Darjeeling Dooars Plantations (Tea) Limited, Kolkata V. DCIT, Circle - 4, Kolkata, Kolkata

ITA 2054/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48075 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 25-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2010
• Court: TRIBUNAL
• Department Lawyers: GOUTAM MONDAL
• Assessee Lawyers: S K AGARWAL
• Keywords: Business income; Depreciation; Corroborative evidences

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 2054/KOL/2010 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) DARJEELING DOOARS PLANTATIONS (TEA) LIMITED (PAN: AABCD 2697 JD.) - % - - VERSUS - . (-.*+/ RESPONDENT ) THE D.C.I.T., CIRCLE-4, KOLKATA *+ / 0 '/ FOR THE APPELLANT: SHRI S.K.AGARWAL -.*+ / 0 '/ FOR THE RESPONDENT: SHRI GOUTAM MONDAL '1 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 14.07.2010 OF THE CIT(A)-XVI, KOLKATA PERTAINING TO A.YR. 2005-06. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE PROFIT, AS CLAIMED BY THE APPELLANT AT RS.51,549/- ON SALE OF TEA OUT OF TEA LEAVES BOUGHT FROM OUTSIDE TEA GARDENS. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD NEW GROUN D (S), MODIFY/SUBSTITUTE THE GROUNDS CONSIDERED. 2 2.1. SUBSEQUENTLY THE ASSESSEE FILED THE REVISED GR OUND WHICH IS AS UNDER :- THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE AD DITION OF RS.4,58,302/- BEING PROFIT ON SALE OF TEA MADE OUT OF TEA LEAVES BOUGHT FROM OUTSIDE TEA GARDENS INSTEAD OF RS.51,549/- DETERMINED AND CLAIM ED BY THE APPELLANT. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AO HA S MADE ADDITION OF RS.10,91,762/- BEING THE 23% OF RS.47,46.791/- ON A CCOUNT OF INCOME FROM SALE OF TEA PROCESSED OUT OF PURCHASED GREEN LEAF BY OBSERVING AS UNDER :- FROM THE BANK A/C. FURNISHED ALONG WITH THE RETURN IT IS SEEN THAT PURCHASE OF GREEN LEAF AMOUNTS TO RS.3,23,56,488/- FROM SCHEDUL E-16 TO THE NOTES ON A/CS GREEN LEAF PURCHASED FROM OWN GARDEN IS 1,17,60,072 KGS. AND PURCHASED FROM OUTSIDE IS 34,91,657 KGS. OUT OF THIS CONSUMPT ION FOR PRODUCTION OF BLACK TEA IS 1,17,34,807 KGS OF PURCHASED LEAF AND 35,12, 651 KGS OF PURCHASED LEAF. THEREFORE, OUT OF A TOTAL AMOUNT OF 152,47,458 KGS OF GREEN LEAF, THE PERCENTAGE OF PURCHASED LEAD IS 23%. THEREFORE, INCOME FROM TE A BUSINESS CONSISTS OF PROFIT ATTRIBUTABLE TO 23% OF GREEN LEAF WHICH WAS PURCHASED BY THE ASSESSEE. THE AR WAS REQUESTED TO BIFURCATE THE PROFIT FORM P ROCESSING AND SALE OF PURCHASED LEAF AGAINST THOSE FROM PLUCKED LEAF FROM OWN GARDEN. THE AR FURNISHED ONE BIFURCATION WITHOUT MAKING ANY SUPPOR TING STATEMENT OR ARGUMENT IN FAVOUR OF SUCH CALCULATION AND WITHOUT SUBSTANTIATING SUCH WITH SUPPORTING EVIDENCE VIZ. IN RESPECT OF ALLOCATION O F DIFFERENT EXPENSE HEADS. IN ABSENCE OF SUCH SUPPORTING DETAILS ASSESSEES CALCU LATION IS NOT ACCEPTABLE. INSTEAD, 23% OF INCOME FROM TEA BUSINESS IS TREATED AS 100% TAXABLE BUSINESS INCOME AND RULE-8 IS APPLIED TO THE REST OF THE PRO FIT. 3.1. ON APPEAL THE LD. CIT(A) HAS RESTRICTED THE IN COME FROM RS.4,58,302/- IN PLACE OF RS.10,91,762/- BY OBSERVING AS UNDER :- 12. I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND PERUSED THE ASSESSMENT ORDER. IT IS OBSERVED THAT IN THE ASSESS MENT ORDER THE AO HAS TAKEN INCOME FROM TEA BUSINESS BEFORE APPLYING RULE-8 AT RS.19,92,619/-. IN THIS INCOME, THE AO HAS ADDED DISALLOWANCE ON ACCOUNT OF DEPRECIATION OF RS.6,43,245/- AND CESS ON GREEN LEAF OR RS.21,10,29 7/- TO ARRIVE ON AGGREGATE INCOME OF RS.47,46,791/-. THE 23% OF RS.47,46,791/- WHICH COMES TO RS.10,91,762/- HAS BEEN TREATED BY THE AO AS INCOME FROM THE SALE OF TEA PROCESSED OUT OF THE PURCHASED GREEN LEAVES. THE AO HAS CONSIDERED 23% OF INCOME FROM TEA BUSINESS AS 100% TAXABLE BUSINESS I NCOME ON THE BASIS MENTIONED IN THE ASSESSMENT ORDER AND REPRODUCED IN PARA-10 OF THIS ORDER. ON THE OTHER HAND, THE APPELLANT HAS SUBMITTED A COMPL EX WORKING TO ARRIVE ON THE PROFIT EARNED OUT OF THE SALE OF TEA PROCESSED OUT OF PURCHASED GREEN LEAVES. HOWEVER, I AM NOT INCLINED TO INTERFERE WITH THE MA NNER, THE AO HAS COMPUTED THE INCOME EARNED BY THE APPELLANT ON SALE OF TEA O UT OF THE PURCHASED GREEN LEAVES BECAUSE WHILE DOING SO HE AHS PROPORTIONATEL Y ALLOWED EXPENSES ALSO. HOWEVER, WHILE COMPUTING THE INCOME OF RS.10,91,762 /-, THE AO HAS ALSO 3 ADDED DISALLOWANCE ON ACCOUNT OF DEPRECIATION AND C ESS ON GREEN LEAF. SINCE, THE DISALLOWANCES ON ACCOUNT OF DEPRECIATION AND CE SS ON GREEN LEAF HAVE BEEN ORDERED TO BE DELETED BY ME IN GROUND NOS. 2 & 4 AB OVE. THEREFORE, THE INCOME FROM SALE OF TEA PROCESSED OUT OF PURCHASED GREEN L EAF WOULD BE 23% OF RS.19,92,619/- WHICH COMES TO RS.4,58,302/-. THE AO IS DIRECTED TO RESTRICT THE INCOME TO THE EXTENT OF RS.4,58,302/- IN PLACE OF E S.10,91,762/-. THE GROUND NO.3 IS PARTLY ALLOWED. 3.2. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES THA T THE AO HAS CONSIDERED AN INCOME OF RS.10,91,762/- AS 100% BUSINESS INCOME FR OM THE SALE OF TEA PROCESSED OUT OF PURCHASED GREEN LEAVES BY AVERAGING THE COMPOSIT E PROFIT INCLUDES PROFIT FROM CULTIVATION OF TEA LEAVES ALSO AND THE SAME IS REQU IRED TO BE EXCLUDED FOR DETERMINING THE PROFIT ON MANUFACTURE OF TEA OUT OF PURCHASED G REEN LEAVES. IT WAS CONTENDED THAT THE APPELLANT HAS FILED A DETAILED CALCULATION OF P ROFIT ON TEA SOLD OUT OF SUCH PURCHASED LEAVES GIVING THE BREAK UP OF EACH AND EVERY ITEM O F EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT AND CLASSIFYING THE SAME INTO THE CATE GORIES OF CULTIVATION EXPENSES, MANUFACTURING EXPENSES, SELLING EXPENSES AND ADMINI STRATIVE AND OTHER CHARGES. IT WAS SUBMITTED THAT THE BASIS ADOPTED BY THE AO IS PRIMA -FACIE WRONG SINCE THE COMPOSITE PROFIT FROM TEA BUSINESS TAKEN BY HIM FOR AVERAGING THE PROFIT ON INCOME FROM SALE OF TEA OUT OF PURCHASED GREEN LEAVES INCLUDES THE PROF IT ON CULTIVATION OF GREEN LEAVES IN OWN GARDENS. HE FURTHER SUBMITTED THAT EVEN THE LD. CIT(A) HAS ALSO NOT APPRECIATED THE FACTS BUT SIMPLY RESTRICTED THE INCOME FROM RS. 10,91,762/- TO RS.4,58,302/- WITHOUT POINTING OUT ANY DEFECTS IN THE SUBMISSIONS MADE BY THE ASSESSEE. THEREFORE, HE REQUESTED TO SET ASIDE THE ORDERS OF THE LD. CIT (A) AND TREAT THE INCOME AS DECLARED BY THE ASSESSEE ON ACCOUNT OF PROFIT AT SALE OF TEA AT RS.51,549/-. 5. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE RELYING ON THE ORDERS OF THE LD. CIT(A) CONTENDED THAT THE LD. CIT (A) HAS RIGHTLY COMPUTED THE INCOME OF THE TEA BUSINESS. THEREFORE, HE REQUESTED TO UPHOLD THE SAME. 4 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT TH AT THE ASSESEE HAS GIVEN THE DETAILS OF PROFIT ON SALE OF TEA SOLD OUT BY GIVING THE BRE AK UP OF EACH AND EVERY ITEM OF EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT AND CLA SSIFYING THE SAME INTO THE CATEGORIES OF CULTIVATION EXPENSES, MANUFACTURING E XPENSES, SELLING EXPENSES AND ADMINISTRATIVE AND OTHER CHARGES WHICH WAS PLACED A T PAGE 15 OF THE PAPER BOOK WE FIND NO JUSTIFICATION ON THE PART OF THE REVENUE TO ENHANCE THE INCOME AS DECLARED BY THE ASSESSEE ON SALE OF TEA FROM RS.51,549/- TO RS. 4,58,302/-. THEREFORE, WE SET ASIDE THE ORDERS OF THE REVENUE ON THIS ISSUE AND ALLOW T HE APPEAL OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 21.04.2011. SD/- SD/- , , , , MAHAVIR SINGH , JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 21.04.2011. '1 / -2 3'2'4- COPY OF THE ORDER FORWARDED TO: 1. DARJEELING DOOARS PLANTATIONS (TEA) LIMITED, NICCO HOUSE (4 TH FLOOR), 2 THE D.C.I.T., CIRCLE-4, KOLKATA 3. THE CIT, 4. THE CIT(A)-XVI, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA .2 -/ TRUE COPY, '1%9/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.) 5