D.C.I.T., Circle-8, Kolkata, Kolkata V. M/s Apeejay Tea Ltd., Kolkata

ITA 2639/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4675 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 20-11-2013
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: MANISH TIWARI
• Keywords: Earning of tax free income

Judgement Text

1 ITA NO. 2639/KOL/2013 M/S. APEEJAY TEA LTD IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NOS. 2639/KOL/2013 A.YS. 2008-09 D.C.I.T, CIR-8 VS. M/S APP EJAY TEA LTD KOLKATA PAN: AAACCA1955F (APPELLANT) (RESPON DENT) FOR REVENUE : SHRI KALYAN NATH, ADDL. CIT, FOR ASSESSEE : SHRI MANISH TIWARI, FCA, DATE OF HEARING: 15-06-2016 DATE OF PRONOUNCEMENT: 10 -08-20 16 ORDER SHRI S.S. VISWANETHRA RAVI, JM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE CIT(A)-CENTRAL-I, KOLKATA IN APPEAL NO. 233/CC-III/CIT(A)/C-I/10-11 DATED 07-08-2013 FOR THE ASSESSMENT YEAR 2008-09 2. THE APPELLANT REVENUE RAISED THE FOLLOWING GROUN DS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT- (A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO TOWARDS CESS PAYABLE ON GREEN LEAF IN COMPUTING COMPOSITE INCOME FROM BU SINESS IN RELATION TO A.Y 2008 09. 2 ITA NO. 2639/KOL/2013 M/S. APEEJAY TEA LTD 3. THE ONLY GROUND IN THIS APPEAL IS AS TO WHETHER CIT-A JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.1,67,80,109/- U/R 8 OF THE INCO ME TAX RULES IN THE CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS PREVIOUSLY CONDUCTED ITS BUSINESS IN THE NAME AND STYLE AS AFT INDUSTRIES LI MITED AND THEREAFTER CHANGED ITS NAME AS M/S APEEJAY TEA LTD AND IT HAS EIGHT TEA ES TATES. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT A TOTAL SUM OF RS.1,6 7,80,109/- WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT AND CLAIM TO HAVE ENTIRE EX PENDITURE AS EXEMPT INCOME BEFORE APPLYING THE PROVISIONS OF RULE 8. THE ASSESSEE SUB MITTED BEFORE THE AO THAT THE SAID ISSUE WAS COVERED DIRECTLY BY A DECISION OF HONOURA BLE HIGH COURT OF CALCUTTA IN THE ASSESSEES OWN CASE REPORTED IN 270 ITR 169 (CAL) A ND ALSO SUBMITTED THAT THE CIT-A ALLOWED SUCH EXEMPTION FOR THE ASSESSMENT YEAR 2007 2008. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE FOR THE REASON THAT THE APPELLANT REVENUE PREFERRED SLP BEFORE THE HONOURABLE SUPREME COURT AGAINST THE DEC ISION OF HONOURABLE HIGH COURT OF CALCUTTA SUPRA. THE CIT-A ALLOWED THE CLAIM OF THE ASSESSEE BY REL YING ON THE DECISION OF HONOURABLE HIGH COURT OF CALCUTTA SUPRA FOR THE YEAR UNDER CONSIDERATION AND AS AGGRIEVED BY SUCH ORDER THE REVENUE BEFORE U S CHALLENGING THE SAME. 5. AS MATTER STOOD THUS, THE HONOURABLE SUPREME COU RT DISMISSED THE SLP FILED BY THE APPELLANT REVENUE AND AGREED WITH THE INTERPRET ATION OF SCOPE OF RULE 8 OF INCOME TAX RULES 1962 RENDERED BY THE HONOURABLE HIGH COUR T OF CALCUTTA. THE LEARNED AR PLACED COPY OF SUCH ORDER BEFORE US AND SUBMITTED T HAT THE PRESENT APPEAL MAY BE DISPOSED