Case Number: ITA 1017/DEL/2021
Appellant: MSD Pharmaceuticals Pvt. Ltd., New Delhi
Respondent: DCIT Circle-16(1), New Delhi
Assessment Year: 2016-17
Result: 2016-17
Case Filed on: 2021-08-26
Order Type: Final Tribunal Order
Date of Order: 2023-02-07
Pronounced on: 2023-02-07
This case involves an appeal filed by MSD Pharmaceuticals Pvt. Ltd. against the order dated 29.06.2021, passed by the Deputy Commissioner of Income Tax (DCIT), Circle-16(1), New Delhi, concerning the assessment year 2016-17. The primary issue in dispute pertains to the disallowance of education cess and adjustments related to transfer pricing.
The pertinent facts relevant to the adjudication of the case are as follows:
The core issues to be adjudicated were the validity of the disallowance of education cess and the adjustments related to transfer pricing.
The assessee, represented by Ms. Rashmi Chopra, Advocate, argued that the education cess should be allowed as a deductible expenditure and contested the transfer pricing adjustments. The assessee also submitted that the adjustment in Arm’s Length Price (ALP) had been rectified and hence the transfer pricing issues were not being pressed.
The Revenue, represented by Sh. Rajesh Kumar, CIT DR, relied on the Supreme Court judgment in the case of CIT vs. Chambal Fertilisers & Chemicals Limited (SLP(C) No. 7379 of 2019), which ruled against the deductibility of education cess.
The Tribunal examined the facts of the case and noted the following key points:
The Tribunal observed that the Binding Legal Theory (BLT) approach, being a non-recognized method, cannot be invoked.
The Tribunal held that the disallowance of education cess is valid in light of the Supreme Court’s ruling. Consequently, the appeal of the assessee was dismissed.
Order: In the result, the appeal of the assessee is dismissed.
Order Pronounced in the Open Court on 07/02/2023.
-Sd/- (Yogesh Kumar US, Judicial Member)
-Sd/- (Dr. B. R. R. Kumar, Accountant Member)
Date: 07/02/2023
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
MSD Pharmaceuticals vs. DCIT: Education Cess Disallowance for AY 2016-17
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