Sheela Foams Ltd. filed an appeal against the final assessment order by the ACIT, Central Circle-6, New Delhi for the assessment year 2016-17. The primary contention involved the disallowance of education cess on income tax, which the company argued should be deductible based on precedents set by the Rajasthan and Bombay High Courts.
During the proceedings, Sheela Foams Ltd. decided to withdraw the appeal post the introduction of Finance Act 2022. This Act amended Section 40(a)(ii) of the Income Tax Act, clarifying that ‘tax’ includes any surcharge or cess, effectively from April 1, 2005. This legislative change rendered the company’s original grievance moot.
The withdrawal signifies compliance with the updated legislative framework, reflecting how judicial and legislative developments can influence ongoing legal proceedings. This case exemplifies the dynamic interaction between lawmaking and tax litigation.
The case of Sheela Foams Ltd. underscores the importance of staying abreast with legislative changes that can impact pending legal issues significantly. For businesses, this case highlights the need to reconsider ongoing litigations in light of new legal provisions.
Sheela Foams Ltd. vs. ACIT: Withdrawal of Appeal in ITA 919/DEL/2021
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform