DCIT, Circle - 4, Kolkata, Kolkata V. M/s. The Moran Tea Co. (I) Ltd., Kolkata

ITA 2180/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48160 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 24-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2010
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: D S DAMLE
• Keywords: Notional interest
• Section: 260A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 2180/KOL/2010 %& '(/ ASSESSMENT YEAR : 2007-08 (*+ / APPELLANT ) D.C.I.T., CIRCLE-4, KOLKATA - % - - VERSUS - . (-.*+/ RESPONDENT ) M/S. THE MORAN TEA CO.(I) LTD., KOLKATA (PAN: AABCT 2119 D) *+ / 0 '/ FOR THE APPELLANT: SHRI P.K.MISHRA -.*+ / 0 '/ FOR THE RESPONDENT: SHRI D.S.DAMLE '1 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 24.04.2010 OF THE CIT(A)-IV, KOLKATA PERTAINING TO A.YR. 2007-08. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE F OLLOWING GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD.CIT(A), KOLKATA HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.58,43,9 84/- ON ACCOUNT OF CESS ON GREEN LEAF WITHOUT CONSIDERING THE FACT THAT EXPENS ES ON ACCOUNT OF CESS ON GREEN LEAF IS RELATED TO 100% AGRICULTURAL OPERATIO N AND SLP IS PENDING BEFORE THE HONBLE SUPREME COURT AGAINST THE DECISION OF C ALCUTTA 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 IN FAVOUR OF THE ASSESSEE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A), KOLKATA HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.36,69,0 00/- BEING NOTIONAL INTEREST ON MONEY ADVANCED TO PARTIES WITHOUT INTEREST ON TH E GROUND THAT LD.ITAT HAS DELETED THE ADDITION IN THE SAME ISSUE IN THE ASSES SEES CASE FOR THE ASSTT.YEAR 2 2003-04 AND ASSTT. YEAR 2004-05 WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT HAS PREFERRED APPEAL U/S 260A AGAINST TH E SAID ORDER OF THE ITAT IN CALCUTTA HIGH COURT. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AO W HILE DOING THE SCRUTINY ASSESSMENT DISALLOWED AN AMOUNT OF RS.58,43,984/- ON ACCOUNT O F CESS ON GREEN LEAF BY OBSERVING AS UNDER :- THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CULTIVATION AND MANUFACTURING OF TEA. THE COMPANY IS HAVING ITS TEA GARDENS IN ASSAM. IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE DEBITED AN EXP ENDITURE OF RS.58,43,984/- UNDER THE HEAD GREEN LEAF TEA AND CLAIMED THE SAME AT THE RATE OF 100% AS EXPENDITURE AGAINST MANUFACTURING OF TEA. IT IS CLA IMED BY THE ASSESSEE THAT THE GREEN LEAAF CESS IS PAYABLE TO THE GOVERNMENT OF AS SAM AS A LEVY AGAINST THE QUANTITY OF GREEN LEAF PLUCKED FROM THE GARDEN AND THAT THIS EXPENDITURE IS A PART AND PARCEL OF THE COST OF RAW MATERIALS UTILIZ ED BY THE ASSESSE FOR MANUFACTURING OF TEA. IN SUPPORT OF HIS CLAIM THE A R CITED THE DECISIONS OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF AFT INDU STRIES LTD. VS CIT. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTED BY THE A O. THEREFORE EXPENSES ON GREEN LEAF CESS FOR RS.58,43, 984/- IS DISALLOWED A ND ADDED BACK. 3.1. IN RESPECT OF NOTIONAL INTEREST ON MONEY ADVAN CED TO PARTIES THE AO ADDED AN AMOUNT OF RS.39,69,000/- TO THE INCOME OF THE ASSE SSEE. 3.2. ON APPEAL THE LD. CIT(A) DISALLOWED THE SAME B Y RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. VS CIT (270 ITR 167) AND DISALLOWED THE NOTIONAL INTEREST OF RS.39, 69,000/- BY RESPECTFULLY FOLLOWING THE DECISIONS OF THE ITAT, KOLKATA FOR THE EARLIER YEAR S. 4. THE LD. DR APPEARING ON BEHALF OF THE REVENUE RE LIED ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESSEE REL IED ON THE ORDERS OF THE LD. CIT(A). 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT TH AT THE ISSUE IS CONCLUDED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS AFT INDUSTRIES LTD. 270 ITR 167 (CAL) WHERE THE AMOUNT PAID AS CESS WAS HEL D AS ELIGIBLE FOR DEDUCTION IN COMPUTING THE COMPOSITE INCOME UNDER RULE 8 OF I.T. RULES. THIS ISSUE IS, THEREFORE, DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE 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 COMPOSITE INCOME FROM TEA BUSINESS OF THE ASSESSEE UNDER RULE 8 OF THE I.T. 3 RULES. WE MAY FURTHER MENTION THAT IDENTICAL ISSUE WAS THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL IN THE CASE OF M/S.EMPIRE PLANT ATIONS (INDIA) LTD. AND THE TRIBUNAL VIDE ORDER DATED 28.2.2005 IN I.T.A.NO.1600 (KOL)/2 004 FOR A.Y. 2000-01 HAS ALLOWED THE CLAIM OF THE ASSESSEE. IN RESPECT OF THE NOTIO NAL INTEREST OF RS.39,69,000/- THE LD. CIT(A) HAS DELETED THE ADDITION BY RESPECTFULLY FOL LOWING THE DECISIONS OF THE ITAT, KOLKATA IN THE ASSESSEES OWN CASE FOR THE A.YRS. 2 003-04& 2004-05. 5.1. THE FACT THAT THE SLP IS PENDING BEFORE THE HONBLE SUPREME COURT AGAINST THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN RESPECT OF AFT INDUSTRIES LTD. VS CIT (270 ITR 167) WILL NOT HAVE ANY EFFECT SINCE TH E HONBLE APEX COURT HAS NEITHER SET ASIDE THE ORDERS OF THE CALCUTTA HIGH COURT NOR GRANTED ANY STAY. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.05.2011. SD/- SD/- MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 24.05 .2011 '1 / -6 7'6'8- COPY OF THE ORDER FORWARDED TO: 1. M/S.THE MORAN TEA CO. (I) LTD., 4, MANGOE LANE, KOL KATA-700001. 2 THE DCIT, CIRCLE-4, KOLKATA 3. THE CIT, 4. THE CIT(A)-IV, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA .6 -/ TRUE COPY, '1%;/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.) 4