ITAT Dismisses Revenue's Appeal on Education Cess Deduction, Case Remanded
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the appeal filed by the Income Tax Department against AVR Storage Tank Terminals Pvt. Ltd. regarding the deduction of education cess. The case has been remanded to the Commissioner of Income Tax (Appeals) for fresh adjudication.
ItatEducation CessIncome TaxKolkata BenchCitaReal EstateJun 06, 2025
The Tribunal observed that the appeal had become infructuous since the very order challenged by the department had already been remanded to the Commissioner of Income Tax (Appeals) for fresh adjudication.
The appellant in this case is the Deputy Commissioner of Income Tax, Circle-11(1), Kolkata, who had filed an appeal against the order dated 17 April 2024 passed by the CIT (Appeals) under Section 250 of the Income Tax Act for the assessment year 2020–21. The department had challenged the CIT(A)'s order on grounds that it wrongly allowed deduction of education cess, allegedly in disregard of the Supreme Court’s decision in PCIT v. Chambal Fertilizers & Chemicals Ltd. (2022).
However, during the hearing, it was brought to the Tribunal’s notice that the impugned CIT(A) order had already been challenged by the assessee in a separate appeal, and the Tribunal had previously set aside that order on 6 December 2024. It was noted that the CIT(A) had ruled on issues which were not even raised by the assessee, leading to an earlier remand for adjudication on the correct grounds.
The counsel for AVR Storage Tank Terminals Pvt. Ltd. further clarified that the assessee had voluntarily disallowed the education cess in its tax computation during the assessment proceedings, and therefore, there was no live dispute on the matter at this stage.
Considering the submissions from both sides and reviewing the records, the ITAT Bench comprising Sonjoy Sharma (Judicial Member) and Rakesh Mishra (Accountant Member) concluded that since the original CIT(A) order dated 17 April 2024 had already been nullified and sent back for fresh decision, the present revenue appeal could not be sustained.
In Conclusion, the appeal was dismissed as infructuous.
Frequently Asked Questions
What is the ITAT?
The Income Tax Appellate Tribunal (ITAT) is a quasi-judicial body established under the Income Tax Act, 1961, to hear appeals against the orders of the Commissioner of Income Tax (Appeals).
What is the education cess?
The education cess is a tax levied on the total tax liability to fund education-related initiatives. It is usually a percentage of the total tax liability.
What is the CIT(A)?
The Commissioner of Income Tax (Appeals) (CIT(A)) is an appellate authority within the Income Tax Department that hears appeals against the orders of the Assessing Officer.
What is the significance of the Supreme Court’s decision in PCIT v. Chambal Fertilizers & Chemicals Ltd. (2022)?
The Supreme Court’s decision in PCIT v. Chambal Fertilizers & Chemicals Ltd. (2022) set important precedents regarding the allowable deductions for education cess, which the Income Tax Department often references in similar cases.
Why was the appeal dismissed as infructuous?
The appeal was dismissed as infructuous because the original order challenged by the department had already been remanded to the CIT(A) for fresh adjudication, rendering the current appeal moot.
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