The Rajasthan High Court reversed the order of the Income Tax Appellate Tribunal and held that in view of the circular of CBDT, ‘cess’ was not ‘tax’ and hence, could not be disallowed under section 40(a)(ii) (pre-amended). The Revenue challenged the High Court’s order before the Supreme Court. On concession, the Supreme Court held that in view of the amendment vide the Finance Act, 2022 with retrospective effect from 1-4-2005 to section 40(a)(ii), Education cess paid assessee was not allowable as an expenditure Accordingly, the Supreme Court allowed the Revenue’s appeal.