DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), HYDERABAD vs. BROADRIDGE FINANCIAL SOLUTIONS(INDIA) PRIVATE LIMITED, HYDERABAD

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ITA 448/HYD/2020Status: DisposedITAT Hyderabad05 October 2021AY 2016-175 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that education cess is not included in 'tax' under Section 40(a)(ii), allowing the assessee's claim. It also accepted the additional ground for foreign tax credit for statistical purposes, remanding it for adjudication. The revenue's appeal regarding ESOP deduction was dismissed.

What were the facts?

The assessee claimed education cess as a deduction, which was disallowed by the lower authorities. The assessee also sought to raise an additional claim for foreign tax credit. The revenue's appeal concerned the disallowance of ESOP deduction.

What were the issues?

Whether education cess is deductible as an expense under Section 40(a)(ii) and whether a new ground for foreign tax credit can be entertained.

Which sections of the Income-tax Act were involved?

Section 40(a)(ii),Section 90,Section 91

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD

Before: SHRI A.MOHAN ALANKAMONY & SHRI S.S.GODARA

O R D E R PER S.S.GODARA, J.M. : These assessee’s and Revenue’s cross-appeals for AY.2016-17 arise against the CIT(A)-1, Hyderabad’s order dated 18-02-2020, in case Nos.10407 / CIT(A)-I / Hyd /2018- 19, involving proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]; respectively. Heard both the parties. Case files perused. 2. It transpires at the outset that this assessee’s appeal suffers from 68 days delay stated to be :- 2 -: & 448/Hyd/2020 attributable to the reason(s) beyond its control as per condonation petition/affidavit. No rebuttal has come from the departmental side. The impugned delay is condoned therefore. 2.1. We also notice that this Revenue’s appeal suffers from delay of 105 days as attributable to the reasons mentioned in the petition/affidavit and on account of no objection from assessee’s side. This delay stands condoned therefore.

3.

We advert to assessee’s appeal ITA No.324/Hyd/2020. Its first and foremost substantive grievance seeks to reverse both the lower authorities’ action declining its education cess claim by quoting 40(a)(ii) of the Act for the reason that the clinching statutory expression “tax” employed therein also includes “cess”. We note in this factual backdrop that the instant issue of assessee’s education cess as allowable deduction is no more res integra in light of case law Sesa Goa Ltd, Vs. JCIT (2020) [117 taxmann.com 96] (Bom) and Chambal Fertilizers and Chemicals Ltd, Vs. CIT, (Raj) in light of CBDT’s circular dt.18-05-1967 that education cess is not included in “tax” u/s.40(a)(ii) of the Act, thereby deciding the issue in assessee’s favour and against the department. We thus accept the assessee’s first and foremost grievance to this effect. The Assessing Officer shall frame consequential computation to this effect as per law.

4.

Next comes the assessee’s petition dt.18-06-2020 seeking to raise its additional claim for credit of foreign tax to the tune of Rs.59,69,740/- paid in Australia.

:- 3 -: & 448/Hyd/2020 4.1. We have given our thoughtful consideration to rival pleadings. Hon'ble apex court’s landmark decision in National Thermal Power Co. Ltd., Vs., CIT [229 ITR 383] (SC) as considered in tribunal’s Special Bench’s decision All Cargo Global Logistics Ltd., Vs. DCIT (2012) [137 ITD 217](SB) (Mumbai), holds that the tribunal can very well entertain a new ground going to root of the matter so as to determine correct tax liability of a taxpayer provided all relevant facts are already on record. We go by the very analogy and find that the assessee’s foregoing petition seeking to raise its additional substantive ground(s) deserves acceptance. Ordered accordingly. 4.2. We find during the course of hearing that the assessee’s case all along is that the relevant details of the impugned income tax amount had been received post facto the CIT(A)’s order only. Be that as it may, we are of the view that the Assessing Officer needs to adjudicate the instant issue both in light of Section 90 as well as Section 91 of the Act as well as the corresponding details forming part of records. We therefore accept the assessee’s instant latter substantive grievance for statistical purposes. Its appeal is treated as allowed for statistical purposes in above terms.

5.

We now proceed to deal with the Revenue’s cross appeal (ESOP) deduction claim of Rs.2,21,55,486/-. The Assessing Officer held in his assessment order dt.19-12-2018 that the impugned

:- 4 -: & 448/Hyd/2020 expenditure is not allowable under revenue head. We note in this factual backdrop that the instant issue as to whether such an ESOP deduction claim falls under revenue head or not already stands adjudicated in this tribunal’s Special Bench decision in M/s.Biocon Ltd. Vs. DCIT (2013) 35 taxmann.com335 (Bang) and uphold in Revenue’s appeal preferred before the hon'ble Karnataka high court on 11-11-2020. We thus reject its instant sole substantive ground as well as the main appeal . No other ground has been pressed before us.

6.

To sum-up, assessee appeal ITA No.324/Hyd/2020 is treated as partly allowed and the Revenue’s cross appeal ITA No.448/Hyd/2020 is dismissed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 6th October, 2021

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