In an appeal about the secondary and higher secondary cess, the Income Tax Appellate Tribunal (ITAT), Kolkata bench ruled that their education cess is part of tax and therefore no deduction will be provided.

The statement was held by the Kolkata ITAT when it received an appeal from an assessee. The assessee is challenging the order issued by the Assistant Commissioner of Income Tax, Kolkata on 25th January 2022 for the assessment year 2017-18.

As a result of the assessee’s appeal, which is the verification of the addition of Rs. 84,76,769/- by DRP, made by the AO/TPO, because of TP adjustment regarding the international transactions, without understanding the situation that TP provisions are not relevant as the assessee’s income was taxable following the Tonnage Tax Scheme, the brief facts of the matter were that the applicant had filed his or her income tax return on November 30, 2017.

In this, the applicant has revealed a total income of Rs. 17,07,17,340/-. The amount was considered for scrutiny under CASS and statutory notices were rightly issued and served on the assessee.

Examining TP criteria and the huge number of international transactions of Rs. 8.80 crores and specified domestic transactions (SDT) totaling Rs. 33.08 crores were two factors in choosing the case for scrutiny.

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Therefore, the reference was sent to the AO/TPO. And the TPO issued the order under Section 92CA (3), proposing the upper adjustment of Rs. 84,76,769/- on account of the transfer pricing adjustment.

As a result, this amount was added to the assessee’s income in the assessment framed under Section 143(3) read with Section 144C (13) of the Act dated January 25, 2022, among other additions.

The DRP disapproved the appeal in the appellate proceedings. It was done so with the help of recording its observations, and it is being discontented by the matter, that the applicant has chosen the instant appeal before the Kolkata ITAT.

The ITAT Panel of Sonjoy Sarma, the Judicial Member, and Rajesh Kumar, the Accountant Member, after hearing the opposing arguments made by Arati Agarwal and Rosy Banjerjee, the A.Rs, on behalf of the assessee, and by G. Hukugha Sema, the CIT, on behalf of the Revenue, held: “We have heard the ld. authorised representatives for both parties perused the orders of the lower authorities and the material available on record, and have also considered the judicial pronouncements that have been relied upon by them in the context of the issue in hand and also explanation 3 as inserted by Finance Act,2022 to section 40(ii) of the Act”.

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Following the conclusion of the matter, it has been decided that tax includes any surcharge or cess, referred by whatever name, is deemed to have always included them.

A deduction is not accessible to the assessee due to the education cess and Secondary and Higher Secondary education cess being included in the tax due to the above-discussed. As a result, the assessee’s arguments are disapproved.