DCIT, Circle-4(1), Kolkata, Kolkata V. M/S. M.K. Shah Exports Ltd., Kolkata

ITA 2149/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1735 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 27-11-2014
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT SHUKLA
• Keywords: Transfer pricing; International transaction
• Section: 2; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI M.BA LAGANESH, AM] I.T.A NO. 2149/KOL/20 14 ASSESSMENT YEAR : 2008-0 9 D.C.I.T., CIRCLE-4(1), -VS.- M/S. M.K.SHAH E XPORTS LTD. KOLKATA KOLKATA [PAN : AACCM 0884 H] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : NONE (DR)(AD J. REQUEST IS REJECTED) FOR THE RESPONDENT : SHRI ROHIT SHUKLA, FCA DATE OF HEARING : 03.05.2017. DATE OF PRONOUNCEMENT : 12.05.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 15.09.2014 OF C.I.T.(A)-VI, KOLKATA RELATING TO A.Y.2008-09. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT ADDITION ON ACCOUN T OF ADJUSTMENT OF INTEREST OF RS.40,32,011 CHARGED TO THE SUBSIDIARY COMPANY ZAO CLASSIC RUSSIA WAS NOT WARRANTED, IGNORING THE FACT THAT THE ADDITION WAS MADE ON THE ARMS LENGTH PRICE DETERMINED BY THE TPO U/S 92(CA)(1). 2 THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT CESS ON GREEN LEAF OF RS.1 ,44,03,221/- IS AN ALLOWABLE EXPENDITURE, IGNORING THE FACT THAT IT IS DIRECTLY ATTRIBUTABLE TO CORE AGRICULTURE ACTIVITIES WHICH IS TAXABLE UNDER STATE AGRICULTURE INCOME TAX, BEYOND THE PURVIEW OF CENTRAL INCOME TAX AND ON THE SAME I SSUE SLP IS PENDING IN THE CASE OF AFT INDUSTRIES. 3 THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELET E OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. WHEN THE APPEAL WAS CALLED FOR HEARING TODAY THERE WAS AN APPLICATION FOR ADJOURNMENT FILED ON BEHALF OF THE REVENUE ON THE G ROUND THAT SR.,DR, ITAT KOLKATA 2 ITA NO.2149/KOL/2014 M/S. M.K.SHAH EXPORTS LTD. A.YR.2008-09 2 BENCHES MR. RAJAT KUREEL WAS TRANSFERRED TO CCIT (C CA) CHARGE, DELHI BY ORDER OF CBDT DT 24.04.2017 AND THEREFORE THE HEARING OF THE APPEAL MAY BE ADJOURNED. SUCH REQUEST WAS MADE IN THE EARLIER WEEK ALSO. THE REV ENUE HAS NOT MADE ANY ALTERNATE ARRANGEMENTS TO REPRESENT ITS CASE BEFORE THE TRIBU NAL. IN MAJORITY OF THE CASES LISTED FOR TODAYS HEARING SIMILAR REQUESTS HAVE BEEN MADE. TH IS BENCH HAS GRANTED ADJOURNMENT WHEREVER ISSUES ARE CONTESTED. IN THIS APPEAL HOWEV ER, WE FIND THAT THE ISSUE RAISED BY THE REVENUE IS NO LONGER RES INTEGRA AND HAS BEEN DECIDED IN SEVERAL DECISIONS RENDERED BY VARIOUS BENCHES OF THE TRIBUNAL AS WELL AS HONB LE HIGH COURTS. IN THESE CIRCUMSTANCES, THE REQUEST FOR AN ADJOURNMENT WAS R EJECTED. THE LD. COUNSEL FOR THE ASSESSEE MADE SUBMISSIONS ON THE ISSUES RAISED BY T HE REVENUE IN THE APPEAL. 4. AS FAR AS GROUND NO.1 RAISED BY THE REVENUE IS CONCERNED THE FACTS ARE AS FOLLOWS :- THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F GROWING AND MANUFACTURING OF TEA AND ARE ALSO BLENDERS, PACKERS AND EXPORTERS OF TEA. THE ASSESSEE ENTERED INTO INTERNATIONAL TRANSACTION OF GIVING OF LOANS TO ITS SUBSIDIARY AZO CLASSIC RUSSIA. IT IS NOT IN DISPUTE THAT THE TRANSACTION OF GIVING LOAN TO A SUBSIDIARY WAS AN INTERNATIONAL TAXATION AND THE RATE OF INTEREST THAT HAS TO BE CH ARGED BY THE ASSESSEE ON SUCH LOAN HAS TO CONFIRM TO THE ARMS LENGTH TEST LAID DOWN IN SEC TION 92 OF THE INCOME TAX ACT, 1961 (ACT). IT IS NOT IN DISPUTE THAT THE LOAN IN QUESTI ON WAS GIVEN IN FOREIGN CURRENCY I.E., US$ AND THE RATE OF INTEREST THAT WAS CHARGED WAS A T 4% P.A. WHICH WAS INCREASED TO 8% ON 02.04.2007. THE BASIC DETAILS OF THE LOAN AGREEM ENT WERE AS FOLLOWS :- UNDER AN AGREEMENT TITLED 'CREDIT AGREEMENT NO.2' DATED 08 DECEMBER, 2003, THE ASSESSEE HAD ADVANCED A LOAN OF USD 800,000 TO ITS SUBSIDIARY ZAO CLASSIC IN RUSSIA. THE PRINCIPAL AMOUNT WAS INCREASED TO 1,500 ,000 USD BY AN AMENDMENT DATED 19,02.2004. THE RATE OF INTEREST CHARGED ON T HE LOAN WAS INCREASED FROM 4% P.A. TO 8% P.A. THROUGH AN AMENDMENT DATED 02.04.20 07, I.E. DURING THE FINANCIAL YEAR PERTAINING TO ASSESSMENT YEAR 2008-09. THE BAS IC TERMS OF THIS AGREEMENT WERE AS FOLLOWS: SL.NO. DESCRIPTION DETAILS 1. LOAN AMOUNT/CURRENCY 800 000/USD(ORIGINAL AGREEM ENT); AMENDED ON 19.02.2004 TO 15,00,000 USD 3 ITA NO.2149/KOL/2014 M/S. M.K.SHAH EXPORTS LTD. A.YR.2008-09 3 2. TERM OF THE LOAN 5 YEARS (AS PER THE ORIGINAL AG REEMENT); 3. PURPOSE OF LOAN TO EXPAN D OPERATIONS, PURCHASE OF GOODS 4. BORROWERS COUNTRY RUSSIA 5. YEAR OF LOAN 8 DECEMBER, 2003 6. RATE 4% P.A. (ORIGINAL AGREEMENT); INCREASED TO 8% ON 02.04.2008 7. PUT OR CALL OPTION BOTH OPTIONS 8. SECURITY UNSECURED 9. SENIORITY N.A. 10. ANY OTHE R CONDITION N.A. 5. THE TRANSFER PRICING OFFICER (TPO) EXAMINED T HE RATE OF INTEREST CHARGED ON THE LOAN BY THE ASSESEE IN THE LIGHT OF MANDATE LAID DO WN IN SECTION 92 OF THE ACT THAT THE RATE OF INTEREST ON SUCH LOANS MUST BE AT ARMS LENG TH I.E. RATE AT WHICH SIMILAR LOAN WOULD BE GIVEN OR TAKEN BY UNRELATED PARTIES. 6. THE PLEA OF THE ASSESSEE BEFORE THE AO WAS TH AT THE LOAN TO THE SUBSIDIARY ZAO CLASSIC WAS A TRADE INVESTMENT IN FORM OF FOREIGN C URRENCY LOAN WHICH IN TURN PROVIDES BENEFIT TO THE PARENT COMPANY I.E. THE ASSESSEE IN THE FORM OF INCREASED MARKET SHARE. IT WAS SUBMITTED BY THE ASSESSEE THAT BORROWINGS IN T HE HANDS OF ZAO CLASSIC WAS EXTERNAL COMMERCIAL BORROWING (ECBS) AND THE RANGE OF RATES OF INTEREST VARY BETWEEN LIBOR PLUS 100 BPS TO 200 BPS. THE EUROPEAN CENTRA L BANK HAS RECOMMENDED RATES RANGING FROM 2.00% TO 5.25% ON ECBS. FOREIGN CURREN CY LOANS ARE GIVEN BY BANKS GLOBALLY BEARING LIBOR BASED RATE. THE AVERAGE OF T HE LIBOR BASED RATE FOR THE PERIOD FROM 01.4.2007 10 3L.03.2008 WAS 4.68 %. IT HAS BEEN COMPARED BY TAKING AVERAGE MONTHLY OPENING AND CLOSING RATE FOR THE PE RIOD FROM 01.04.2007 TO 31.03.2008. THE ASSESSEE ENCLOSED A COPY OF DATA SO URCED FROM GLOBAL-RATES .COM IN SUPPORT OF ITS PLEA. THE ASSESSEE POINTED OUT THAT IT HAD CHARGED 8% ON THE LOAN GIVEN TO ZAO CLASSIC FOR 01.04.2007 TO 31.03.2008 WHICH W AS HIGHER THAN THE USD LIBOR RATE. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE ITAT CHENNAI (2011) 46 SOT 2 (CHENNAI) (URO)/] 1 TAXMAN. COM 404 (SIVA IND USTRIES & HOLDINGS LIMITED VS. 4 ITA NO.2149/KOL/2014 M/S. M.K.SHAH EXPORTS LTD. A.YR.2008-09 4 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY C IRCLE - VI (4), CHENNAI) WHEREIN IT WAS HELD THAT WHERE LOAN IS GIVEN TO THE ASSOCIATED ENTERPRISES IN US DOLLARS THEN THE TRANSACTION WOULD HAVE TO BE LOOKED UPON T HE APPLYING THE COMMERCIAL PRINCIPLES IN REGARD TO INTERNATIONAL TRANSACTION. IF THAT WAS SO, THEN THE DOMESTIC PRIME LENDING RATE WOULD HAVE NO APPLICABILITY AND THE IN TERNATIONAL RATE FIXED BEING LIBOR RATE HAD TO BE CONSIDERED WHILE DETERMINING THE ARM 'S LENGTH INTEREST RATE IN RESPECT OF THE TRANSACTION BETWEEN THE ASSESSEE AND THE ASSOCI ATED ENTERPRISES. THE ASSESSEE CLAIMED THAT THE FACTS OF ITS CASE FAIRLY AND SQUA RELY MATCH WITH THAT OF THE CASE DECIDED BY ITAT, CHENNAI AND CONSIDERING THE INTEREST RATE OF 8% CHARGED ON LOAN GIVEN TO SUBSIDIARY ZAO CLASSIC, THE PROVISIONS RELATING TO ARM'S LENGTH TRANSACTION HAVE NO APPLICABILITY. 7. THE TPO WAS OF THE VIEW THAT THE RATE OF INTE REST HAS BEEN CHARGED BY THE ASSESSEE ON THE LOAN TO ITS SUBSIDIARY KEEPING IN MIND THE A RMS LENGTH RATE WOULD BE 14.12% AND HE ACCORDINGLY SUGGESTED AN ADJUSTMENT OF RS.40,32, 011/- AND THE SAID SUM SHOULD BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY WAY OF ADJUSTMENT TO ALP. CONSEQUENTLY A SUM OF RS.40,32,011/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED THE ADDITION MADE BY THE AO BY FOLLOWING THE DECISION OF ITAT CHENNAI IN THE CASE OF SIVA INDUSTRIES & HOLDINGS LIMITED VS. THE ASSISTANT COMMISSIONER OF INCOME TA X (SUPRA) . THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF CIT(A): 4.2. I HAVE CONSIDERED THE FACTS OF THE CASE. THE APPELLANT HAD ADVANCED A LOAN IN FOREIGN CURRENCY TO ITS SUBSIDIARY ZAO CLASSIC, RUS SIA ON WHICH IT WAS CHARGED INTEREST AT THE RATE OF 8% P.A. THE TPO WAS OF THE VIEW THAT PRICE OF THE LOAN I.E. THE INTEREST CHARGED HAS TO BE WORKED OUT ON THE BASIS OF TAKING TWO PARTIES AS SEPARATE AND BENCH-MARKING THE PRICE OF THE LOAN ON THE BASI S OF WHAT AN INDEPENDENT THIRD PARTY WOULD CHARGE FROM ZAO CLASSIC, RUSSIA BASED O N ITS ANALYSIS OF RISK ASSOCIATED WITH THE LOAN. THE APPELLANT STATED IN R EPLY TO SHOW CAUSE NOTICE ISSUED BY THE TPO, THAT FOREIGN CURRENCY LOANS ARE GIVEN B Y BANKS BEARING UBOR BASED RATE AS A GLOBAL PRACTICE. THE AVERAGE OF LIBOR BAS ED RATE FOR THE YEAR UNDER 5 ITA NO.2149/KOL/2014 M/S. M.K.SHAH EXPORTS LTD. A.YR.2008-09 5 CONSIDERATION WAS 4.68%. THUS THE RATE OF 8% CHARGE D BY THE APPELLANT WAS HIGHER THAN THE LIBOR RATE. THE APPELLANT ALSO RELIED UPON A NUMBER OF DECISIONS, IN PARTICULAR THE DECISION OF ITAT, CHENNAI IN THE CAS E OF SIVA INDUSTRIES AND HOLDINGS LTD VS ACIT, CENTRAL CIRCLE-6(1) CHENNAI 4 6 SOT 112. IN THE APPELLATE PROCEEDINGS THE APPELLANT HAS CITED SOME MORE DECIS IONS SUCH AS FOUR SOFT LTD VS DC IT IN ITA NO. 1495/HYD 12010, COTTON NATURAL (I) PVT LTD. VS DCIT IN ITA NO. 5855/DE1/2012. IN THE CASE OF SIVA INDUSTRIES A ND HOLDINGS LTD. (SUPRA), IT HAS BEEN HELD BY THE HON'BLE TRIBUNAL THAT ONCE THE TRA NSACTION IS BETWEEN THE ASSESSEE AND THE AES IS IN FOREIGN CURRENCY, THE TRANSACTION WOULD HAVE TO BE LOOKED UPON BY APPLYING COMMERCIAL PRINCIPLE IN REGARD TO INTER NATIONAL TRANSACTION. IF THIS IS SO, THEN THE DOMESTIC PRIME LENDING RATE WOULD HAVE NO APPLICABILITY AND THE INTERNATIONAL RATE FIXED BEING LIBOR WOULD COME INT O PLAY. SAME VIEW WAS TAKEN BY TRIBUNAL IN THE CASE OF FOUR SOFT LTD (SUPRA) AN D SOME OTHER CASES CITED BY THE APPELLANT. FURTHER, IT HAS BEEN HELD IN THE DECISIO N IN THE CASE OF COTTON NATURAL (I) PVT LTD. (SUPRA), THAT FINANCIAL POSITION AND CREDI T RATING OF THE SUBSIDIARY WOULD BE BROADLY SAME AS THE HOLDING COMPANY AND LIBOR SHOUL D BE TAKEN AS BENCH-MARK WITHOUT GOING INTO ASPECTS LIKE FINANCIAL HEALTH OF SUBSIDIARY. IN ONE OF THE CITED CASES, VIZ. AURIONPRO SOLUTION LTD. VS ADDL. CIT IN ITA NO.7872/MUM/2011, HON'BLE TRIBUNAL HAS OBSERVED THAT APPROPRIATE RATE WOULD BE LIBOR PLUS 2%. IN THE APPELLANT'S CASE, THE TPO HAS NOT COUNTERED THE DECISION IN THE CASE OF SIVA INDUSTRIES AND HOLDINGS LTD (SUPRA) CITED BY THE AP PELLANT BEFORE HIM, NOR CITED ANY AUTHORITY IN SUPPORT OF HIS VIEW. THE RATIO GIVEN B Y THE HON'BLE TRIBUNAL IN THE CASES CITED BY THE APPELLANT IS, THAT IN THE FOREIG N CURRENCY LENDING, RATE OF INTEREST TO BE ADOPTED IS TO BE BASED ON LIBOR AND AT THE MO ST LIBOR PLUS 2%. AS PER DOCUMENTS GIVEN BY THE APPELLANT, THE AVERAGE LLBOR RATE FOR THE PREVIOUS YEAR WAS 4.68%. EVEN IF A MARK UP OF 2% IS GIVEN, THE RA TE WOULD BE 6.68% WHEREAS THE APPELLANT HAS CHARGED 8% ON THE LOAN GIVEN TO ITS A ES. IT IS ALSO NOT IN DISPUTE THAT THE COST OF FUNDS IN THE HANDS OF THE APPELLANT IS LOWER THAN 8% CHARGED FROM THE AE. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE RATIO GIVEN BY THE VARIOUS BENCHES OF HON'BLE T RIBUNAL, THE ADJUSTMENT PRICE OF RS.40,32,011/- IS DELETED. 9. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 10. AFTER HEARING THE SUBMISSIONS OF THE LD. CO UNSEL FOR THE ASSESSEE WE ARE OF THE VIEW THAT THERE IS NO MERIT IN GROUND NO.1 RAISED B Y THE REVENUE. IT HAS BEEN CONSISTENTLY HELD IN SEVERAL DECISIONS BY THE TRIBUNAL THAT WHER EVER THE TRANSACTION OF LOAN BETWEEN 6 ITA NO.2149/KOL/2014 M/S. M.K.SHAH EXPORTS LTD. A.YR.2008-09 6 THE ASSOCIATED ENTERPRISES IS IN FOREIGN CURRENCY T HEN THE TRANSACTION WOULD HAVE TO BE LOOKED UPON BY APPLYING THE COMMERCIAL PRINCIPLES I N REGARD TO INTERNATIONAL TRANSACTION. THEREFORE THE DOMESTIC PRIME LENDING R ATE WOULD HAVE NO APPLICABILITY AND THE INTERNATIONAL RATE LIBOR WOULD COME INTO PLAY. IT HAS THEREFORE BEEN HELD THAT LIBOR RATE HAS TO BE CONSIDERED WHILE DETERMINING T HE ARMS LENGTH RATE OF INTEREST IN RESPECT OF TRANSACTIONS OF LOAN IN FOREIGN CURRENCY BETWEEN THE ASSOCIATED ENTERPRISES. THIS VIEW HAS ALSO BEEN ACCEPTED BY THE HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS COTTON NATURALS (I) LTD. 276 CTR 445 (DELHI) AN D BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TATA AUTO COMP SYSTEM LTD APPR OVING THE DECISION OF ITAT IN THE CASE OF TATA AUTO COMP VOL.52 SOT 48 (MUM). IN VIEW OF THE ABOVE SETTLED LEGAL POSITION WE FIND NO MERITS IN GROUND NO.1 AND DISM ISS THE SAME. 11. AS FAR AS GROUND NO.2 RAISED BY THE REVENUE IS CONCERNED INCOME FROM GROWING, MANUFACTURING AND SALE OF TEA WOULD BE COMPOSITE IN COME, WHICH MEANS IT COMPRISES AGRICULTURAL INCOME TO THE EXTENT OF GROWING TEA, W HICH IS NOT CHARGEABLE TO TAX AND NON- AGRICULTURAL INCOME TO THE EXTENT IT COMPRISES OF I NCOME FROM MANUFACTURE AND SALE OF TEA, WHICH INCOME IS CHARGEABLE TO TAX. RULE 8 OF T HE INCOME TAX RULES, 1962 PROVIDES METHOD OF COMPUTATION FOR COMPOSITE INCOME FROM MAN UFACTURE OF TEA. UNDER RULE 8 (1) OF THE INCOME TAX RULES, 1962 (RULES) INCOME DERIVED FROM SALE OF TEA GROWN AND MANUFACTURED BY THE SELLER IN INDIA SHALL BE COMPUT ED AS IF IT WERE INCOME DERIVED FROM BUSINESS, AND FORTY PER CENT OF SUCH INCOME SHALL B E DEEMED TO BE INCOME LIABLE TO TAX. ACCORDING TO THE AO CESS ON GREEN LEAF WAS AN EXPEN DITURE WHICH WAS ATTRIBUTABLE TO THE ACTIVITY OF GROWING OF TEA AND WOULD THEREFORE BE NOT ALLOWABLE AS DEDUCTION WHILE COMPUTING INCOME FROM MANUFACTURE AND SALE OF TEA. THE PLEA OF THE ASSESSEE WAS THAT THE ENTIRE GREEN LEAF CESS HAD TO BE ALLOWED AS DED UCTION FIRST AND ONLY ON THE LOSS OR PROFIT ARRIVED AT AFTER SUCH DEDUCTION RULE 8(1) OF THE RULES HAVE TO BE APPLIED AND 40% OF SUCH SUM HAS TO BE CONSIDERED AS INCOME OR LOSS FROM THE BUSINESS OF MANUFACTURE AND SALE OF TEA. 7 ITA NO.2149/KOL/2014 M/S. M.K.SHAH EXPORTS LTD. A.YR.2008-09 7 12. ON APPEAL BY THE ASSESSEE, THE CIT(A) DELET ED THE DISALLOWANCE MADE BY THE AO BY FOLLOWING THE ORDER OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. VS CIT (270 ITR167) WHEREIN IT WAS HELD THAT GREEN LEAF C ESS HAS TO BE ALLOWED AS DEDUCTION BEFORE APPLYING RULE 8(1) OF THE RULES A ND ONLY THEREAFTER 40% OF SUCH INCOME HAS TO BE BROUGHT TO TAX. 13. AGGRIEVED BY THE ORDER OF THE CIT(A), THE RE VENUE HAS RAISED GR.NO.2 BEFORE THE TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE RELIED O N THE ORDERS OF THE LD. CIT(A). 14. AFTER HEARING THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND ON CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECOR D, KEEPING IN VIEW OF THE FACT THAT THE ISSUE IS CONCLUDED BY THE DECISION OF THE HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS AFT INDUSTRIES LTD . 270 ITR 167 (CAL) WHERE THE AMOUNT PAID AS CESS W AS HELD AS ELIGIBLE FOR DEDUCTION IN COMPUTING THE COM POSITE INCOME UNDER RULE 8 OF I.T. RULES. THIS ISSUE IS, THEREFORE, DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY UPHOLDING THE ORDER OF THE C.I.T.(A) WHO HAS ALLOWED THE DEDUCTION OF PAYMENT OF CESS ON GREEN LEAVES IN COMPUTING THE CO MPOSITE INCOME FROM TEA BUSINESS OF THE ASSESSEE UNDER RULE 8 OF THE I.T. RULES. THE FACT THAT THE SLP IS PENDING BEFORE THE HON'BLE SUPREME COURT AGAINST THE DECISION OF THE H ON'BLE CALCUTTA HIGH COURT IN RESPECT OF AFT INDUSTRIES LTD. VS CIT (270 ITR 167) WILL NOT HAVE ANY EFFECT SINCE THE HON'BLE APEX COURT HAS NEITHER SET ASIDE THE ORDERS OF THE CALCUTTA HIGH COURT NOR GRANTED ANY STAY. THE LEARNED COUNSEL FOR THE ASSE SSEE ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. M/S.APEEJAY TEA CO. LTD. CIVIL APPEAL NO.3168 OF 2006 DATED 6.8.2015 WH EREIN THE HONBLE SUPREME COURT HAS UPHELD VIEW AS WAS TAKEN BY THE HONBLE CALCUTT A HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. (SUPRA). IN VIEW OF THE ABOVE, GRO UND NO.2 RAISED BY THE REVENUE IS DISMISSED. 8 ITA NO.2149/KOL/2014 M/S. M.K.SHAH EXPORTS LTD. A.YR.2008-09 8 15. IN THE RESULT THE APPEAL BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COU RT ON 12.05.2017. SD/- SD/- [M.BALAGANESH] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12.05.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. M/S. M.K.SHAH EXPORTS LTD., 2/2, JUSTICE DWARKAN ATH ROAD, KOLKATA-700020. 2. D.C.I.T., CIRCLE-4, KOLKATA. 3. CIT(A)-VI, KOLKATA 4. C.I.T.-III, KO LKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES