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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI N. V. VASUDEVAN & SHRI B. R. BASKARAN
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI B. R. BASKARAN, ACCOUNTANT MEMBER IT(TP)A No.474/Bang/2017 Assessment Year : 2012-13 Goldman Sachs Services Pvt. Ltd., ACIT, Vs. Crystal Downs, Embassy Golf links Business Circle – 3(1)(2), Park, off Intermediate Ring Road, Bengaluru. Bengaluru-560 071. PAN : AACCG 2435 N ASSESSEE RESPONDENT Assessee by : Shri. Madhur Agarwal, Advocate Revenue by : Shri. Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru Date of hearing : 07.03.2022 Date of Pronouncement : 11.03.2022 O R D E R
Per N V Vasudevan, Vice President
This is an appeal by the assessee against the final Order of Assessment dated 26.12.2016 passed by the ACIT, Circle – 3(1)(2), Bengaluru, under section 143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter called ‘the Act’), in relation to Assessment Year 2012-13.
The assessee has filed concise grounds of appeal
which reads as follows:
1. Transfer Pricing (Information Technology Enabled services segment) The order passed by the Honorable Dispute Resolution Panel ("DRP") and the learned Assessing Officer ("AO")/ Transfer Pricing Officer ("TPO") is not in accordance with the law and is IT(TP)A No.474/Bang/2017 Page 2 of 16 contrary to the facts and circumstances of the present case and in any case in violation of the principle of equity and natural justice. 1.2 The Honourable DRP and the learned AO/ TPO have erred in law and on facts in rejecting, without appropriate reasons, the detailed benchmarking analysis conducted by the Appellant and embarking on a fresh search for comparables with respect to the Information Technology Enabled services ("ITES") segment with modified filters. 1.3 The Honorable DRP and the learned AO/ TPO have erred in law and on facts in determining the Arm's Length Price ("ALP") by adopting the financial data for a single year (i.e. the financial year 2011-12) of the comparables as against multiple year data considered by the Appellant. 1.4 The Honorable DRP and the learned AO/ TPO have erred in determining the ALP based on following companies which are not comparable to the Appellant due to various factors such as functional dissimilarity, product/ intangible led revenues, inadequate financial information, non-availability of segment financials, extra ordinary events/ business restructuring, lower employee cost levels, high related party transactions, fails TPOs own filters etc, with respect to the ITES segment: Infosys BPO Limited; TCS E-Serve Limited; and BNR Udyog Limited. 1.5 The Honorable DRP and the learned AO/ TPO have erred in rejecting the following comparable companies based on inappropriate reasons: Microland Limited; and Jindal Intellicom Limited. 1.6 The Honorable DRP and the learned AO/ TPO have erred in computing the operating margins of the comparable companies at higher levels than actuals and determining the operating margin of the Appellant to be lower than the margin actually earned by the Appellant. 1.7 The Honorable DRP and the Learned AO/ TPO have erred in not appreciating that the Appellant, being a captive service provider, operates at lower risk levels as compared to comparable IT(TP)A No.474/Bang/2017 Page 3 of 16 companies, which carry higher risks (including receivables, market and credit risk) and accordingly erred in not granting appropriate risk adjustments to the margins of the comparable companies.
2. Disallowance under section 14A of the Income-tax Act, 1961 ("Act") 2.1 The Honorable DRP and the Learned AO have erred in law and on facts in disallowing an amount of Rs. 1,38,000 under section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962 ("Rules") in connection with the investment in share capital of group companies of the Appellant, where no exempt income has arisen during the assessment year.
3. Other Grounds 3.1 The Honorable DRP and the learned AO/TPO have erred in law and on facts in upholding the arm's length margin arrived at by the learned TPO by not considering the lower range of 5. percent from the mean margin as allowed under the Act and the Rules.
3. At the time of hearing, the learned Counsel for assessee pressed for adjudication of only ground No.1.4 in relation of transfer pricing adjustment and ground 2.1 with reference to the disallowance under section 14A of the Act. Apart from the above, the assessee has also filed an application for admission of the following additional ground:
“The Learned Assessing Officer ("Learned AO") and Hon'ble Dispute Resolution Panel ("Hon'ble DRP"), while assessing the total income of the Appellant for the year under consideration, ought to have allowed a deduction for education cess and secondary & higher education cess (collectively known as "education cess") for the year under consideration, though not claimed as a deduction by the Appellant.” 4. The additional ground being a legal ground is admitted for adjudication.
IT(TP)A No.474/Bang/2017 Page 4 of 16 5. As far as ground No.1.4 raised by the assessee is concerned, the same relates to the addition made consequent to determination of Arm’s Length Price (ALP) in respect of an international transaction.
The assessee is a company engaged in the business of providing contract Software Development Services (SWD Services) and providing Information Technology Enabled Services (ITES) to its holding company in Netherlands BV as a captive service provider. The transaction of rendering software development services and ITES to holding company was a transaction with an Associated Enterprise (AE) and was therefore an international transaction. As per the provisions of Sec.92 of the Act, income from international transaction has to be computed having regard to Arm’s Length Price (ALP).
The details of the international transaction between the assessee and its AE in AY 2012-13 were as follows:
Particulars Amount in Rs. Provision of SWD services 509,56,59,955 Provision of ITeS 127,78,91,238
It is not in dispute between the assessee and the revenue that the Transaction Net Margin Method (TNMM) was the Most Appropriate Method (MAM) for determination of ALP and that the profit level indicator to be adopted for comparison of the assessee’s profit with that of comparable companies was Operating Profit/Total Cost (OP/TC). The OP/TC of the assessee was 12.39%. The assessee in its TP study selected comparable companies whose arithmetic mean of OP/TC was comparable IT(TP)A No.474/Bang/2017 Page 5 of 16 with that of the assessee. Since the profit margin of the assessee was more than the arithmetic mean of OP/TC of the comparables selected by the assessee, it was claimed by the assessee that the price charged by it in the international transaction was at Arm’s Length. The Transfer Pricing Officer (TPO) to whom the determination of ALP was referred by the AO, other companies as comparable companies with the assessee. Thus a final set of 10 comparable companies was chosen by the TPO as comparable companies. The arithmetic mean of profit margin of these companies after and before adjustment towards working capital adjustment was as follows: Comparables selected by TPO and their arithmetic mean: Sl. No. Mark-up Mark-up on Total on Total Name of the Company Costs Costs (WC– (WC–adj) unadj) (in %) (in %) 1 Accentia Technologies Ltd. 11.75 10.62 2 Universal Print Systems Ltd. (Seg) (BPO) 52.46 56.49 3 Informed Technologies India Ltd. 6.08 7.91 4 Infosys BPO Ltd. 36.30 34.68 5 Jindal Intellicom Ltd. -0.05 1.90 6 Microgenetic Systems Ltd. 19.61 21.60 7 TCS E-Serve Ltd. 63.69 64.10 8 BNR Udyog Ltd. (Seg) (Medical Transcription) 41.58 49.05 9 Excel Infoways Ltd. (Seg) (IT/BVPO) 29.79 36.77 10 e4e Healthcare Business Services Pvt. Ltd. 19.85 20.58 AVERAGE MARK-UP 28.11 30.37 IT(TP)A No.474/Bang/2017 Page 6 of 16 9. On the basis of the comparable companies, the TPO computed arm’s length price of the international transaction of rendering of ITES by the assessee to its AE and the consequent addition to total income by way of adjustment to ALP as follows:
Arm’s Length Mean Mark-up 28.11% Less: Working Capital Adjustment -0.34% (after restriction) Adjusted mean mark-up of the 28.45% comparables Operating Cost (‘OC’) Rs.676,04,44,965/- Arm’s Length Price (‘ALP’) = Rs. 868,36,15,727/- 130.37% of OC Price Received Rs. 7,76,84,01,453/- Shortfall being adjustment u/S. Rs. 91,52,14,247/- 92CA 10. The difference between the price charged by the assessee and the ALP determined by the TPO viz., Rs.91,52,14,247/- was added to the total income by the AO in his drat assessment order dated 29.2.2016 as addition on account of shortfall being adjustment u/s.92CA of the Act.
The assessee filed objections before the Dispute Resolution Panel (DRP) under section 144C of the Act, against the addition made on account of adjustment to ALP. The DRP gave the following directions consequent to which the TP adjustment stood reduced to Rs.74,81,77,118/-. Still aggrieved by the addition made in the fair order of assessment, the assessee has raised several grounds of appeal challenging the addition on several counts.
IT(TP)A No.474/Bang/2017 Page 7 of 16 12. The learned counsel for the assessee submitted before us that the assessee seeks the following relief from the Tribunal: (i) Exclude 3 companies from the final list of comparable companies post DRP directions viz., Infosys BPO Ltd., TCS E-Serve Ltd., BNR Udyog Ltd., and Excel Infoways Ltd. from list of comparable companies on the ground that functionally these companies are not comparable with the assessee.
The learned counsel for the assessee submitted before us that 2 out of the 3 companies which the assessee seeks to exclude from the list of comparable companies viz., Infosys BPO Ltd., TCS E-service Ltd., were considered for exclusion by the Tribunal in the case of a similar assessee such as the assessee engaged in providing ITES in the case of Baxter (I) Pvt.Ltd. Vs. ACIT (2017) 85 Taxmann.com 285 (Delhi-Trib.). The learned DR relied on the order of the DRP/TPO.
We have considered the rival submissions. In the case of Baxter (I) Pvt.Ltd., (supra) the Delhi ITAT Bench considered comparability of the aforesaid three companies with a company engaged in providing ITES such as the assessee. The functional profile of the assessee and the assessee in the case of Baxter (I) Pvt.Ltd. (supra) are identical in as much as 7 out of the 10 companies chosen by the TPO in the case of the assessee were chosen as comparable in the case of Baxter (I) Pvt.Ltd. (supra). The Tribunal held on the comparability of the two companies Infosys BPO Ltd., and TCS E- service Ltd., as follows: (i) In paragraph 23 of its order the Tribunal held that Infosys BPO Ltd., is not comparable with a company providing ITES because of brand value and extraordinary events in the previous year relevant to IT(TP)A No.474/Bang/2017 Page 8 of 16 AY 2012-13 viz., acquisition of an Australia based company which had effect on its profits. (ii) In paragraphs 21 & 22 of its order the Tribunal held that TCS E- service Ltd. was liable to be excluded because it was also engaged in the business of software testing, verification and validation of software at the time of implementation and data centre management activities.
Respectfully following the decision of the Tribunal we hold that the aforesaid 3 companies be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison with the profit margins.
As far as the comparable company BNR Udyog Ltd., is concerned, learned Counsel for the assessee brought to our notice decision of the ITAT, Bengaluru Bench, rendered in the case of M/s. e4e Business Solutions India Pvt. Ltd., Vs. ITO for Assessment Year 2012-13 in IT(TP)A No.451/Bang/2017 order dated 03.11.2017. In the aforesaid decision, Tribunal remanded the question of comparability of BNR Udyog Ltd., with the following observations:
“11. BNR Udyog Ltd., ('BNR) 11.1 This company was selected as a comparable by the TPO,overruling the assessee's objections that this company, 'BNR', is functionally not comparable to the assessee, fails the RPT filter, the foreign exchange filter and service income filter applied by the TPO. Both the TPO/DRP have rejected the assessee's contentions for exclusion of this company from the list of comparables and therefore the assessee is in appeal before the Tribunal. 11.2.1 Before us, the ld AR of the assessee submitted that this company 'BNR' is functionally different from the assessee. It is contended that 'BNR' has Commercial Medical Billing and Coding IT(TP)A No.474/Bang/2017 Page 9 of 16 services in addition to Medical Transcription, but has not reported the results from these two activities in different segments, thereby rendering its results incomparable. Therefore, this company can be classified as rendering KPO services. 11.2.2 Apart from the above, it is also contended that this company, 'BNR', should be excluded from the set of comparables as its RPT at 49.60% is higher than the RPT filter of 25% applied by the TPO (Viz., that 'BNR' has RPT revenues of Rs. 1.70 crores as against total revenues of Rs. 3.63 crores) and thereby fails the RPT filter. It is also contended that this company also fails the service income filter applied by the AO. 11.3 Per contra, the ld DR for Revenue supported the order of the TPO in including this company in the list of comparables to the assessee. 11.4.1 We have heard the rival contentions and perused and carefully considered the material on record. The contention of the assessee that this company, 'BNR', fails the RPT filter at the entity level has been countered by the TPO who has mentioned that while this company has three segments, the benchmarking has been done only with the Medical Transcription segment. The TPO has pointed out that while the entire Medical transcription segment is exported, the RPT are with domestic companies and therefore it could not have been with the Medical transcription segment. 11.4.2 The DRP in its order has further elaborated on the TPO's view that RPT expenses have been booked in the earlier year also when the Business support segment was in existence; which fact has been confirmed by this company in is response to information called for u/s 133(6) of the Act. In our view, the rationale given by the DRP does not give any conclusive finding. If there was no Business Support Services Segment in the earlier year but RPT have been booked, it would mean that those RPT expenses pertain to the Medical transcription service segment in the earlier year. Since, in the current year under consideration, there are 2 segments, how much of the RPT pertains to each of the segments requires examination. This has not been analyzed either by the TPO or by the assessee. While it is clear that benchmarking is done only for the Medical transcription segment, then the RPT pertaining to that segment alone should be considered. However, the extent of the RPT pertaining to the Medical transcription segment has not been determined, either by the assessee or the TPO.
IT(TP)A No.474/Bang/2017 Page 10 of 16 11.4.3 Apart from this, the assessee has sought exclusion of this company, 'BNR' from the list of comparables on the ground that it fails the service income filter applied by the TPO, which we find has not been examined by the DRP. 11.4.4 The assessee has also sought exclusion of this company, 'BNR', from the set of comparables on the grounds of being functionally not comparable to the assessee. According to the assessee, this company carried out both Medical transcription and medical billing and coding and thus performed KPO services also. In our view, this aspect requires examination, particularly in the light of the finding of the DRP that the assessee also performed a mix of high end and low end services. In this view of the matter, we deem it appropriate to remand the matter of comparability of this company, 'BNR', to the file of the TPO for examination and determination of this issue afresh, in line with the above observations made by us. Needless to add the TPO will pass orders deciding the issue only after affording the assessee adequate opportunity of being heard and to file details/submissions in this regard which shall be duly considered. We hold and direct accordingly.”
Respectfully following the aforesaid decision, we direct the AO/TPO to consider the comparability of BNR Udyog Ltd., afresh as directed by the Tribunal in the order referred to above.
18. The AO is directed to compute the ALP in connection with international transaction as per the directions contained in this order, after affording opportunity of being heard to the assessee.
As far as ground No.2.1 raised by the assessee is concerned, the issue is with regard to the disallowance of expenses under section 14A of the Act. The admitted position is that the assessee did not earn any exempt income during the previous year. The question is whether in such situation disallowance under section 14A of the Act can be made. The CIT(A) followed the decision of the Hon’ble Delhi High Court in the case of IT(TP)A No.474/Bang/2017 Page 11 of 16 Cheminvest Ltd. Vs CIT 317 ITD 33 (Delhi) wherein it was categorically held that section 14A envisages that there should be actual receipt of income which was not includible in the total income during the relevant previous year for the purpose of disallowing any expenditure in relation to the said income. Wherever there is no exempt income includible in the total income of the assessee, the provisions of section 14A cannot be invoked. The relevant observations of the judgment of the Hon’ble Delhi High Court are extracted hereunder:-
15. Turning to the central question that arises for consideration, the court finds that the complete answer is provided by the decision of this court in CIT v. Hololcim India (P) Ltd. (decision dated 5th September 2014, in I.T. A. No. 486 of 2014). In that case, a similar question arose, viz., whether the Income-tax Appellate Tribunal was justified in deleting the disallowance under section 14A of the Act when no dividend income had been earned by the assessee in the relevant assessment year ? The court referred to the decision of this court in Maxopp Investment Ltd. (supra) and to the decision of the Special Bench of the Income-tax Appellate Tribunal in this very case, i.e., Cheminvest Ltd. v. CIT [2009] 317 !TR (AT) 86 (Delhi) [SB]. The court also referred to three decisions of different High Courts which have decided the issue against Revenue. The first was the decision in CIT v. Lakhani Marketing Incl. (decision dated April 2, 2014, of the High Court of Punjab and Haryana in I. T. A. No. 970 of 2008)--since reported in [2015] 4 ITR-OL 246 (P&H)-- which in turn referred to two earlier decisions of the same court in CIT v. Hero Cycles Ltd. [2010] 323 ITR 518 (P&H) and CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204 (P&H). The second was of the Gujarat High Court in CIT v. Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj) ; [2015] 372 1TR 97 (Guj) and the third of the Allahabad High Court in CIT v. Shivam Motors (P) Ltd. (decision dated 5th May, 2014, in T.A. No. 88 of 1071Bang12016 2014). These three decisions reiterated the position that when an assessee had not earned any taxable income in the relevant assessment year in question IT(TP)A No.474/Bang/2017 Page 12 of 16 corresponding expenditure could not be worked out for disallowance."
