DCIT, Circle - 4, Kolkata, Kolkata V. M/s. Nilpur Tea Co. Ltd., Kolkata

ITA 2250/KOL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7252 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 04-07-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 22-12-2010
• Court: TRIBUNAL
• Department Lawyers: A S MONDAL LD DR
• Assessee Lawyers: D S DAMLE LD
• Keywords: Reasonable cause
• Section: 194C

Judgement Text

I.T.A NO. 2250/KOL/2010 -C--SVM 1 , C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA BEFORE SRI S.V MEHROTRA , AM & SRI MAHAVIR SINGH, JM () . ., !' ! #' , '$ / I.T.A NO.2250/KOL/2010 ASSESSMENT YEAR: 2002- 03 DEPUTY COMMISSIONER OF INCOME-TAX VS. M/S. NILPUR TEA CO. LTD CIRCLE-4, KOLKATA PAN: AAACN 8309C (%& /APPELLANT ) ('(%&/ RESPONDENT ) %& / FOR THE APPELLANT : * / SHRI A.S. MONDAL, LD.DR '(%& / FOR THE RESPONDENT : * /SHRI D.S DAMLE, LD. AR +,!- . / /DATE OF HEARING : 29/09/2011 01 . / /DATE OF PRONOUNCEMENT: 29/09/2011 2 / ORDER . ., SHRI S.V MEHROTRA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOLKATA DATED 24.04. 2010 FOR THE ASSESSMENT YEAR 2002-03. 2. THE APPEAL FILED BY THE DEPARTMENT IS TIME BARRE D BY 67 DAYS FOR WHICH A CONDONATION PETITION BY WAY OF AN AFFIDAVIT HAS BEEN FILED BY THE REVENUE, WHEREIN IT HAS BEEN, INTER-ALIA, STATED THAT: WITHIN A SPAN OF ONE WEAK THIS OFFICE RECEIVED 93 APPELLATE ORDERS FROM THE OFFICE OF LD. CIT(A) RELATING TO SEVERAL M ONTHS BATCHES APART FROM HAVING 19 OLD APPELLATE ORDER OF WHICH APPEAL SCRUTINY REPORTS ARE BEING PREPARED AND SENT TO THE OFFICE OF C.I.T , KOL-II, KOLKATA. BESIDES THIS, DUE TO HUGE PENDENCY OF TIME BARRING CASES TO BE COMPLETED BY 31.12.2010 A DELAY OCCURRED IN SENDING PAPERS FOR FILING OF APPEAL. 2.1 AFTER CONSIDERING THE AVERMENTS MADE IN THE A FFIDAVIT, WE ARE OF THE OPINION THAT THE DEPARTMENT WAS PREVENTED BY REASONABLE CAUSE FROM PREFERRING THE APPEAL WITHIN THE STIPULATED PERIOD. WE, ACCORDINGLY, CONDONE THE DEL AY IN FILING THE APPEAL IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. WEST BENGAL INFRASTRUCTURAL & I.T.A NO. 2250/KOL/2010 -C--SVM 2 FINANCIAL CORPORATION LTD REPORTED IN 2011 [ 196 T AXMAN 321(SC) ] AND PROCEED TO DECIDE THE APPEAL ON MERIT. 3. THE ASSESSEE COMPANY IN THE RELEVANT ASSESSMENT YEAR CARRIED ON THE BUSINESS OF GROWING AND MANUFACTURING OF TEA. IT HAD FILED ITS RETURN OF INCOME DISCLOSING LOSS OF RS.13,86,253/-. HOWEVER, THE ASSESSMENT U/S.147/143 (3) OF THE ACT WAS COMPLETED AT A TOTAL INCOME OF RS.5,05,522/- INTER-ALIA, MAKING FOLLOWI NG ADDITIONS:- A. CESS ON GREEN LEAF RS.4,90,432/- B. (-)U/S.40A(IA) RS.1,08,616/- 4. AGGRIEVED WITH THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), WHO WHILE PAR TLY ALLOWING THE ASSESSEES APPEAL DELETED THE ABOVE MENTIONED TWO ADDITIONS. 5. BEING AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING 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 O F RS.4,90,432/- ON ACCOUNT OF CESS ON GREEN LEAF WITHOUT CONSIDERING T HE FACT THAT EXPENSES ON ACCOUNT OF CESS ON GREEN LEAF IS RELATED TO 100% AGRICULTURAL OPERATION AND SLP IS PENDING BEFORE THE HONBLE 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 IN FAVOUR OF THE ASSESSEE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE EAS E, LD. CIT(A), KOLKATA HAS ERRED IN LAW IN DELETING THE DISALLOWAN CE OF RS. 1,08,616/- U/S.40A(IA) WITHOUT CONSIDERING THE FACT THAT SUB-S ECTION TO SECTION 40A WAS INTRODUCED W.E.F. 01.4.2005 AND PRIOR TO IT, SE CTION40(A) WAS APPLICABLE WHEREIN CLAUSE (IV) WORK HAS BEEN DEFI NED AT EXPLANATION 3 TO SECTION 194C AND IN THE INSTANT CASE, AS TDS IS INVOLVED, RELATES TO SECTION 194C. AS A RESULT, SECTION 40A WAS APPLICAB LE IN THE INSTANT CASE. 6. BRIEF FACTS APROPOS GROUND NO.1 ARE THAT ON EXA MINING THE DETAILS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEBITED CES S ON GREEN LEAF FOR AN AMOUNT OF RS.4,90,432/-. HE OBSERVED THAT THIS WAS PURELY AG RICULTURAL EXPENDITURE BEING PAYABLE ONLY ON PRODUCTION/PLUCKING OF GREEN LEAF. HE POINTED O UT THAT SINCE INCOME FROM THOSE ACTIVITIES WAS NOT TAXABLE, THE EXPENDITURE WAS NOT ADMISSIBLE FOR DEDUCTION FROM COMPOSITE ACTIVITY. I.T.A NO. 2250/KOL/2010 -C--SVM 3 THE ASSESSEE IN ITS SUBMISSION RELIED ON THE DECIS ION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AFT INDUSTRIES LTD RE PORTED IN [(2004) 270 ITR 170 (CAL)]. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT SINCE SLP WAS PENDING ON THIS ISSUE BEFORE THE HONBLE SUPREME COURT AGAINST THE SAID DECISION , IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY, THE SAME WAS LIABLE TO BE DISALLOWED AND ADDED BACK. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) , HOWEVER, ALLOWED THE ASSESSEES APPEAL FOLLOWING THE SAID DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT VS. AFT INDUSTRIES LTD (SUPRA). 8. HAVING HEARD BOTH THE PARTIES, PERUSING THE REC ORD OF THE CASE AND IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAI D ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), WHEREIN THE HONBLE HIGH COU RT HAS HELD AS UNDER :- IN RESPECT OF COMPUTATION OF INCOME OF TEA GROWN A ND MANUFACTURED, A FICTION HAS BEEN CREATED UNDER WHICH BOTH THE AG RICULTURAL COMPONENT AND THE BUSINESS COMPONENT OF THE INCOME WOULD BE ASSESSED TOGETHER FOR THE PURPOSE OF COMPUTING THE INCOME UNDER THE A CT AND ONLY AFTER THE COMPUTATION OF THE TOTAL INCOME, THE APPORTION MENT IS TO BE MADE DETERMINING 60 PER CENT AS AGRICULTURAL INCOME. WH EN BY FICTION THE INCOME IS COMPUTED AS INCOME UNDER THE ACT, ALL DED UCTIONS AS ARE AVAILABLE BOTH FOR THE AGRICULTURAL COMPONENT AND F OR THE BUSINESS COMPONENT OF THE INCOME ARE TO BE ALLOWED AS A NATU RAL COROLLARY. THEREFORE, THE ENTIRE AMOUNT PAID AS CESS UNDER TH E AGRICULTURAL INCOME-TAX ACT IS ELIGIBLE FOR DEDUCTION. IN VIEW OF THE ABOVE, THE GROUND RAISED BY THE DEP ARTMENT IS LIABLE TO BE DISMISSED. 9. BRIEF FACTS APROPOS GROUND NO.2 ARE THAT FROM THE TAX AUDIT REPORT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NOT COMPLIED IN DEPOSITING THE TDS. HE, THEREFORE, DISALLOWED THE TRANSPORTATION CHARGES OF RS.108,6 16/-. 10. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) DELETED THE ADDITION INTER-ALIA, OBSERVING THAT THE PROVISION OF SECTION 40(A)(IA) C AME INTO EFFECT FROM ASSESSMENT YEAR 2005-06 BY THE FINANCE (NO.2) ACT 2004 AND, THEREFO RE, THE SAME COULD NOT BE APPLIED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. I.T.A NO. 2250/KOL/2010 -C--SVM 4 11. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED C OMMISSIONER OF INCOME-TAX (APPEALS), BECAUSE THE PROVISION OF SECTION 40(A)(IA) WAS NOT ENACTED IN ASSESSMENT YEAR 2002-03. THEREFORE, THE SAME COULD NOT BE BASIS FOR MAKING ADDITION AT THE TIME OF PASSING ASSESSMENT ORDER. THIS GROUND OF THE DEPARTMENT IS DISMISSED. 12. IN THE RESULT, THE ABOVE DEPARTMENTAL APPEAL [ITA NO.2250/KOL/2010] IS DISMISSED. 2 + 3 +, 4 5 / 29-09--2011 ORDER PRONOUNCED IN THE OPEN COURT ON 29-09-201 1 SD/- SD/- [ ! #' , ] [ . . , ] ( MAHAVIR SINGH, JUDICIAL MEMBER) (S.V. MEHROTRA, ACCOUNTANT MEMBER ) (/) DATED :29-09-2011 *PP !67 #,89 #:! /SR.P.S. 2 . '##; <;1=- COPY OF THE ORDER FORWARDED TO: 1. %& /APPELLANT- D.C.I.T CIRCLE-4, P-7 CHOWRINGHEE SQU ARE, 8 TH FL., KOL-69. 2 '(%& / RESPONDENT : M/S. NILPUR TEA CO. LTD. 4 MANGOE LA NE, KOL-1. 3. #2,/ THE CIT, KOLKATA 4. #2, ()/ THE CIT(A), KOLKATA. 5. !#4 '#,/ DR, KOLKATA BENCHES, KOLKATA (; '#/ TRUE COPY , 2,+/ BY ORDER , '9 /ASSTT. REGISTRAR