Jay Shree Tea & Industries Ltd., Kolkata V. DCIT, Circle - 4(1), Kolkata, Kolkata

ITA 1016/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2073 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 16-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: B K CHADURVEDI
• Keywords: Business income; Revision of order; Assessment record; Set aside
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1016 / KOL / 2018 ASSESSMENT YEAR :2013-14 JAY SHREE TEA & INDUSTRIES LTD., 10, CAMAC STREET, KOLKTA-17 [ PAN NO.AAACJ 7788 D ] V/S . DCIT, CIRCLE-4(1), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KLKATQA-700 069 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI B.K. CHADURVEDI, CA /BY RESPONDENT SHRI RADHEY SHYAM, CIT-DR /DATE OF HEARING 09-09-2019 /DATE OF PRONOUNCEMENT 06-12-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 ARISES AGAINST THE PRINCIPAL COMMISSIONER OF INCOME TAX-2,KOLKATAS OR DER DATED 22.03.2018 PASSED IN CASE F.NO.PR.CIT-2/KOL/REVISION/17-18/263 /JAY SHREE/13- 14/11392-94, INVOLVING PROCEEDINGS U/S 263 OF THE I NCOME TAX ACT, 1961;IN SHORT THE ACT. HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF THE PRINCIPAL CITS ACTION ASSUMING U/S 263 REVISION JURISDICTION QUA THE ASSESSEES REGULAR ASSESSMENT FRAMED ON 09.03.2016 DETERMINING INCOME OF 22,26,27,270/- UNDER NORMAL AND 33,65,83,660/- UNDER MAT PROVISION. CASE FILE PERUS ED. ITA NO.1016/KOL/2018 A.Y. 2013-14 JAY SHREE TEA & INDS. LTD. VS. DCIT, CIR-4( 1), KOL. PAGE 2 2. BOTH THE LEARNED REPRESENTATIVES TAKE US TO THE PCITS REVISION FINDINGS UNDER CHALLENGE ON THE SOLE SUBSTANTIVE ISSUE OF AS SESSEES INTEREST INCOME AS UNDER:- 2. THE ASSESSMENT RECORDS OF THE ASSESSEE-COMPANY WERE CALLED FOR AND ON THE BASIS OF THE VERIFICATION OF THE MATERIAL AVAIL ABLE ON RECORD, IT WAS FOUND THAT THE ORDER OF ASSESSMENT U/S.143(3), DATED 09.0 3.2016 FOR THE A.Y 2013- 14, IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE ON THE FOLLOWING GROUND:- THE PERUSAL OF THE ASSESSMENT RECORDS REVEALS THAT AS PER PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2013, YOU CREDITED AN AMOUNT OF RS.27,92,53,000/- UNDER THE HEAD OTHER INCOME ( SCHEDULE 2.19 TO THE P&L A/C ) WHICH INCLUDED RS.13,11,47,476/- AS INTEREST INCOME WHICH WAS ALLOCATED TO THREE HEADS NAMELY 100% TAXABLE BY CENTRAL 40% TAXABLE BY CENTRAL AND H EAD OFFICE (( WHICH LATER PROPORTIONATELY ALLOCATED BETWEEN PREVIOUS TW O ) AMOUNTING TO RS.14,43,568/-, RS.9,88,847/- AND RS.12,87,15,061/- . FOR THE PURPOSE OF RULE 8 OF INCOME TAX RULES. INTEREST INCOME SHOULD NOT BE INCLUDED IN COMPOSITE INCOME RATHER IT SHOULD BE TA XABLE ON FULL (100%) WITHOUT AVAILING ANY APPORTIONMENT. 3. A SHOW CAUSE NOTICE, DATED 27.02.2018 WAS ISSUED TO THE ASSESSEE- COMPANY REQUIRING IT TO SUBMIT CLARIFICATION OR EXP LANATION TO THE ABOVE ISSUE & ALSO TO SHOW CAUSE WHY REMEDIAL ACTION U/S.263 OF T HE ACT WOULD NOT BE TAKEN AGAINST THE ASSESSMENT ORDER MADE U/S.143(3) DATED 09.03.2016. IN ITS RESPONSE, SHRI B.K. CHADURVEDI, VICE PRESIDENT (TAX ATION) APPEARED ON BEHALF OF THE ASSESSEE COMPANY AND FURNISHED A WRIT TEN SUBMISSION TO THE SHOW CAUSE NOTICE, WHICH IS PLACED ON RECORD. THE M ATTER WAS DISCUSSED AND HEARD. THE RELEVANT PORTION OF THE WRITTEN SUBMISSI ON MAD THEREIN IS REPRODUCED BELOW:- THE ASSESSEE IS MAINLY ENGAGED IN THE BUSINESS OF GROWING AND MANUFACTURING OF TEA, APART FROM OTHER ACTIVITIES A ND THE INCOME FROM TEA GROWN AND MANUFACTURED IS REQUIRED TO BE COMPUT ED AS IF BUSINESS INCOME AND 40% THEREOF IS TAXABLE UNDER THE INCOME TAX ACT, AS PER RULE 8 OF THE INCOME TAX RULES, 1962. FOR THE PURPOSE OF COMPUTATION OF INCOME OF EACH TE A ESTATE, ALL THE REVENUE INCOME AND EXPENDITURE OF TEA ESTATES ARE C ONSIDERED AND THREE AFTER THE TOTAL EXPENDITURE OF THE HEAD OFFIC E IS BEING ALLOCATED TO ALL THE GARDENS AND UNITS ON THE BASIS OF SALES PER CENTAGE. ALL THE INCOME AND EXPENDITURE SO ALLOCATED INCLUDES PAYMEN T OF INTEREST AND RECEIPT OF INTEREST BOTH. IN THE YEAR UNDER REVIEW THE TOTAL INTEREST EARNED BY THE ASSESSEE IS RS.13,11,47,476/- WHICH I NCLUDES RS.9,88,847/- BEING THE INTEREST RECEIVED BY THE TE A ESTATES ON SECURITY DEPOSITS MADE WITH THE ELECTRICITY BOARD AND THE TO TAL EXPENDITURE ON ACCOUNT OF INTEREST IS RS.37,38,37,446/-. THEREFOR E, THE NET AMOUNT IS RS.24,26,89,970/- WHICH HAS BEEN PROPORTIONATELY CH ARGED IN THE PROFIT AND LOSS ACCOUNT IN ALL THE UNITS AND GARDENS. THE HON'BLE HIGH COURT IN THE CASE OF AFT INDUSTRIE S LTD. [ 270 ITR 167 ] HAS HELD THAT CESS ON GREEN LEAF WILL BE DEDUCTIB LE FROM THE ITA NO.1016/KOL/2018 A.Y. 2013-14 JAY SHREE TEA & INDS. LTD. VS. DCIT, CIR-4( 1), KOL. PAGE 3 COMPOSITE INCOME AND THEREAFTER RULE 8 WILL BE APPL ICABLE. THE SAID PRINCIPLE LAID DOWN BY THE HON'BLE CALCUTTA HIGH CO URT HAS BEEN APPROVED BY THE APEX COURT IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. APPEJAY TEA CO. LTD. [ CIVIL APPEAL NO. 1105 OF 2006 ]. A COPY OF THE SAID JUDGMENT OF THE HON'BLE SUPREME COURT I S ANNEXED HERETO. RELIANCE IS FURTHER PLACED ON THE JUDGMENT OF THE H ON'BLE CALCUTTA HIGH COURT IN THE CASE OF WARREN TEA LTD. VS. COMMISSIO NER OF INCOME TAX & OTHERS. [374 ITR 0006] AND COMMISSIONER OF INCOME TAX VS. J.J. EXPORTERS LTD. [ 324 ITR 329 ]. ALTHOUGH BOTH THE JUDGMENTS ARE PRINCIPALLY IN FAVOUR OF THE ASSESSEE BUT THE JUDGM ENT IN RESPECT OF WARREN TEA WHICH IS A TEA COMPANY AND WHOSE INCOME IS ASSESSABLE UNDER RULE 8, THE HON'BLE COURT HAS HELD THAT THE I NTEREST EARNED BY THE COMPANY IS A BUSINESS INCOME AND ACCORDINGLY ELIGIB LE FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 33AB OF THE INCOME TAX ACT, 1961 WHICH IS APPLICABLE TO THE ASSESSEE DERIVING INCOME FROM GROWING AND MANUFACTURING TEA WHICH IS ASSESSABLE IN ACCORDANCE WITH RULE 8 OF THE INCOME TAX RULES, 1962. A COPY OF THE JUDGMENT OF W ARREN TEA LTD. IS ANNEXED. FROM THE ABOVE JUDGMENTS, IT IS CRYSTAL CLEAR THAT THE INTEREST INCOME EARNED BY THE ASSESSEE HAS RIGHTY BEEN APPORTIONED AMONGST ITS UNITS AND GARDENS AND THE ASSESSMENT ORDER PASSED U/S.143 (3) ON 09-03- 2016 IS NEITHER ERRONEOUS NOR PREJUDICE TO THE INTE REST OF REVENUE. THE ASSESSEE IS FILING ITS RETURN OF INCOME AND IS BEING ASSESSED REGULARLY YEAR AFTER YEAR. FROM THE DATE OF INCORPO RATING OF THE COMPANY, THE ASSESSEE IS FILING ITS RETURN AND SHOW ING ITS INCOME AND EXPENDITURE BY ALLOCATING THE INTEREST INCOME AND E XPENDITURE TO ALL OF ITS UNITS AND GARDENS AND THE SAID COMPUTATION ARE BEING ACCEPTED BY THE REVENUE. IN NONE OF THE PAST YEARS, THE QUESTIO N OF TAXING INTEREST INCOME AS INCOME FROM OTHER SOURCES HAS BEEN RAISED . THIS IS A SETTLED LAW THAT ALTHOUGH THE RES JUDICAT A DOES NOT APPLY TO THE TAX PRECEDING BUT THE CONSISTENCY SHOULD BE MAINTAI NED. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: ARONI COMMERCIALS LTD. VS. DEPUTY COMMISSIONER OF INCOME TADX AND ANOTHER [ 362 ITR 403 ] GALILEO NEDERLAND BY VS. ASSISTANT DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATIN) [ 367 ITR 319 ] NUCLEAR POWER CORPORATION OF INDIA LTD. VS. DY. DI RECTOR OF INCOME TAX (INTL. TAXATION) [ ITAT-MUM; ITA 733-35/MUM/11 ] FROM THE ABOVE JUDGMENTS, IT IS CRYSTAL CLEAR THAT THE CONSISTENCY SHOULD BE MAINTAINED TO MAINTAIN THE UNIFORMITY, OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE ARE IDENTICAL. SINCE IN THE INSTANT CASES, THE ASSESSEE WAS APPORTIONING ITS INTEREST INCOME T O ALL OF ITS UNITS AND GARDENS YEAR AFTER YEAR AND DEPARTMENT HAS ACCEPTED THE SAME AND MADE ASSESSMENTS ACCORDINGLY, THE ORDER PASSED BY T HE LD. ASSESSING OFFICER CANNOT SAID TO BE ERRONEOUS. THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR I NDUSTRIAL CO. LTD. V. COMMISSIONER OF INCOME TAX [243 ITR 83] HAS HELD THAT IF TWO VIEW ARE POSSIBLE AND THE INCOME TAX OFFICE HAS TAKEN ON E VIEW WITH WHICH ITA NO.1016/KOL/2018 A.Y. 2013-14 JAY SHREE TEA & INDS. LTD. VS. DCIT, CIR-4( 1), KOL. PAGE 4 THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREAT ED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE LEARNED. ASSESSING OFFICER HAS TAKEN A PO SSIBLE VIEW WHICH IS BEING CONSTANTLY FOLLOWED YEAR AFTER YEAR, ORDER CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. UNDER THE ABOVE CIRCUMSTANCES, WE THEREFORE PRAY BE FORE YOUR GOODSELF TO PLEASE DROP THE PROCEEDING INITIATED U/ S 263 OF THE INCOME TAX ACT, 1961. 4. I HAVE CONSIDERED THE SUBMISSION MADE ON BEHALF OF THE ASSESSEE AND THE FACTS ON RECORD. REGARDING THE APPLICABILITY OF THE PROVISIONS OF RULE 8 OF INCOME TAX RULES, 1962 ON THE INTEREST INCOME, IT H AS BEEN SUBMITTED N BEHALF OF THE ASSESSEE THAT THE ISSUE STANDS COVERE D THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN WARREN TEA LTD. VS. CI T (2015) 374 ITR 06(CAL) WHICH IS BINDING. I AM OF THE CONSIDERED VIEW THAT THE DECISIONS OF THE JURISDICTIONAL HIGH COURT IN EVEREADY INDUSTRIES I NDIA LTD. VS. CIT (2010) 323 ITR 312 (CAL) AND WARREN TEA LTD. VS. CIT (2015) 37 4 ITR 06 (CAL) ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. IT IS ALSO SEEN THAT THE OPERATION OF THE SAID DECISIONS HAS NOT BEEN STAYED BY THE SU PREME COURT. THEREFORE THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE ISS UE IN THE LIGHT OF THE DECISIONS IN THE CASE OF EVEREADY INDUSTRIES INDIA LEARNED. VS. CIT (2010) 323 ITR 312 (CAL) AND WARREN TEA LTD. VS. CIT (2015 ) 374 ITR 06 (CAL). 5. SUBJECT TO THE OBSERVATIONS MADE ABOVE, THE ASSE SSMENT ORDER PASSED BY THE AO IS SET ASIDE IN RESPECT OF ONLY THE POINT ST ATED IN PARA-2 ABOVE. THE ASSESSING OFFICER IS DIRECTED TO INITIATE FRESH ASS ESSMENT PROCEEDINGS & CARRY OUT NECESSARY VERIFICATION & TAKE ACTION ACCORDINGL Y AFTER VERIFICATION OF THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. THE ASSES SING OFFICER MUST ALSO PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSEE COMP ANY TO PRODUCE DOCUMENTS & EVIDENCES WHICH IT MAY CHOSE TO RELY UP ON FOR SUBSTANTIATING ITS OWN CLAIM. THEREAFTER A FRESH ASSESSMENT ORDER MAY BE PASSED IN ACCORDANCE WITH THE RELEVANT PROVISIONS OF LAW. 3. A PERUSAL OF THE PCITS FOREGOING DETAILED DISCU SSION MAKES IT CLEAR THAT HE HAS INVOKED HIS REVISION JURISDICTION QUA ASSESS EES INTEREST INCOME OF 13,11,47,476/- INCLUDED IN OTHER INCOME OF 27,92,53,000/-. THE REVENUES CASE IS THAT THE PCIT HAS RIGHTLY ISSUED HIS REVISION DIRECTION TO THE ASSESSING OFFICER. WE SEE NO REASON TO CONCUR WITH THE SAME. WE MAKE IT CLEAR THAT THE PCIT HAS HIMSELF ADMITTED THE CLINCH ING LEGAL PROPOSITION IN VIEW OF HON'BLE JURISDICTIONAL HIGH COURTS TWIN JUDGMEN TS IN WARREN TEA LTD. VS. COMMISSIONER OF INCOME TAX (2015) 374 ITR 06 (CAL) AND EVEREADY INDUSTRIES INDIA LTD. VS. COMMISSIONER OF INCOME TA X (2010) 323 ITR 312 (CAL). THEIR LORDSHIPS MAKE IT CLEAR THAT INTEREST INCOME DERIVED FROM PARKING ITA NO.1016/KOL/2018 A.Y. 2013-14 JAY SHREE TEA & INDS. LTD. VS. DCIT, CIR-4( 1), KOL. PAGE 5 OF SURPLUS FUNDS IN CASE OF TEA COMPANY HAS TO BE T REATED AS BUSINESS INCOME SINCE THE MAIN ACTIVITY IS OF GROWING, MANUFACTURI NG AND SELLING OF TEA AND NOT THAT OF EARNING INTEREST BY MAKING INVESTMENTS IN S HORT TERM FIXED DEPOSITS. NO CONTRARY JUDICIAL PRECEDENT HAS BEEN QUOTED AT THE REVENUES BEHEST TAKING A DIFFERENT STAND AGAINST THE TAXPAYER. THE PCIT NOWH ERE HOLDS THE IMPUGNED ASSESSMENT AS ERRONEOUS CAUSING PREJUDICE TO THE IN TEREST OF THE REVENUE; SIMULTANEOUSLY, AS PER HON'BLE APEX COURTS LANDMAR K DECISION IN MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX (2000) 243 ITR 83 (SC). WE THEREFORE ACCEPT THE ASSESSEES ARGUMENTS AND RE STORE THE REGULAR ASSESSMENT DATED 09.03.2016 FRAMED IN THE INSTANT C ASE. THE PCITS REVISION DIRECTION STAND REVERSED. 4. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 06/ 12/2019 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP )- 06 / 12 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-JAY SHREE TEA & INDUSTRIES LTD., 10, CAM AC STREET, KOLKATA-17 2. /RESPONDENT-DCIT, CIR-4(1), P-7 CHOWRNGHEE SQ. KOLK ATA-69 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. ((4, 4, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ 4,