ITO, Wd-4(4), Kolkata, Kolkata V. M/s Rungamattee Tea & Industries Ltd., Kolkata

ITA 844/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1828 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND KR SINGH J
• Assessee Lawyers: MRS NILMA JOSHI
• Keywords: Depreciation
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 844 / KOL / 2014 ASSESSMENT YEAR :2003-04 ITO WARD-4(4), AAYAKAR BHAWAN, 8 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 V/S . M/S RUNGAMATTEE TEA & INDUSTRIES LTD. 90/31, DIAMOND HARBOUR ROAD, KOLKATA-700 038 [ PAN NO.AABCR 1833 Q ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI ANAND KR. SINGH, JCIT-DR /BY RESPONDENT MRS. NILMA JOSHI, FCA /DATE OF HEARING 13-02-2017 /DATE OF PRONOUNCEMENT 03-05-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOLKATA DA TED 15.01.2014. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-4 KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 13.01.2006 FOR ASSESSMENT YEAR 2003-04. SHRI ANAND KR. SINGH, LD. DEPARTMENTAL REPRESENTATI VE REPRESENTED ON BEHALF OF REVENUE AND MRS. NILIMA JOSHI, LD. AUTHORIZED RE PRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. THE FIRST ISSUE RAISED BY THE REVENUE IN THIS AP PEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR R S. 25,63,853/- ON ACCOUNT OF CESS ON GREEN LEAF EXPENDITURE CLAIMED BY THE AS SESSEE. ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 2 3. THE ASSESSEE DURING THE YEAR HAS CLAIMED CESS EX PENSES ON THE PRODUCTION OF GREEN LEAF MADE IN THE GARDENS AS PER THE PROVISION OF ASSAM GOVERNMENT. THE ASSESSEE CLAIMED DEDUCTION OF SUCH CESS EXPENSES BEFORE APPORTIONING THE COMPOSITE INCOME AS PER RULE 8 OF INCOME TAX RULES. THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. A.F.T INDUSTRIES LTD . (2004) , 270 ITR 167 (CAL). HOWEVER, THE AO DISALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT AGAINST THE ORDER OF HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF A.F.T INDUSTRIES LTD. (SUPRA), THE REVENUE HAS FILED AN SLP BEFORE THE HONBLE SUPREME COURT WHICH HAS BEEN ADMITTED. SINC E THE MATTER IS PENDING BEFORE THE HONBLE SUPREME COURT, THEREFORE, THE AO TREATED THE CESS AS NON- DEDUCTIBLE EXPENDITURE FROM THE COMPOSITE INCOME AN D DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A), WHO HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER :- 3.2 I HAVE EXAMINED THIS ISSUE. THIS MATER HAS BEE N DULY CONSIDERED BY THE ITAT, KOLKATA, IN THE CASE OF M/S APEEJAY TEA L TD. ITA NO. 901/KOL/2011 PRONOUNCED ON 5.9.2011. THE ITAT KOLKA TA WHILE DISMISSING THE APPEAL OF THE REVENUE HELD AS BELOW: - THE FACT THAT THE SLP IS PENDING BEFORE THE HON'BL E SUPREME COURT AGAINST THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN RESPECT OF AFT INDUST5RIES LTD. VS CIT (270 ITR 167 ) WILL NOT HAVE ANY EFFECT SINCE THE HON'BLE APEX COURT HAS NEITHER SET ASIDE THE ORDERS OF THE CALCUTTA HIGH COURT NOR GRANTED ANY S TAY. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSE D. THE HON'BLE ITAT, KOLKATA, CONFIRMED THE ABOVE VIEW AT A LATER DATE IN AN ORDER PASSED ON 11.05.2012 IN THE CASE OF M/S A SSAMBROOK LTD. AT ITA NO.2049/KOL/2010 FOR AY 2006-07. HUMBLY FOLLOWING THE DECISION OF THE JURISDICTIONAL TRIBUNAL, I DELETE THE ADDITION OF RS.25,63,853/- ON ACCOUNT OF CESS ON G REEN LEAF MADE BY THE AO. THE AO IS DIRECTED ACCORDINGLY. GROUND (A) OF THE APPEAL IS ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S ON THE FOLLOWING GROUND:- 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT CESS ON GREEN LEAF IS AN ALLOWABLE EXPENDITURE, IGNORING TH E FACT THAT IT IS DIRECTLY ATTRIBUTABLE TO CORE AGRICULTURE ACTIVITIES WHICH I S TAXABLE UNDER STATE ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 3 AGRICULTURE INCOME TAX, BEYOND THE PURVIEW OF CENTR AL INCOME TAX AND ON THE SAME ISSUE SLP IS PENDING IN THE CASE OF AFT INDUST RIES. 5. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF AO WHER EAS LD. AR RELIED ON THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INS TANT CASE RELATES TO DISALLOWANCE OF CESS EXPENDITURE CLAIMED BY THE ASS ESSEE. THE HONBLE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF COMMISSIONER OF INCOME TAX VS. A.F.T INDUSTRIES LTD . (2004) , 270 ITR 167 (CAL) BUT AGAINST THE SAME ORDER THE REVENU E HAS FILED SLP IN THE HONBLE APEX COURT WHICH HAS BEEN ADMITTED FOR FINA L ADJUDICATION. IN VIEW OF THIS, THE AO HAS DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE HEAD CESS ON GREEN LEAF. HOWEVER, ON PERUSAL OF RECORD, WE FIND THAT IN IDENTICAL FACTS AND CIRCUMSTANCES, HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. M/S APEEJAY TEA & CO . LTD. CIVIL APPEAL NO.1105 OF 2006 , ORDER DATED 6 TH AUGUST, 2015 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW:- O R D E R THE RESPONDENT-ASSESSEE HAD PAID CESS ON GREEN LEAF 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 HIG H COURT. THE RELEVANT DISCUSSION IN THIS BEHALF IS AS UNDER: - 'HOWEVER, THE LEARNED TRIBUNAL HAD HELD THAT THE DE DUCTION 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 BE FARE THE DEDUCTION. RULE 8 OF THE INCOME TAX RULES, 1962 REQ UIRES 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 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 THAT AFTER A PPORTIONMENT OF THE 60% OF THE INCOME SO COMPUTED SHALL AGAIN BE RE QUIRED TO BE COMPUTED UNDER THE AGRICULTURAL INCOME TAX ACT. ON THE OTHER HAND, THIS 60% IS EXPOSED AND BECOMES ELIGIBLE TO T AX UNDER THE AGRICULTURAL INCOME TAX ACT WITHOUT BEING REQUIRED TO BE ASSESSED UNDER THE SAID ACT BY REASON OF THE FICTIO N SO CREATED. ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 4 THEREFORE, THE CESS PAID HAS RIGHTLY BEEN EXCLUDED WHILE COMPUTING THE INCOME UNDER RULE 8 OF THE TEA GROWN AND MANUFACTURED. IN ARRIVING OF THE AFORESAID CONCLUSION THE HIGH CO URT 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 RULES 1962. W E, THUS, FIND NO MERIT IN THIS APPEAL WHICH IS, ACCORDINGLY, DISM ISSED. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HONBL E SUPREME COURT, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL RAISED BY THE REVENUE AND WE DISMISS THE SAME. 7. SECOND ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION OF 1,21,206/- OUT OF THE WITHDRAWAL FROM THE ACCOUNT MAINTAINED WITH NABARD WHICH IS AGAINST THE PROVISI ON OF SEC. 33AB(4) OF THE ACT. 8. THE ASSESSEE HAS WITHDRAWN A SUM OF 1,21,206/- FOR THE PURCHASE OF OFFICE EQUIPMENT FROM THE ACCOUNT MAINTAINED WITH N ABARD IN THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER OBSERVED THAT THE AMOUNT CAN BE WITHDRAWN FROM THE NABARD ACCOUNT UNDER THE SPECIFI ED CIRCUMSTANCES AS MENTIONED U/S 33AB(4) OF THE ACT. THE INSTANT WITHD RAWAL FROM THE NABARD ACCOUNT IS NOT IN ACCORDANCE WITH THE PROVISION OF SEC. 33AAB(4) OF THE ACT AND THEREFORE THE SAME WAS DISALLOWED BY AO AND ADD ED TO THE TOTAL INCOME OF ASSESSEE. 9. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE AMOUN T WAS WITHDRAWN IN ACCORDANCE WITH THE TEA DEVELOPMENT ACCOUNT SCHEME, 1990 VIDE PARA-9 CLAUSE-(K) WHICH READS AS UNDER:- 9. WITHDRAWAL AND UTILIZATION OF THE AMOUNTS DEPOSI TED A DEPOSITOR SHALL BE ENTITLED TO WITHDRAW THE AMOUNT DEPOSITED OR SUCH P ART THEREOF AS MAY BE APPROPRIATE AND SUCH WITHDRAWALS SHALL BE USED FOR ANY OF THE FOLLOWING PURPOSES SET OUT WHICH, HOWEVER, SHALL BE SUBJECT T O REVIEW FROM TIME TO TIME. (K) ON PURCHASE OF COMPUTERS AND ANCILLARY OR RELAT ED EQUIPMENT. ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 5 THE ASSESSEE ALSO SUBMITTED THE DETAILS OF ANCILLAR Y EQUIPMENT WHICH ARE GIVEN HERE IN BELOW:- (I) STABILIZER RS. 1,400/- (II) STEEL TABLE WITH CHAIR RS. 7,800/- (III) COMPUTER CHAIR RS. 10,710/- (IV) AIR CONDITIONER WITH STABILIZER RS. 83,390/- (V) REFRIGERATOR RS. 12,500/- (VI) CEILING FANS RS. 5,406/- RS.1,21,206/- THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITION MADE BY AO IN PART BY OBSERVING AS UNDER:- 4.3 IN THE ASSESSMENT ORDER THE AO HAS NOT GIVEN AN Y REASONING FOR DISALLOWANCE OF RS.1,21,206/- EXCEPT THAT THE ADDIT ION IS BEING MADE ON AGREED BASIS. I AM OF THE VIEW THAT ASSESSMENT HAS TO BE MADE AS PER LAW AND NOT AS PER AN AGREEMENT BETWEEN THE AO AND THE ASSESSEE. HENCE, I WILL APPROACH THE ISSUE AND EXAMINE IT AS PER LAW. FIRST LY, UNDER THE TEA DEVELOPMENT ACCOUNT SCHEME, 1990 OF NABARD IT IS PE RFECTLY LEGAL TO MAKE WITHDRAWAL UNDER THE SAID SCHEME FOR PURCHASE OF CO MPUTER AND ANCILLARY OR RELATED EQUIPMENTS [PARA-9, CLAUSE (K)]. HENCE, THE ACTION OF THE APPELLANT TO MAKE WITHDRAWALS FOR THIS PURPOSE IS AS PER LAW. TH E AR OF THE APPELLANT HAS GIVEN A BREAK UP OF EXPENSES TOTALING RS.1,21,206/- WHICH INCLUDES ITEMS LIKE STABILIZER, COMPUTER CHAIR, REFRIGERATOR AND CEILIN G FAN. AFTER PERUSING THESE DETAILS GIVEN BY THE AR OF THE APPELLANT, I AM IN A GREEMENT WITH THE VIEWS OF THE AR OF THE APPELLANT THAT EXCEPT FOR PURCHASE OF REFRIGERATOR ALL THEIR ITEM CAN BE CATEGORISED AS COMPUTER AND ANCILLARIES OR RELATED EQUIPMENTS . THEREFORE, OUT OF THE DISALLOWANCE OF RS.1,21,206/- MADE BY THE AO, DISALLOWANCE OF ONLY RS.12,500/- IS SUSTAINED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S ON THE FOLLOWING GROUND:- 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT PURCHASE OF COMPUTER AND ITS ANCILLARIES FOR RS.1,21,206/- OUT OF WITHDRAWAL FROM CREDIT AVAILABLE WITH NABARD ACCOUNTS SCHEME WAS ALLOWABLE , IGNORING THE FACT THAT S PER PROVISOS OF SECTION 33AB(4) PURCHASE OF COMPUTER IS NOT ALLOWABLE FROM THE WITHDRAWAL FROM CREDIT AVAILABLE WITH NABA RD SCHEME AS PLANT & MACHINERY. 10. BEFORE US LD. DR HEAVILY RELIED ON THE ORDER OF AO WHEREAS LD. AR REITERATED SAME SUBMISSIONS AS MADE BEFORE LD. CIT( A) AND HE ALSO RELIED ON THE ORDER OF LD. CIT(A). ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 6 11. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INS TANT CASE RELATES TO PURCHASE OF OFFICE EQUIPMENTS OUT OF MONEY WITHDRAW N FROM THE ACCOUNT MAINTAINED WITH NABARD. AS PER THE AO THE AMOUNT CA N BE WITHDRAWN FROM THE NABARD ACCOUNT IN THE CIRCUMSTANCES AS SPECIFIE D U/S 33AB(4) OF THE ACT WHICH ARE ENUMERATE BELOW:- [ TEA DEVELOPMENT ACCOUNT [,COFFEE DEVELOPMENT ACCOUN T AND RUBBER DEVELOPMENT ACCOUNT ]. 33AB . (1). .. (2). (3). [(4). NOTWITHSTANDING ANYTHING CONTAINED IN SUB-S ECTION (33), WHERE ANY AMOUNT STANDING TO THE CREDIT OF THE ASSESSEE I N THE SPECIAL ACCOUNT OR IN THE DEPOSIT ACCOUNT IS RELEASED DURIN G ANY PREVIOUS YEAR BY THE NATIONAL BANK OR WITHDRAWN BY THE ASSESSEE FROM THE DEPOSIT ACCOUNT, AND SUCH AMOUNT IS UTILIZED FOR THE PURCHA SE OF- (A) ANY MACHINERY OR PLANT TO BE INSTALLED IN ANY O FFICE PREMISES OR RESIDENTIAL ACCOMMODATION, INCLUDING ANY ACCOMMODAT ION IN THE NATURE OF A GUEST HOUSE; (B) ANY OFFICE APPLIANCES (NOT BEING COMPUTERS); (C) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COST OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIAT ION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OF ANY ONE PREVIOUS YEAR; (D) ANY NEW MACHINERY OR PLANT TO BE INSTALLED IN A N INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF BUSINESS OF CONSTRU CTION, MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING SPECIFIED IN THE LISTED IN THE ELEVENTH SCHEDULE. THE WHOLE OF SUCH AMOUNT SO UTILIZED SHALL BE DEEME D TO BE THE PROFITS AND GAINS OF BUSINESS OF THAT PREVIOUS YEAR AND SHA LL ACCORDINGLY BE CHARGEABLE TO INCOME TAX AS THE INCOME OF THAT PREV IOUS YEAR.] ACCORDING TO THE ASSESSING OFFICER, THE INSTANT WIT HDRAWAL OF MONEY FROM THE ACCOUNT MAINTAINED WITH NABARD DOES NOT FALL UNDER THE CIRCUMSTANCES PROVIDED U/S 33AB(4) OF THE ACT, THUS, THE DISALLOW ANCE WAS MADE BY AO. HOWEVER, THE LD. CIT(A) DELETED THE ADDITION MADE B Y AO BY OBSERVING THAT THE AMOUNT WAS WITHDRAWN IN ACCORDANCE WITHIN THE M EANING OF APPROVED SCHEME UNDER THE ACT. THEREFORE, IN SUCH DISALLOWAN CE WAS NOT WARRANTED. IN THE LIGHT OF ABOVE DISCUSSION, THE ISSUE BEFORE US ARISES FOR OUR ADJUDICATION SO AS TO WHETHER