20. In view of the aforesaid decision of Hon’ble Delhi High Court, we allow ground No.2.1 raised by the assessee.
21. As far as the additional ground raised by the assessee is concerned, the same is in relation to the issue whether education cess can be allowed as a deduction under section 37(1) of the Act or has to be disallowed under section 40(a)(ii) of the Act. The additional ground of appeal being a legal ground is admitted for adjudication. ITAT Kolkata Bench in the case of Kanoria Chemicals & Industries Ltd. Vs Addl. CIT (ITAT Kolkata) Appeal Number Order dated 26/10/2021, dealt with identical additional ground as raised by the assessee in this appeal and held as follows:
“15. The assessee has taken the following additional ground of appeal:-
Additional Ground. I. On the facts and circumstances of the case and in law, the Assessing Officer/ CIT(A) ought to have allowed deduction of Education Cess amounting to Rs. 3,19,95,9981- in terms of law laid down by the Hon’ble Rajasthan High Court in Chambal Fertilizers and Chemicals Ltd. [ITA o. 52/Raj/2018 ruling dt. 31.7.2018] and further Hon’ble Kolkata Tribunal in case of ITC Ltd. [ 14 ruling dt. 27.11.20 18 ]
16. As per the provisions of section 40(a)(ii) of the Income-tax Act, 1961 ( in short, the ‘Act’) ‘any rate or tax levied’ on profits and gains of business or profession’ shall not be deducted in computing the income chargeable under the head ‘profits and gains, business or profession.
17. The Ld. Counsel for the assessee has submitted that ‘Cess’ has not been specifically mentioned in the aforesaid provisions of section 40(a)(ii) and, therefore, Cess is an allowable expenditure. He in this respect has relied upon the “CBDT Circular No. 91/58/66-ITJ(19)
IT(TP)A No.474/Bang/2017 Page 13 of 16 dated 18-05-1967”, wherein it has been interpreted that the ‘Cess’ shall not be disallowable. The said Circular for the sake of ready reference is reproduced as under:- “Interpretation of provision of Section 40(a)(ii) of IT Act, 1961 – Clarification regarding.- “Recently a case has come to the notice of the Board where the Income Tax Officer has disallowed the ‘cess’ paid by the assessee on the ground that there has been no material change in the provisions of section 10(4) of the Old Act and Section 40(a)(ii) of the new Act.
2. The view of the Income Tax Officer is not correct. Clause 40(a)(ii) of the Income Tax Bill, 1961 as introduced in the Parliament stood as under:- “(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 ot, or otherwise on the basis of, any such profits or gains”. When the matter came up before the Select Committee, it was decided to ‘omit the word ‘cess’ from the clause. The effect of the omission of the word ‘cess’ is that only taxes paid are to be disallowed in the assessments for the years 1962-63 and onwards. – 3. The Board desire that the changed position may please be brought to the notice of all the Income Tax Officers so that further litigation on this account may be avoided.{Board’s F . No.91/5B/66-ITJ(19), dated 18-5-1967.
The Learned Counsel for the assessee in this respect has further relied upon the decision of the Hon’ble Bombay High Court in the case of “Sesa Goa Limited Vs. JCIT“ (2020) 117 taxmann.com 96 and further on the decision of the Hon’ble Rajasthan High Court in the case of “Chambal Fertilizers & Chemicals Ltd Vs. JCIT”: D.B Income-tax Appeal No. 52/2018 decided on 31-07-2018, wherein, the Hon’ble High Court/s relied upon the aforesaid CBDT Circular Dt. 18-05-1967(supra) and in view of the interpretation made by the CBDT have held that ‘education cess’ can be claimed as an allowable deduction while computing the income chargeable under the heads of profits and gains of business or profession. The Learned Counsel has further relied upon the following decisions of the Co-ordinate Benches of this Tribunal, who have followed the aforesaid judgments of the Hon’ble High Courts: a. Decision of Kolkata Bench of the Tribunal in the case of DCIT Vs. ITC Infotech India Ltd, dt. 23-10-2019 b. Decision of Kolkata Bench of the Tribunal in the case of Tega Industries Ltd Vs. ACIT, ITA No. 404/Kol/2017 dt. 23-8-2019 c. Decision of Kolkata Bench of the Tribunal in the case of SREI Infrastructure Finance Ltd Vs. Addl. CIT, R-9, ITA No. 1318/Del/2012 dt. 31-12-2019.
IT(TP)A No.474/Bang/2017 Page 14 of 16 19. However, with due respect to the decisions of the Hon’ble Bombay High Court and Hon’ble Rajasthan High Court and of co-ordinate Benches of this Tribunal, we find that the issue is squarely covered by the decision of the Hon’ble Apex Court of the country in the case of “CIT Vs. K. Srinivasan” (1972) 83 ITR 346, wherein the following questions came for adjudication before the Hon’ble Apex Court:- “Whether the words “Income tax” in the Finance Act of 1964 in sub-s (2) and sub-s.(2)(b) of s. 2 would include surcharge and additional surcharge.”
The Hon’ble Supreme Court answered the question in favour of revenue observing as under:- “In our judgment it is unnecessary to express any opinion in the matter because the essential point for determination is whether surcharge is an additional mode or rate for charging income tax. The meaning of the word “surcharge” as given in the Webster’s New International Dictionary includes among others “to charge (one) too much or in addition ” also “additional tax”. Thus the meaning of surcharge is to charge in addition or to subject to an additional or extra charge. If that meaning is applied to s. 2 of the Finance Act 1963 it would lead to the result that income tax and super tax were to be charged in four different ways or at four different rates which may be described as (i) the basic charge or rate (In part I of the First Schedule); (ii) Surcharge; (iii) special surcharge and (iv) additional surcharge calculated in the manner provided in the Schedule. Read in this way the additional charges form a part of the income tax and super tax”.
The Hon’ble Supreme Court, therefore, has decided the issue in favour of the revenue and held that surcharge and additional surcharge are part of the income-tax. At this stage, it is pertinent to mention here that ‘education cess’ was brought in for the first time by the Finance Act, 2004, wherein it was mentioned as under:- “An additional surcharge, to be called the Education Cess to finance the Government’s commitment to universalise quality basic education, is proposed to be levied at the rate of two per cent on the amount of tax deducted or advance tax paid, inclusive of surcharge.”
The provisions of the Finance Act 2011 relevant to the Assessment Year under consideration i.e. 2012-13 are also relevant. For the sake of ready reference, the same is reproduced hereunder:- 2(11) The IT(TP)A No.474/Bang/2017 Page 15 of 16 amount of income-tax as specified in sub-sections (1) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the “Education Cess on income-tax”, calculated at the rate of two per cent. of such income- tax and surcharge, so as to fulfil the commitment of the Government to provide and finance universalised quality basic education.
23. A perusal of the aforesaid provisions of the Finance Act 2004 and Finance Act 2011 would show that it has been specifically provided that ‘education cess’ is an additional surcharge levied on the income- tax. Therefore, in the light of the decision of the Hon’ble Supreme Court in the case of “CIT Vs. K. Srinivasan” (supra) the additional surcharge is part of the income-tax. The aforesaid decision of the Hon’ble Apex Court and the provisions of Finance Act, 2004 and the relevant provisions of section 2(11) & (12) of the subsequent Finance Acts have not been brought into the knowledge of the Hon’ble High Courts in the cases of ” Sesa Goa Ltd” & “Chambal Fertilisers” (supra). Since the decision of the Hon’ble Supreme Court prevails over that of the Hon’ble High Courts, therefore, respectfully following the decision of the Hon’ble Supreme Court in the case of “CIT Vs. K. Srinivasan” (supra), this issue is decided against the assessee. The additional ground of assessee’s appeal is accordingly dismissed.”
22. Following the aforesaid decision, we reject the additional ground of appeal raised by the assessee.
In the result, appeal by the assesse is partly allowed.
Pronounced in the open court on the date mentioned on the caption page.