claim of education cess as a deductible expenditure under the Income Tax Act.
Maral Overseas Ltd is engaged in various business activities and had claimed the deduction of education cess paid during the assessment year 2016-17. The company argued that education cess should be considered an allowable deduction under Section 37(1) of the Income Tax Act, 1961.
The dispute arose when the Assessing Officer (AO) disallowed the deduction of education cess, treating it as a tax, which is not allowed as a deduction under Section 40(a)(ii) of the Income Tax Act. The company contended that there was no explicit prohibition in the Act regarding the deduction of education cess.
The grounds of appeal raised by Maral Overseas Ltd included:
The tribunal, comprising Shri Anil Chaturvedi (Accountant Member) and Shri Yogesh Kumar U.S. (Judicial Member), heard the case on 11th May 2023. Both parties presented their arguments, with the Departmental Representative (DR) citing the judgment of the Hon’ble Supreme Court of India in the case of Joint Commissioner of Income Tax vs. Chambal Fertilizers and Chemicals Ltd, which held that education cess paid by the assessee would not be allowed as an expenditure under Section 37 read with Section 40(a)(ii) of the Income Tax Act.
In light of the Supreme Court judgment, the tribunal upheld the CIT(A)’s decision to disallow the claim of education cess as a deductible expenditure. The appeals filed by Maral Overseas Ltd were dismissed.
The order pronounced on 17th May 2023 by the tribunal concluded the appeal in favor of the Revenue.
Order Pronounced in the Open Court on 17/05/2023.
Signed by:
(Anil Chaturvedi) – Accountant Member
(Yogesh Kumar U.S.) – Judicial Member
Date: 17/05/2023
Pk/sps/ R.N, Sr. PS
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
ITA No. 324/DEL/2021 – Maral Overseas Ltd vs DCIT Central Circle-31, Assessment Year 2016-17
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