THE IMPUGNED WITHDRAWAL WAS WITHIN TH E MEANING OF THE ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 7 PROVISION OF SECTION 33AB OF THE ACT. AS PER THE PR OVISIONS OF SECTION 33AB OF THE ACT A DEDUCTION IS ALLOWABLE FROM THE INCOME IF ASSESSEE DEPOSITS THE AMOUNT WITH THE NATIONAL BANK IN ACCORDANCE WITH TH E SCHEME APPROVED BY THE TEA BOARD OR COFFEE BOARD OR RUBBER BOARD. THE AMOUNT SO DEPOSITED UNDER THE SCHEME WILL BE ELIGIBLE FOR DEDUCTION FRO M THE INCOME OF THE ASSESSEE SUBJECT TO THE AMOUNT OF CONDITIONS AS SPE CIFIED UNDER THE PROVISION OF SEC. 33AB OF THE ACT. THE AMOUNT SO DEPOSITED CA N BE WITHDRAWN UNDER THE CIRCUMSTANCES AS SPECIFIED UNDER THE SUB-SECTIO N (3) OF 33AB OF THE ACT WHICH READS AS UNDER:- (3). ANY AMOUNT STANDING TO THE CREDIT OF THE ASSES SEE IN [THE SPECIAL ACCOUNT OR THE [***] DEPOSIT ACCOUNT SHALL NOT BE ALLOWED T O BE WITHDRAWN EXCEPT FOR THE PURPOSES SPECIFIED IN THE SCHEME OR, AS THE CAS E MAY BE, IN THE DEPOSIT SCHEME] OR IN THE CIRCUMSTANCES SPECIFIED BELOW:- (A) CLOSURE OF BUSINESS; (B) DEATH OF AN ASSESSEE; (C) PARTITION OF A HINDU UNDIVIDED FAMILY; (D) DISSOLUTION OF A FIRM; (E) LIQUIDATION OF A COMPANY FROM THE PROVISIONS OF SECTION 33AB(3) OF THE ACT, WE FIND THAT THE ASSESSEE IS ENTITLED TO UTILIZE THE AMOUNT WITHDRAWN FROM THE A CCOUNT MAINTAINED IN NABARD FOR THE PURPOSES AS SPECIFIED IN THE SCHEME. AND IN THE INSTANT CASE THE ASSESSEE HAS UTILIZED THE FUND AS PER THE SCHEM E. IT IS ALSO IMPORTANT TO NOTE THAT THE PROVISIONS OF SECTION 33AB(4) OF THE ACT ALSO PROVIDES THE ASSESSEE TO UTILIZE THE MONEY FOR PURCHASE OF THE C OMPUTERS. THUS WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CI T(A) THEREFORE, THERE IS NO MERIT IN THIS GROUND OF APPEAL RAISED BY THE REVENU E, HENCE, WE DISMISS THE SAME. 12. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 9,48,088/- ON ACCOUNT OF DEPRECIATION ON THE PLANT & MACHINERY PURCHASED FRO M THE AMOUNT WITHDRAWN FROM THE ACCOUNT MAINTAINED WITH NABARD. 13. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S WITHDRAWN A SUM OF 65,17,738/- FROM THE NABARD ACCOUNT AND PURCHASED P LANT AND MACHINERY. ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 8 THE ASSESSEE ON SUCH PLANT AND MACHINERY CLAIMED DE PRECIATION OF 9,48,088/- ONLY. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, AO OBSERVED THAT AS PER THE PROVISION OF SEC. 33AB(6) OF THE AC T THE AMOUNT OF DEPRECIATION IS NOT ALLOWABLE EXPENDITURE. ACCORDINGLY, AO DISAL LOWED THE DEPRECIATION AMOUNT OF 9,48,088/- AND ADDED TO THE TOTAL INCOME OF ASSESSE E. 14 AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT AS PER TH E PROVISION OF SEC. 33AB(6) OF THE ACT THE DEDUCTION OF EXPENDITURE INC URRED OUT OF AMOUNT WITHDRAWN FROM THE NABARD ACCOUNT IS NOT ALLOWABLE. BUT, THERE IS NO DENIAL FOR THE DEDUCTION OF DEPRECIATION AS THE SAME IS AN ALLOWANCE AND IT IS NOT EXPENDITURE. THE LD. CIT(A) AFTER CONSIDERING THE S UBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- 5.2 I HAVE CONSIDERED THE WRITTEN SUBMISSION OF THE AR OF THE APPELLANT. I FIND THAT THE AO HAS HELD THAT THE CLAIM OF DEPRECIATION WILL NOT BE ALLOWABLE U/S. 33AB(6) WHEREAS THE AR OF THE APPELLANT HAS ARGUED THAT DEPRECIATION IS NOT AN EXPENDITURE AND IT IS ONLY A NOTIONAL ALLOWANCE WHICH IS NOT BASED ON ACTUAL EXPENDITURE. THE AR OF THE APPELLANT HAS PLA CED RELIANCE ON THE SUPREME COURT DECISION IN THE CASE OF GARDEN SILK W EAVING FACTORY VS. CIT (1993) 189 ITR 512 WHICH PERTAINS TO CLAIM OF DEPRE CIATION U/S 32 OF THE IT ACT, 1961. THE SAID JUDGMENT HOLDS DEPRECIATION TO BE OF THE NATURE OF NOTIONAL ALLOWANCE AND NOT AN ITEM OF ACTUAL EXPEND ITURE. HOWEVER, SECTION 33AB(6) STATES THAT IF CERTAIN AMOUNT IS STANDING T O THE CREDIT OF THE ASSESSEE IN A SPECIAL DEPOSIT ACCOUNT AND WITHDRAWALS FROM T HIS ACCOUNT IS MADE BY THE ASSESSEE FOR ANY EXPENDITURE UNDER THE SCHEME, THEN , SUCH EXPENDITURE SHALL NOT BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE U NDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. HOWEVER, IN LIGHT OF THE JUDGEMENT OF HON'BLE SUPREME COURT 189 ITR 512, DEPRECIATION IS HELD TO BE NOT AN ACTUAL EXPENDITURE BUT ONLY A NOTIONAL ALLOWANCE. I AM, TH EREFORE, OF THE VIEW THAT THE ACTION OF THE AO TO EQUATE EXPENDITURE TO DEPRECIAT ION CANNOT BE UPHELD. GROUND (C) IS ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S ON THE FOLLOWING GROUND:- 3. THE LD. CIT(A) ERRED IN LAW IN HOLDING THAT DEPR ECIATION ON PLANT & MACHINERY PURCHASED OUT OF NABARD SCHEME WAS ALLOWA BLE, IGNORING THE FACT THAT DEPRECIATION ON PLANT & MACHINERY ACQUIRE D FROM WITHDRAWAL FROM NABARD SCHEME WAS NOT ALLOWABLE AS PER PROVISIONS O F SECTION 33AB(4). ITA NO.844/KOL/2014 A.Y. 200 3-04 ITO WD-4(4) KOL. VS. M/S RUNGAMATTEE TEA & INDUSTRIES LTD. PAGE 9 15. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 16. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO TH E AMOUNT OF DEPRECIATION CLAIMED BY ASSESSEE IN RESPECT OF PLANT AND MACHINE RY PURCHASED OUT OF THE MONEY WITHDRAWN FROM THE ACCOUNT MAINTAINED WITH NA BARD. WE NOTE THAT THE HONBLE APEX COURT IN THE CASE OF GARDEN SILK WEAVING FACTORY VS. CIT REPORTED IN 189 ITR 512 (SC) HAS HELD THAT THE DEPR ECIATION IS NOT A EXPENDITURE BUT AN ALLOWANCE. THUS, IN OUR CONSIDER ED VIEW, WE ARE INCLINED TO HOLD THAT THE DEPRECIATION IS AN ALLOWANCE AND THER EFORE THE SAME IS OUT OF THE PURVIEW OF SECTION 33AB(6) OF THE ACT. THUS WE DO N OT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). THEREFORE, TH ERE IS NO MERIT IN THIS GROUND OF APPEAL RAISED BY THE REVENUE, HENCE, WE DISMISS THE SAME. 17. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 03/ 05/2017 SD/- SD/- ( !') ( !') (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S $!% &- 03 / 05 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT 2. / RESPONDENT 3. %.%/0 2 / CONCERNED CIT KOLKATA 4. 2- / CIT (A) KOLKATA 5. 567 /0, /0 , / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ ! , /TRUE COPY/ / % /0 ,