Is education Cess Allowed as Expenditure?

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KAPIL CHAUDHARY (Querist)

01 February 2011 1. If EC is allowable as expenditure then what will be the treatment of Education Cess Paid with Advance Tax?

2. What will be treatment of EC in self assessment tax?

C.A.Javid Patel

C.A.Javid Patel (Expert)

01 February 2011 No the traetment of EC is exactly like the treatment of Advance Tax & self assessment tax

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

01 February 2011 In both the cases,cess on income tax will be disallowed under section 40 (a)(ii) of the income tax Act,1961. For a wider meaning of the terms used in the referred section, pl see the decision of Madras High Court in the case reported in (1986) 159 ITR 646.

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KAPIL CHAUDHARY

KAPIL CHAUDHARY (Querist)

01 February 2011 As Per CBDT Circular No. 91/58/66 - ITJ(19) : In the CBDT Circular No. 91/58/66 - ITJ(19), dated May 18, 1967, it has been clarified that the effect of the omission of the word ‘cess’ from section 40(a)(ii) is that only taxes paid are to be disallowed in the assessment for the years 1962-63 onwards. Thus, as per the said circular, the education cess cannot be disallowed; and there cannot be a contradiction as the circular binds the tax authorities

CA. Lohith Jagadeesh

CA. Lohith Jagadeesh (Expert)

05 February 2011 HI,
Edu Cess becomes part of Income Tax Paid.
When there is no Provision to Claim Income tax as an Expenditure, Edu Cess also cannot not be claimed as an expenditure, therefore it shall be disallowed.

Thank you,
Regards
CA. Lohith. J
B.Com,ACA,CS,(ICWA),ITF Hons, SAPM Hons

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