The Oodlabari Company Ltd, Kolkata V. DCIT, Kolkata

ITA 283/KOL/2023

AI Insights

The case involves The Oodlabari Company Ltd appealing against the order of the National Faceless Appeal Centre (CIT(A)), which sustained certain additions and disallowances made by the Assessing Officer under the Income Tax Act. The primary issues in the appeal were the disallowance of a Replantation subsidy received from the Tea Board, and the disallowance of 30% of the sale proceeds of shade trees under Section 14A read with Rule 8D of the Income Tax Rules. The Tribunal found that the Assessing Officer's reasons for disallowing the Replantation subsidy were insufficient and that the disallowance on the shade trees was unjustified as the company had already added back 30% of the receipts.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128121 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 28-03-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Earning of tax free income
• Section: 14A; 250

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘एसएमसी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी ͬगरȣश अĒवाल, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member I.T.A. No.283/Kol/2023 Assessment Year: 2014-15 The Oodlabari Company Ltd.................................................Appellant 11 Nilhat House, R.N. Mukherjee Road, Kolkata-1. [PAN: AAACT9648L] vs. DCIT, Circle-4(2), Kolkata............................................................... Respondent Appearances by: Shri Siddharth Agarwal, AR, appeared on behalf of the appellant. Smt. Archna Gupta, DR, appeared on behalf of the Respondent. Date of concluding the hearing : October 31, 2023 Date of pronouncing the order : October 31, 2023 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 30.01.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. That under the facts and circumstances of the case and in law the order passed by CIT(A) is bad-in-law, arbitrary, perverse, unsustainable and against the principles of natural justice. 2. That under the facts and circumstances of the case the Learned CIT (Appeals) has grievously erred in sustaining the addition/disallowances of Rs. 34,66,287 being Replantation subsidy received from Tea Board which is exempt under Section 10(30) of the Income Tax Act, 1961. I.T.A. No.283/Kol/2023 Assessment Year: 2014-15 The Oodlabari Company Ltd 2 3. That under the facts and circumstances of the case the Learned CIT (A) has erred in sustaining the addition/disallowances of Rs. 5,29,625 being 30% of sale proceeds of shade trees which had been disallowed by the Assessing Officer by invoking the provision of Section 14A read with Rule 8D even though the sale proceeds of shade trees has not been claimed by the assessee as exempt income. 4. That under the facts and circumstances of the case and in law the Ld. CIT (A) has erred in not visualising the grave arithmetical mistakes committed by the Assessing Officer in the computation of income which is as glaring as broad daylight and even though the same was pointed out. 5. That the learned CIT(A) grossly erred in not considering the written submissions and evidences furnished during the course of appellate proceedings. 6. The appellant craves leave to make any addition, alteration or modification etc., of the grounds either before the appellate proceedings, or in the course of appellate proceedings.” 3. Ground No.1 is general in nature. 4. Ground No.2 – Vide Ground No.2 the assessee has agitated the confirmation of addition of Rs.34,66,287/- on account of disallowance made by the Assessing Officer relating to exemption claimed u/s 10(30) of the Act in respect of Replantation subsidy received from Tea Board of India. 5. A perusal of the assessment order would reveal that the Assessing Officer has disallowed the exemption from taxation claimed by the assessee on the ground that for the year under consideration, the assessee could not establish nexus between income earned from its tea production activity and the Replantation subsidy received from the Board. There is no allegation of the Assessing Officer that the assessee has not received the Replantation subsidy from the Board. The ld. counsel for the assessee, in this respect, has placed reliance to pages 39 to 59 of the paper-book. I.T.A. No.283/Kol/2023 Assessment Year: 2014-15 The Oodlabari Company Ltd 3 6. The only reason pointed out by the Assessing Officer is that the nexus of income with the subsidy has not been established, which, in our view, cannot be a valid reason to deny exemption to the assessee in respect of Replantation subsidy. The Replantation subsidy, in our view, is given for Replantation of tea plants, which may yield income in subsequent years. Therefore, the above disallowance made by the Assessing Officer cannot be held to be justified. The addition made by the Assessing Officer, in this respect, is ordered to be deleted. 7. Ground No.3 – Vide Ground No.3, the assessee has agitated the confirmation of addition of Rs.5,29,625/- on account of disallowance made u/s 14A of the Act r.w.r 8D of the Income Tax Rules in respect of exemption claimed on sale of shade trees as agricultural income. 8. The Assessing Officer held that the shade trees do not grow naturally but they have to be planted, irrigated and nourished which require considerable expenditure in terms of manure, irrigation and engagement of labour. Keeping in view this aspect, the Assessing Officer disallowed 30% of the sale proceeds of shade trees as expenditure incurred for earning of exempt agricultural income. 9. At the outset, the ld. counsel for the assessee has submitted that out of total receipts, the assessee has already added back 30% and submitted that no further disallowance was warranted. Considering the above plea, the disallowance made by the Assessing Officer in respect of Ground No.3 is ordered to be deleted. This ground stands allowed. 10. Ground No.4 – Vide Ground No.4, the assessee has pleaded that there is some computation error made by the Assessing Officer while computing taxable income of the assessee. I.T.A. No.283/Kol/2023 Assessment Year: 2014-15 The Oodlabari Company Ltd 4 11. This ground is restored to the file of the Assessing Officer with a direction that the Assessing Officer will consider the error pointed out by the assessee and thereafter compute/recompute of the income of the assessee in accordance with law. 12. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Kolkata, the 31 st October, 2023. Sd/- Sd/- [ͬगरȣश अĒवाल /Girish Agrawal] [संजय गग[ /Sanjay Garg] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 31.10.2023. RS Copy of the order forwarded to: 1. The Oodlabari Company Ltd 2. DCIT, Circle-4(2), Kolkata 3.CIT (A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches