JCIT(OSD), Circle - 4, Kolkata, Kolkata V. M/s. Rajabhat Tea Co. Ltd., Kolkata

ITA 1771/KOL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99719 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2011
• Court: TRIBUNAL
• Assessee Lawyers: H V BHARDWA; V N PUROHITFCA
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ] ITA NO.1771 /KOL/2011 ASSESSMENT YEAR : 2006 - 07 ( A PPELLANT ) (RESPONDENT) J .C.I.T., (OSD) CIRCLE - 4, - VERSUS - M/S. RAJABHAT TEA CO. LTD. KOLKATA KOLKATA (PAN: AABCR 2772 E) FOR THE APPELLANT : NONE FOR THE RESPONDENT : SHRI V.N.PUROHIT,FCA & SHRI H.V.BHARDWAJ,ACA DATE OF HEARING : 17.08 .2015. DATE OF PRONOUNCEMENT : 31.08.2015. ORDER PER SHRI M.BALAGANESH, AM THIS APPEAL OF REVENUE ARISES OUT OF ORDER OF LD. CIT(A) - I V , KOLKATA IN APPEAL NO . 174 /CIT(A) - I V / 08 - 09 DATED 23.08 .2011 FOR A.Y. 2006 - 07 AGAINST THE ORDER OF ASSESSMENT FRAMED U/S 143(3) OF THE I.T.ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT ). 2. THE FIRST ISSUE TO BE DECIDED IS AS TO WHETHER THE LD. CIT(A) IS CORRECT IN DIRECTING THE LD. AO TO VERIFY THE CERTIFICATE ISSUED BY THE TEA BOARD FOR THE SUBSIDY PAID TO THE ASSESSEE FOR ALLOWANCE OF CLAIM OF EXEMPTION U/S 10(30) OF THE ACT. 2.1. T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A GROWER AND MANUFACTURER OF TEA. THE ASSESSEE IS ENTITLED FOR RECEIPT OF TEA PLANTATION SUBSIDY FROM TEA BOARD AND THE SAME AS AND WHEN RECEIVED IS EXEMPTED U/S 10(30) OF THE ACT. DURING THE ASSESSMENT Y EAR UNDER APPEAL, THE ASSESSEE HAD CLAIMED EXEMPTION U/S 10(30) OF THE ACT IN RESPECT OF SUBSIDY RECEIVED AND RECEIVABLE FOR THE YEAR UNDER APPEAL. THE LD. AO MENTIONED THAT ONLY THE SUBSIDY RECEIVED DURING THE YEAR COULD BE GRANTED EXEMPTION U/S 10(30) OF THE A CT ON FURNISHING OF CERTIFICATE FROM TEA BOARD IN THAT REGARD. ACCORDINGLY, HE ALLOWED EXEMPTION U/S 10(3 0 ) OF THE ACT ONLY TO THE EXTENT OF RS.8,23,265/ - IN THE ASSESSMENT AND HAD NOT GRANTED EXEMPTION ON OTHER SUBSIDIES AS ITA NO. 1771/KOL/2011 M/S. RAJABHAT TEA CO.LTD . A.YR. 2006 - 07 2 CERTIFICATE FROM TEA BOAR D TO THAT EFFECT WERE NOT PRODUCED BEFORE THE LD. AO BY THE ASSESSEE. ON APPEAL THE LD. CIT(A) DIRECTED THE LD. AO TO VERIFY THE CERTIFICATE FROM TEA BOARD AND GRANT EXEMPTION U/S 10(30) OF THE ACT. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US ON THE F OLLOWING GROUND : - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE A.O. TO VERIFY THE CERTIFICATE IN REGARD TO TEA PLANTATION SUBSIDY AND ALLOW THE CLAIM OF THE ASSESSEE SINCE SECTION 10(3) STIPULATES THAT PRODUCTION/FILING OF CERTIFICATE FOR RECEIPT BEFORE THE A.O. IS MANDATORY. NONE APPEARED ON BEHALF OF THE REVENUE. SHRI V.N.PUROHIT, FCA AND SHRI H.V.BHARDWAJ, ACA, THE LD. ARS APPEARED ON BEHALF OF THE ASSESSEE. 2.2. WE HAVE HEARD THE LD. AR ON THIS I SSUE AND HELD THAT IN THE INTEREST OF JUSTICE AND FAIR PLAY, THIS ISSUE BE RESTORED TO THE FILE OF THE LD. AO TO VERIFY THE CERTIFICA TE FROM TEA BOARD FOR THE SUBSIDIES PAID TO THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER APPEAL AND DIRECT THE LD. AO TO G RANT EXEMPTION U/S 10(30) OF THE ACT ONLY TO THE EXTENT OF SUBSIDIES RECEIVED DURING THE YEAR SUBJE CT TO PRODUCTION OF CERTIFICATE FROM TEA BOARD. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A)IS CORRECT IN DELETING THE ADDITION MADE IN THE SUM OF RS.2,07,337/ - TOWARDS EMPLOYEES CON TRIBUTION TO PROVIDENT FUND (P.F.). 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE HAD DEDUCTED P.F. FROM THE SALARY TO ITS EMPLOYEES BUT REMITTED THE SAME BEYOND THE DUE DATE PRESCRIBED UNDER PROVIDENT FUND ACT. ACCORDINGLY, THE LD. AO HELD THAT THE SAME IS NOT ALLOWABLE AS DEDUCTION IN TERMS OF SECTION 36(1)(VA) OF THE ACT. ON FIRST APPEAL, THE LD. CIT(A) DELET ED THE ADDITION ON THE GROUND THAT THE PROVIDENT FUND DUES WERE REMITTED BEFORE THE DUE DATE OF RETURN OF INCOME. ITA NO. 1771/KOL/2011 M/S. RAJABHAT TEA CO.LTD . A.YR. 2006 - 07 3 AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND : - 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT(A) HAS E RRED IN LAW IN DIRECTING THE A.O. TO ALLOW RS.2,07,337/ - ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO P.F. SINCE THE DECISION OF THE LD. CIT(A) IN THIS IS IN CONTRAVENTION WITH SECTION 36(1)(VA). 3.2. WE HAVE HEARD THE LD. AR ON THIS ISSUE AND HELD THAT THI S ISSUE IS DIRECTLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF VINAY CEMENT REPORTED IN (2009) 313 ITR 1, WHEREIN IT HAS BEEN HELD THAT STATUTORY ITEMS LIKE PROVIDENT FUND AND ESI, IF PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME HAVE TO BE ALLOWED IRRESPECTIVE OF THE FACT WHETHER THE CONTRIBUTIONS RELATED TO THE EMPLOYEE AND EMPLOYER. HOWEVER, WE ARE NOT ABLE TO VERIFY FROM THE MATERIALS AVAILABLE ON RECORD AS TO WHETHER THE PROVIDENT FUND REMITTANC E S WERE INDEED MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME BY THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE FILE OF THE LD. AO WITH THE DIRECTION TO VERIFY THE DATES OF REMITTANCE AND IF THE SAME IS PAID BEFORE THE DUE DATE OF FILIN G OF RETURN OF INCOME, THE DEDUCTION SHOULD BE GRANTED TO THE ASSESSEE. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) IS CORRECT IN ALLOWING DEDUCTION TOWARDS CES S ON GREEN LEAF BY RELYING UPON THE JURISDICTIONAL HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD CASE. 4.1. THE ASSESSEE DEBITED A SUM OF RS.16,07,688/ - IN ITS PROFIT AND LOSS ACCOUNT TOWARDS CESS ON GREEN LEAF. THE LD. AO SOUGHT TO DISALLOW THE SAME ON T HE GROUND THAT IT IS RELATED TO 100% AGRICULTURAL ACTIVITY. THE LD.AO FURTHER STATED THAT THOUGH THE DECISION OF THE JURISDICTIONAL HIGH COURT IN AFT INDUSTRIES REPORTED IN 270 ITR 167 (CAL) IS FAVOURBLE TO THE ASSESSEE ON THIS ISSUE, BUT SINCE THE SPECIAL LEAVE PETITION (SLP) IS PREFERRED BY THE DEPARTMENT AGAINST THAT ORDER, RELIEF IS NOT GRANTED. ON FIRST APPEAL THE LD. CIT(A) RESPECTFULLY FOLLOWING THE JURISDICTIONAL HIGH COURT DECISION DELETED THE ADDITION. ITA NO. 1771/KOL/2011 M/S. RAJABHAT TEA CO.LTD . A.YR. 