OF IN PURSUANCE OF THE DECISION OF HONOURA BLE SUPREME COURT AND LEARNED DR SUBMITS THAT THE APPELLANT REVENUE DID NOT SUCCE ED IN SLP AND THE DECISION OF HONOURABLE HIGH COURT OF CALCUTTA HAS BECOME FINAL AND BINDING ON THE APPELLANT 3 ITA NO. 2639/KOL/2013 M/S. APEEJAY TEA LTD REVENUE IN VIEW OF THE CONFIRMATION OF THE SUCH DEC ISION BY THE HONOURABLE SUPREME COURT. THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELOW: THE RESPONDENT-ASSESSEE HAD PAID CESS ON GREEN LEA F TO THE GOVERNMENT OF ASSAM WHICH WAS LEVIED UNDER ASSAM TA XATION ( ON SPECIFIED LAND) ACT, 1990. IN ITS INCOME TAX RETURN , IT HAD CLAIMED THE SAME AS DEDUCTION WHICH HAS BEEN ALLOWED BY THE HIGH COURT. THE RELEVANT DISCUSSION IN THIS BEHALF IS AS UNDER: - 'HOWEVER, THE LEARNED TRIBUNAL HAD HELD THAT THE D EDUCTION IS ELIGIBLE AFTER COMPUTING THE INCOME UNDER RULE 8 AN D THE APPORTIONMENT IS TO BE MADE ONLY AFTER THE INCOME I S SO COMPUTED. SUCH APPORTIONMENT CANNOT BE MADE BEFORE THE DEDUCTION. RULE 8 OF THE INCOME TAX: RULES, 1962 RE QUIRES THAT THE COMPUTATION IS TO BE MADE AS IF BY FICTION THE ENTIRE INCOME OUT OF THE TEA GROWN AND MANUFACTURED AS INCOME ASS ESSABLE UNDER THE INCOME TAX ACT, 1961. IN VIEW OF RULE 8, THE INCOME SO COMPUTED IS TO BE APPORTIONED 60: 40 OF WHICH 40 IS ASSESSABLE TO TAX UNDER THE ACT . IT DOES NOT PROVI DE THAT AFTER APPORTIONMENT OF THE 60 % OF THE INCOME SO COMPUTED SHALL AGAIN BE REQUIRED TO BE COMPUTED UNDER THE AGRICUL TURAL INCOME TAX ACT. ON THE OTHER HAND, THIS 60% IS EXPO SED AND BECOMES EXIGIBLE TO TAX UNDER THE AGRICULTURAL INCO ME TAX ACT. WITHOUT BEING REQUIRED TO BE ASSESSED UNDER TH E SAID ACT BY REASON OF THE FICTION SO CREATED. THEREFORE, THE CESS PAID HAS RIGHTLY BEEN EXCLUDED WHILE COMPUTING THE INCOM E UNDER RULE 8 OF THE TEA GROWN AND MANUFACTURED.' IN ARRIVING AT THE AFORESAID CONCLUSION, THE HIGH C OURT HAS REFERRED TO THE VARIOUS JUDGMENTS OF THIS' COURT. WE ARE OF THE OPINION THAT THE HIGH COURT HAS RIGHT LY INTERPRETED THE SCOPE OF RULE 8 OF THE INCOME TAX R ULES 1962. WE, THUS, FIND NO MERIT IN THIS APPEAL WHICH IS, ACCORD INGLY, DISMISSED. 6. RESPECTFULLY FOLLOWING DECISION OF HONOURABLE SU PREME COURT IN THE CASE OF SUPRA , WE HOLD THAT THE FIRSTLY INCOME HAS TO BE COMPUTED BY APPLYING THE METHOD O F RULE 8, THEREAFTER, SECONDLY SUCH COMPUTED INCOME SHALL BE APPORTIONED AT RATIO OF 60%: 4 ITA NO. 2639/KOL/2013 M/S. APEEJAY TEA LTD 40% , THIRDLY SUCH 40% IS SUBJECTED TO FAX. THUS, APPEAL OF THE REVENUE FAILS AND SOLE EFFECTIVE GROUND IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016 SD/- SD/- P.M. JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:10.08.2016 **PP/SPS COPIES OF ORDER FORWARDED TO :- (1) THE DCIT, CIR-8, AAYKAR BHAWAN, 5 TH FL.,P-7 CHOWRINGHEE SQ KOL-69. (2) M/S. APEEJAY TEA LTD APEEJAY HOUSE 15 PARK S TREET, KOL-16. (3) INCOME-TAX (APPEALS)- , KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA