DCIT, CIR-4(2), KOLKATA, Kolkata V. M/s Stewart Holl (India) Ltd., Kolkata

ITA 664/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1229 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 142(1)

Judgement Text

ITA NO. 664/KOL/2015 M/S. STEWART HALL (I) LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C B ENCH, KOLKATA BEFORE : SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBE R I.T.A. NO. 664/KOL/2015 A.Y : 2006-07 D.C.I.T., CIR-4(2), KOLKATA, AAYKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069. APPELLANT -VS- M/S. STEWART HALL (INDIA) LTD, CAMELIA HOUSE, 14, GURUSADAY ROAD, KOLKATA-700019, PAN: AAECS 3091C. RESPONDENT APPEARANCES BY: SHRI DAVID Z. CHAWNGTH, ADDL.CIT, LD. SR.DR SHRI P.N. RAJENDRA, LD.AR DATE OF HEARING : 10-08- 2017 DATE OF PRONOUNCEMENT : 1 8-10-2017 SHRI. S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 02/01/2015 PASSED BY THE COMMISSIONER OF INCO ME TAX(APPEALS)-2, KOLKATA FOR THE ASSESSMENT YEAR 200 6-07. 2. IT IS NOTICED THAT THE APPEAL FILED BY THE REVEN UE IS TIME BARRED BY 17 DAYS. FOR WHICH THE REVENUE FILED AN A FFIDAVIT ITA NO. 664/KOL/2015 M/S. STEWART HALL (I) LTD 2 DATED 15-05-2015 STATING THE REASONS FOR DELAY IN F ILING THE APPEAL. ON PERUSING THE SAME AND HEARING BOTH THE P ARTIES, WE CONDONE THE DELAY AND DISPOSE OFF THE APPEAL SAME O N MERITS. 3. THE APPELLANT REVENUE HAS RAISED FOLLOWING GROUN DS:- 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED ON AS WELL AS IN LAW IN HOLDING THAT CESS ON GREEN LEAVES OF RS.5 3,03,855/- WAS ALLOWABLE EXPENDITURE, IGNORING THE FACT THAT CESS ON GREEN LEAVES IS ATTR IBUTABLE TO CORE AGRICULTURAL ACTIVITIES OF THE ASSESSEE GOVERNED BY THE STATE AGRICULTURE INCO ME TAX BEYOND THE PURVIEW OF THE CENTRAL INCOME TAX AND ON THE SAME ISSUE SLP IS PEN DING BEFORE THE APEX COURT IN THE CASE OF CIT VS. AFT INDUSTRIES. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED ON FACTS AND WELL AS IN LAW IN HOLDING THAT EMPLOYEES CONTRI BUTION TO PF OF RS.6,38,344/- IS ALLOWED IF DEPOSITED BEFORE FILING OF RETURN, IGNOR ING THE FACT THAT EMPLOYEES CONTRIBUTION TO PF IS GOVERNED BY THE PROVISIONS OF SECTION 36( 1)(VA) WHICH PROVIDES THAT CONTRIBUTION TO EMPLOYEES CONTRIBUTION TO PF IS TO BE MADE WITHIN DUE AS SPECIFIED IN RESPECTIVE RULE I.E. PF RULE IN THIS CASE. 3. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS COMPANY AND INVOLVED IN THE BUSINESS OF MANUFACTURING OF TEA AN D FILED RETURN OF INCOME ON 21-11-06 SHOWING NIL INCOME. UNDER SCR UTINY, NOTICES U/S. 143(2) AND 142(1) WERE ISSUED AND, IN RESPONSE TO T HE SAID NOTICES, THE ASSESSEE APPEARED. 5. GROUND NO-1 IS RELATING TO DISALLOWANCE MADE ON ACCOUNT OF CESS ON GREEN LEAF. THE CONTENTION OF THE ASSESSEE IS THAT THE GREEN LEAF IS PURELY AN AGRICULTURAL ACTIVITY AND AS SUCH, THE CESS LEVI ED ON THE PRODUCTION OF THE GREEN LEAF DOES NOT COME UNDER THE PURVIEW OF COMPOSITE INCOME AND CLAIMED DEDUCTION BEFORE APPLYING RULE 8. ACCORDING TO AO THE REVENUE CHALLENGED THE ORDER OF THE HON'BLE CALCUTTA HIGH C OURT IN THE CASE OF AFT INDUSTRIES BEFORE THE HON'BLE SUPREME COURT AND THE HONBLE SUPREME COURT ADMITTED SAID SLP AND IN VIEW OF PENDENCY OF THE MATTER, THE AO ITA NO. 664/KOL/2015 M/S. STEWART HALL (I) LTD 3 TREATED THE CESS IS NON DEDUCTIBLE EXPENDITURE FROM THE COMPOSITE INCOME OF THE ASSESSE AND ADDED AN AMOUNT OF RS. 53,03,855 /- 6. BEFORE THE CIT-A THE ASSESSEE RELIED ON THE ORDER OF THE CALCUTTA HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD REPORT ED IN 270 ITR 167. THE CIT-A HELD AS UNDER:- 4.1 I HAVE EXAMINED THE ABOVE ISSUE. THE SUPREME COUR T OF INDIA WHILE ADMITTING THE SLP OF THE DEPARTMENT AGAINST TH E DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF AFT INDUSTR IES LTD HAS NEITHER STAYED NOR KEPT IN ABEYANCE THE ORDER OF THE JURISDIC TIONAL HIGH COURT. IN VIEW OF THIS POSITION, THE ORDER OF THE JURISDICTIONAL HIGH COURT AT 270 ITR 167 WILL CONTINUE TO BE IN FORCE TILL OTHERWI SE DECIDED BY THE HONBLE SUPREME COURT OF INDIA. HUMBLY FOLLOWING THE DECISION OF THE CALCUTTA HIGH COURT AT 270 ITR 167 I DELETE THE DISA LLOWANCE OF RS. 53,03,855/- MADE BY THE AO ON ACCOUNT OF CESS ON GREEN LEAF. GROUND NO. 2 OF THE APPEAL IS ALLOWED. 7. WE FIND THAT, AS MATTER STOOD THUS, THE HONOURAB LE SUPREME COURT DISMISSED THE SLP FILED BY THE APPELLANT REVENUE AN D AGREED WITH THE INTERPRETATION OF SCOPE OF RULE 8 OF INCOME TAX RUL ES 1962 RENDERED BY THE HONOURABLE HIGH COURT OF CALCUTTA. THE LEARNED AR PLACED COPY OF SUCH ORDER BEFORE US AND SUBMITTED THAT 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 N OT SUCCEED IN SLP AND THE DECISION OF HONOURABLE HIGH COURT OF CALCUTTA H AS BECOME FINAL AND BINDING ON THE APPELLANT REVENUE IN VIEW OF THE CON FIRMATION OF THE SUCH DECISION BY THE HONOURABLE SUPREME COURT. THE RELEV ANT PORTION OF WHICH IS REPRODUCED HEREIN BELOW: THE RESPONDENT-ASSESSEE HAD PAID CESS ON GREEN LEAF TO THE GOVERNMENT OF ASSAM WHICH WAS LEVIED UNDER ASSAM TAXA TION ( 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:- ITA NO. 664/KOL/2015 M/S. STEWART HALL (I) LTD 4 'HOWEVER, THE LEARNED TRIBUNAL HAD HELD THAT THE DED UCTION IS ELIGIBLE AFTER COMPUTING THE INCOME UNDER RULE 8 AND THE APPORTIONMENT IS TO BE MADE ONLY AFTER THE INCOME IS SO COMPUTED. SUCH APPORTIONMENT CANNOT BE MADE BEFORE THE DEDUCTION. RULE 8 OF THE INCOME TAX: RULES, 1962 REQU IRES THAT THE COMPUTATION IS TO BE MADE AS IF BY FICTION THE E NTIRE INCOME OUT OF THE TEA GROWN AND MANUFACTURED AS INCOME ASSESS ABLE UNDER THE INCOME TAX ACT, 1961. IN VIEW OF RULE 8, T HE INCOME SO COMPUTED IS TO BE APPORTIONED 60: 40 OF WHICH 40 IS ASSESSABLE TO TAX UNDER THE ACT. IT DOES NOT PROVIDE T HAT AFTER APPORTIONMENT OF THE 60 % OF THE INCOME SO COMPUTED SHAL L AGAIN BE REQUIRED TO BE COMPUTED UNDER THE AGRICULT URAL INCOME TAX ACT. ON THE OTHER HAND, THIS 60% IS EXPOS ED AND BECOMES EXIGIBLE TO TAX UNDER THE AGRICULTURAL INCOME TAX ACT. WITHOUT BEING REQUIRED TO BE ASSESSED UNDER THE SAI D ACT BY REASON OF THE FICTION SO CREATED. THEREFORE, THE CESS PAID HAS RIGHTLY BEEN EXCLUDED WHILE COMPUTING THE INCOME UND ER 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 RIGHTLY INTERPRETED THE SCOPE OF RULE 8 OF THE INCOME TAX RUL ES 1962. WE, THUS, FIND NO MERIT IN THIS APPEAL WHICH IS, ACCORDIN GLY, DISMISSED. 8. IN ACCORDANCE WITH THE PRINCIPLE AS LAID BY THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF AFT INDUSTRIES WHICH HAS BEEN FURTHER STRENGTHENED BY DISMISSAL OF SLP BY THE HONBLE SUP REME COURT, WE HOLD THAT THE INCOME SO COMPUTED IS TO BE APPORTIONED 60 : 40 OF WHICH 40 IS ASSESSABLE TO TAX UNDER THE ACT. THUS, GROUND NO-1 RAISED IS, ACCORDINGLY DISMISSED. 9. GROUND NO. 2 IS RELATING TO DELETION OF ADDITION MADE AS DISALLOWANCE TOWARDS PF OF RS. 6,38,344/-. 10. THE AO FOUND THAT THE ASSESSEE COMPANY HAS NOT DEPOSITED EMPLOYEESCONTROBUTION TO PF WITHIN SPECIFIED DATE OF RS.6,38,344/-. THUS, ITA NO. 664/KOL/2015 M/S. STEWART HALL (I) LTD 5 HE ADDED THE IMPUGNED AMOUNT BEING NOT ALLOWABLE AS DEDUCTION U/S. 36(I)(VA) OF THE ACT TO THE TOTAL INCOME OF THE ASS ESSEE. 11. THE CIT-A HELD AS UNDER:- 3.2 I AM IN AGREEMENT WITH THE VIEW OF THE AR OF T HE APPELLANT. THE AMOUNT OF RS. 6,38,344/- WHICH WAS DISALLOWED BY TH E AO AS PAID BEYOND DUE DATE HAS ACTUALLY BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN U/S. 13991). I HAVE EXAMINED THE RECORDS OF THE APPELLANT. THE DUE DAT E FOR FILING OF RETURN FOR A.Y 2006-07 WAS 30/11/2006 AND THE AMOUNT OF RS. 6,38,344/- WAS PAID MUCH BEFORE THE DUE DATE. THIS RATIO HAS BEEN UPHELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD 319 ITR 306. THEREFORE, HUMBLY FOLL OWING THE JUDGEMENT OF APEX COURT, I DELETE THE ADDITION OF RS.6,38,344/- MADE BY THE AO . GROUND NO. 1 OF THE APPEAL IS ALLOWED. 12. IN VIEW OF ABOVE, WE FIND NO INFIRMITY IN THE I MPUGNED ORDER OF THE CIT-A. THE CIT-A HAS GIVEN RELIEF TO THE ASSESSEE B ASING ON DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUPRA. WE UPHOLD THE SAME. GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18-10 -2017. SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 18-10-2017 COPIES TO : **PP/SPS (1) APPELLANT/DEPARTMENT: THE DCIT, CIR-4(2), KOL., P-7 CHOWRINGHEE SQUARE, KOLKATA-69. (2) RESPONDENT/ASSESSEE: M/S. STEWARD HALL (INDIA) LTD, CAMELIA HOUSE, 14 GURUSADAY ROAD, KOLKATA-19. (3)COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SR.PS/H.O.O ITAT, KOLKATA