2006 - 07 4 AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND : - 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.16,07,788/ - ON ACCOUNT OF CESS ON GREEN LEAF WITHOUT CONSIDERING THE FACT THAT EXPENSES ON ACCOUNT OF CESS ON GRE EN LEAF IS RELATED TO 100% AGRICULTURAL OPERATION AND SLP IS PENDING BEFORE THE HON BLE SUPREME COURT AGAINST THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. VS - CIT (270 ITR 167) IN THE LIGHT OF WHICH LD.CIT(A) DECIDED THE ISSUE I N FAV OUR OF THE ASSESSEE. 4.2. WE HAVE HEARD THE LD.AR AND FIND THAT THIS IS SQUARELY COVERED BY THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS AFT INDUSTRIES LTD. REPORTED IN (2004) 270 ITR 167 WHEREIN THEIR LORDSHIPS HAD HELD AS UNDER : - IN R ESPECT OF COMPUTATION OF INCOME OF TEA GROWN AND MANUFACTURED, A FICTION HAS BEEN CREATED UNDER WHICH BOTH THE AGRICULTURAL COMPONENT AND THE BUSINESS COMPONENT OF THE INCOME WOULD BE ASSESSED TOGETHER FOR THE PURPOSE OF COMPUTING THE INCOME UNDER THE ACT AND ONLY AFTER THE COMPUTATION OF THE TOTAL INCOME, THE APPORTIONMENT IS TO BE MADE DETERMINING 60 PER CENT AS AGRICULTURAL INCOME. WHEN BY FICTION THE INCOME IS COMPUTED AS AN INCOME UNDER THE ACT, ALL DEDUCTIONS AS ARE AVAILABLE BOTH FOR T HE AGRICULTURAL COMPONENT AND FOR THE BUSINESS COMPONENT OF THE INCOME ARE TO BE ALLOWED AS A NATURAL COROLLARY. THEREFORE, THE ENTIRE AMOUNT PAID AS CESS UNDER THE AGRICULTURAL INCOME - TAX ACT IS ELIGIBLE FOR DEDUCTION. RESPECTFULLY FOLLOWING THE DECISIO N OF THE JURISDICTIONAL HIGH COURT AS STATED SUPRA, WE DISMISS THIS GROUND OF THE REVENUE. 5. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) IS CORRECT IN ALLOWING THE ENTIRE CLAIM OF SUBSIDY FOR THE PURPOSE OF ASCERTAINING T HE BOOK PROFIT U/S 115JB OF THE ACT. 5.1. WE HAVE HEARD THE LD. AR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HOLD THAT THIS ISSUE IS ONLY CONSEQUENTIAL TO THE FIRST GROUND RAISED BY THE REVENUE. THERE , WE HAVE DIRECTED THE LD. AO TO GRANT EXEMPTI ON U/S 10(3 0) OF THE ACT TOWARDS TEA PLANT ATION SUBSIDY TO THE EXTENT OF SUBSIDY RECEIVED DURING THE YEAR SUBJECT TO PRODUCTION OF CERTIFICATES FROM TEA BOARD TO THAT EFFECT. WE HOLD THAT WHATEVER IS ALLOWED BY THE LD. AO PURSUANT TO THAT GROUND, THE SAME AMOUNT HAD TO BE REDUCED FROM THE NET PROFIT AS PER PROFIT AND LOSS ACCOUNT TOWARDS EXEMPTION U/S 10(30) OF THE ACT FOR THE PURPOSE OF ASCERTAINING THE BOOK PROFIT U/S 115JB OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ITA NO. 1771/KOL/2011 M/S. RAJABHAT TEA CO.LTD . A.YR. 2006 - 07 5 6. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNC ED IN TH E COURT ON 31.08.2015. SD/ - SD/ - [MAHAVIR SINGH] [M.BALAG ANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31.08.2015. R.G.(.P. S.) COPY OF THE ORDER FORWARDED TO : 1 . M/S. RAJABHA T TEA CO.LTD., 3, NETAJI SUBHAS ROAD, KOLKATA - 700017. 2 THE J.C.I.T.(OSD), CIRCLE - 4, KOLKATA. 3 . THE CIT - I I , KOLKATA , 4. THE CIT(A) - I V , KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES