D.C.I.T Cir - 3,Siliguri, Darjeeling V. M/s Nandi Tea Company Ltd, Siliguri

ITA 887/KOL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4882 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KR PANDE JCITSRDR
• Assessee Lawyers: S K TULSIYAN
• Keywords: Depreciation; Source of fund
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 887 / KOL / 2013 ASSESSMENT YEAR :2008-09 ACIT CIRCLE-3, AAYKAR BHAWAN, PARIBAHAN NAGAR, MATIGARA, SILIGURI, DIST. DARJEELING 734 010 V/S . M/S NANDI TEA CO. PVT. LTD., SAROJINI VILLA119, RAJA RAM MOHAN ROY ROAD, HAKIMPARA, SILIGURI-734001 [ PAN NO.AAACN 7285 P ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI ANIL KR. PANDE, JCIT-SR-DR /BY RESPONDENT SHRI S.K. TULSIYAN, ADVOCATE /DATE OF HEARING 08-02-2016 /DATE OF PRONOUNCEMENT 18-03-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), SILIGURI IN APPEAL NO.50/CIT( A)/SLG/10-11 DATED 04.02.2013. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-3 , SILIGURI U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 28.12.2010 FOR ASSESSMENT YEAR 2008-09. GROUN DS RAISED BY REVENUE ARE REPRODUCED BELOW:- 1. WHETHER THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE METHOD ADOPTED BY THE AO AS AN ERRONEOUS AND NOT ACCEPTABLE. DURING THE CURSE OF ASSESSMENT PROCEEDI NGS, FOR THE SAKE OF CLARITY, THE AO ANALYZED ALL THE EXPENSES AND INCOM ES CLAIMED IN THE AUDIT REPORT AND RECOMPUTED THE INCOME ON THE BASIS OF FA CTS AND FIGURE AVAILABLE IN THE AUDIT REPORT. THE METHOD AO ADOPTED FOR COMPUTA TION OF INCOME WAS WITHIN THE PROVISIONS OF INCOME TAX ACT, 1961. RULE 8 OF INCOME TAX RULES ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 2 1962 OUTLINES THE METHOD BY WHICH INCOME FROM SALE OF TEA GROWN AND MANUFACTURED COULD BE COMPUTED. THE RULE PROVIDES T HAT INCOME DERIVED FROM THE SALE OF TEA GROWN AND MANUFACTURED BY THE SELLER SHALL BE COMPUTED AS IF IT WERE INCOME DERIVED FROM BUSINESS BUT ONLY 40% OF SUCH INCOME SHALL BE DEEMED TO BE THE INCOME LIABLE TO TAX. THE RULE IS NOT APPLICABLE IN CASE OF INCOME DERIVED FROM MANUFACTURE OF TEA FROM THE TEA LEAVES PURCHASED FROM OUTSIDE. HENCE, SUCH INCOME IS SUBJECT TO TAX IN FU LL. FURTHER, IN THE INSTANT CASE THE ASSESSEE HAD NOT MAINTAINED SEPARATE ACCOU NTS IN RESPECT OF TEA MANUFACTURED FROM GREEN LEAVES GROWN BY THE ASSESSE E AND OUT OF GREEN LEAVES PURCHASED FROM OUTSIDE. WITHOUT POINTING OUT ANY DEFECT SPECIFICALLY IN THE SAID COMPUTATION, THE LD. CIT(A) S COMPUTATION WAS AN ERRONEOUS. THEREFORE, THERE WAS NO REASON TO TREAT THE METHOD ADOPTED BY THE AO AS ERRONEOUS AND NOT ACCEPTABLE. 2. WHETHER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN GRANTING DISALLOWANCE U/S. 80IB OF THE ACT IGNORING THE FACT THAT THE ASSESSEE HAD NOT SUBMITTED ANY DOCUMENTARY EVIDENCE FOR PROVING ITS ELIGIBILITY. 2. FIRST GROUND RAISED BY REVENUE IS WHETHER LD. CI T(A) IS JUSTIFIED IN FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THE METHOD ADOPTED BY THE AO FOR WORKING OUT THE PROFIT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PRIVA TE LTD. COMPANY AND ENGAGED IN THE BUSINESS OF GROWING TEA LEAF AND MAN UFACTURING TEA. IN THE INSTANT CASE THE ASSESSEE IS HAVING INCOME FROM THE TWO SOURCES OF THE BUSINESS. SOURCE- 1 1) GROWING AND MANUFACTURING OF TEA. AS PER RULE 8 OF INCOME TAX RULES 1962 40% INCOME FROM SUCH ACTIVITY CHARGEABLE TO TA X. SOURCE- 2 2) MANUFACTURING OF TEA FROM THE TEA LEAVES PURCHAS ED FROM OUTSIDE. THE RULE 8 OF INCOME TAX RULES 1962 IS NOT APPLICABLE T O THE INCOME FROM THIS ACTIVITY SO 100% INCOME FROM SUCH ACTIVITY IS CHARGEABLE TO TAX. IN THE PRESENT CASE, ASSESSEE HAS INCURRED NUMEROUS EXPENSES WHICH ARE DIRECTLY ATTRIBUTABLE TO THE ABOVE SOURCES AND SOME OF THEM ARE NOT DIRECTLY ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 3 ATTRIBUTABLE TO THE ABOVE SOURCES OF INCOME. THE AS SESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF TEA MANUFA CTURED FROM LEAVES GROWN BY THE ASSESSEE AND IN RESPECT OF TEA MANUFACTURED OUT OF LEAVES PURCHASED FROM OUTSIDE. IT IS IMPORTANT TO ASCERTAIN THE ACTU AL INCOME FROM THE ABOVE SOURCES SEPARATELY IN ORDER TO LEVY THE CORRECT TAX ON THE INCOME. THE EXPENDITURES WHICH ARE NOT DIRECTLY ATTRIBUTABLE TO THE ABOVE SOURCES OF INCOME WERE SHOWN AS MIXED EXPENDITURE OF WHICH DET AILS ARE GIVEN BELOW. 1) MIXED EXPENDITURE (I) EMPLOYMENT COST RS. 97,37,480.00 (II) ADMINISTRATIVE EXPENSES RS. 37,16,428.36 (III) FINANCIAL CHARGES RS. 64,60,274.51 (IV) SELLING & DISTRIBUTION EXPENSES RS. 38,44,754. 81 (V) DEPRECIATION RS. 59,53,237.02 RS.2,96,92,174.70 WHILE FRAMING ASSESSMENT, THE AO HAS APPORTIONED TH E ABOVE EXPENSES IN THE FOLLOWING MANNER : HEAD OF EXPENDITURE TOTAL EXPENSES INCURRED FOR MANUFACTURING OF TEA OUT OF GREEN LEAVES PURCHASED COMPOSITE EXPENDITURE (SUBJECT TO RULE 8) GARDENING MAINTENANCE 2,24,84,517.48 NIL 2,24,84,517.48 EMPLOYMENT COST 97,37,480.00 NIL 97,37,480.00 ADMINISTRATIVE EXPENSES 37,16,426.36 NIL 37,16,426.36 *FINANCIAL CHARGES 64,60,274.51 43,67,160.24 20,93,114.27 *SELLING AND DISTRIBUTION EXPENSES 38,44,754.81 25,99,062.98 12,45,691.83 *MANUFACTURING EXPENSES EXCLUDING GREEN LEAVES PURCHASE 2,05,36,055.8 1,38,82,420.42 66,53,635.46 DEPRECIATION 59,53,237.02 NIL 59,53,237.02 TOTAL 7,27,32,746.06 2,08,48,643.64 5,18,84,102.42 ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 4 THE AO HAS APPORTIONED 100% EMPLOYMENT, ADMINISTRAT IVE EXPENSES AND DEPRECIATION TO THE SOURCE OF GROWING AND TEA MANUF ACTURING OF THE BUSINESS OF THE ASSESSEE. THE REASON RECORDED BY THE AO IS T HAT THE COST OF EMPLOYMENT, ADMINISTRATIVE AND DEPRECIATION ON THE PLANT & MACHINERY, BUILDINGS ETC ARE PERMANENT IN NATURE WHETHER TEA I S MANUFACTURED OUT OF GREEN LEAVES PURCHASED OR NOT, THESE EXPENSES ARE N ECESSARILY TO BE INCURRED. IN THE PRESENT CASE THE PROFITS ARISING O UT OF TEA LEAVES PURCHASED FROM OUTSIDE AND MANUFACTURED IN ASSESSEES ESTATE, ARE SUBJECT TO TAX IN FULL. BUT AT THE SAME TIME THE RATE OF TAX FOR GROWING AN D MANUFACTURING OF TEA BUSINESS IS DIFFERENT. AS PER RULE 8 OF INCOME TAX RULES 1962 40% INCOME FROM SUCH ACTIVITY IS CHARGEABLE TO TAX. THE ASSESS EE HAS ALSO NOT MAINTAINED SEPARATE ACCOUNTS IN RESPECT OF TEA MANUFACTURED FR OM GREEN LEAVES GROWN BY THE ASSESSEE, AND OUT OF GREEN LEAVES PURCHASED FRO M OUTSIDE. ACCORDINGLY THE AO HAS APPORTIONED THE 100% EMPLOYMENT, ADMINIS TRATIVE EXPENSES AND DEPRECIATION TO THE SOURCE OF GROWING AND TEA MANUF ACTURING OF THE BUSINESS OF THE ASSESSEE AND FRAMED THE ASSESSMENT. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHERE THE ASSESSEE SUBMITTED THAT ALL THE ABOVE COST WERE INC URRED IN CONNECTION WITH BOTH SOURCES OF INCOME. THE ASSESSEE ALSO SUBMITTED THE DETAILS IN SUPPORT OF HIS CLAIM WHICH ARE DULY RECORDED IN THE ORDER OF L D. CIT(A). IN SUCH CIRCUMSTANCES, IT CAN BE SAID THAT THE ABOVE EXPENS ES STAND INCIDENTAL TO BOTH AS REQUIRED FOR MANUFACTURING ACTIVITY PER SE IRRESPECTIVE OF THE SOURCE OF LEAF. THE ASSESSEE SPECIFICALLY SUBMITTED THAT FOR GROWIN G TEA LEAVES AND MANUFACTURING TEA OUT OF GROWN LEAVES AND PURCHASED LEAVES, LABOUR AND STAFFS ARE REQUIRED TO BE HIRED AND HENCE ANCILLARY EXPENSES NEED TO BE INCURRED TOO. THUS, ON THE BASIS OF THE ABOVE ANALO GY, IT CAN BE SAID THAT THE AO HAD ERRED IN OPINION THAT EMPLOYMENT COST AMOUNT ING TO RS. 97,37,480/- WAS INCURRED BY ASSESSEE FOR ONLY EARNING COMPOSITE INCOME AND NOT 100% TAXABLE INCOME. REGARDING ADMINISTRATIVE EXPENSES A N ORGANIZATION INCURS EXPENSES INDIRECTLY RELATED TO A SPECIFIC FUNCTION SUCH AS ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 5 MANUFACTURING/PRODUCTION OR SALES. THESE EXPENSES A RE RELATED TO THE ORGANIZATION AS A WHOLE AS OPPOSED TO AN INDIVIDUAL DEPARTMENT. THUS, IT STANDS CLEAR THAT THESE EXPENSES ARE ACTUALLY INCID ENTAL & INDISPENSABLE FOR FACILITATING THE WORKABILITY OF ALL THE DEPARTMENTS IN AN ORGANIZATION. AN INFERENCE OF THE ABOVE IN THE FACTS OF THE CONCERNE D CASE IMPLIES THAT THESE ADMINISTRATIVE EXPENSES HAD TO BE ACTUALLY BORNE BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IN ORDER TO FACILITATE SMOOTH A ND FAST WORKING CAPACITY OF THE ENTIRE ORGANIZATION. SIMILARLY IN THE CASE OF D EPRECIATION EXPENSES ALMOST 90% OF THE ASSETS ENSHRINED THEREIN HAD TO BE UTILI ZED BY THE ASSESSEE FOR EARNING NOT ONLY COMPOSITE INCOME BUT ALSO 100% TAX ABLE INCOME. 3.1 IN VIEW OF ABOVE LD. CIT(A) REJECTED THE WORKIN G DONE BY AO FOR PROFIT EARNED FROM THE SOURCES OF ASSESSEES BUSINESS I.E. , GROWING AND MANUFACTURING OF TEA AND MANUFACTURING OF TEA FROM TEA LEAVES (GROWN IN ASSESSEES GARDEN AND PURCHASED FROM OPEN MARKET) B Y OBSERVING AS UNDER:- ON FURTHER CONSIDERATION I FIND THAT THE LD AO HAS NOT APPORTIONED EMPLOYMENT COST ADMINISTRATIVE EXPENSES AND DEPRECI ATION BETWEEN EXPENDITURE INCURRED FOR MANUFACTURING TEA OUT OF GREEN LEAVES PURCHASED AND COMPOSITE EXPENDITURE ( SUBJECT TO RULE 8 ) AS EVIDENT FROM PAGE NO. 7 OF THE ASSESSMENT ORDER. THE LD AO WAS OF THE OPINION THAT EMPLOYMENT COST, ADMINISTRATIVE EXPENSES AND DEPRECIATION WERE INCUR RED ONLY FOR COMPOSITE INCOME SUBJECT TO RULE 8 AND NOT FOR BOTH COMPOSITE AS WELL AS 100% TAXABLE INCOME. HOWEVER, WITH REGARD TO EMPLOYMENT COST, ON PERUSAL IT IS FOUND THAT LABOUR AND STAFF ARE REQUIRED FOR MANUFACTURING AND SALE OF TEA FROM TEA LEAVES GROWN IN OWN GARDEN AND TEA LEAVES BROUGHT FROM OUT SIDE. WITHOUT LABOUR AND STAFF, MANUFACTURING AND SALE OF TEA FROM TEA LEAVE S GROWN IN OWN GARDEN AND TEA LEAVES BOUGHT FROM OUTSIDE CANNOT BE CARRIED ON . THEREFORE, IT IS CLEAR THAT EMPLOYMENT COST AMOUNTING TO RS.97,37,480/- WAS INC URRED BY THE ASSESSEE NOT ONLY FOR MANUFACTURING AND SALE OF TEA FROM TEA LEAVES GROW IN OWN GARDEN BUT ALSO FROM TEA LEAVES BOUGHT FROM OUTSIDE. AS FAR AS ADMINISTRATIVE EXPENSES ARE CONCERNED IT IS TRUE THAT THESE EXPENSES ARE INCURRED BY AN ORGANIZATION INDIRECTLY TIED TO A SPECIFIC FUNCTION SUCH AS MANUFACTURING/PRODUCTION OR SALES. SUCH EXP ENSES ARE REQUIRED TO ENSURE SMOOTH BUSINESS OPERATIONS AND EXPEDITIOUS D ELIVERY MECHANISM IN THE ORGANIZATION. AS EXPLAINED BY THE LD. AR SUCH E XPENDITURE IS REQUIRED FOR SMOOTH FUNCTIONING OF CORPORATE OFFICE TO PROMOTE E FFICIENCY, GROWTH AND PRODUCTIVITY. THEREFORE, IT IS CLEAR THAT ADMINISTR ATIVE EXPENSES OF RS.37,16,426/- WERE INCURRED BY THE ASSESSEE FOR EA RNING COMPOSITE INCOME AS WELL AS 100% TAXABLE INCOME. SUCH EXPENDITURE WA S INCURRED BY THE ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 6 ASSESSEE NOT ONLY FOR MANUFACTURING AND SALE OF TEA FROM TEA LEAVES GROWN IN OWN GARDEN BUT ALSO FROM TEA LEAVES BOUGHT FROM OUT SIDE. WITH REGARD TO DEPRECIATION I HOLD THAT THE LD AR I S CORRECT IN STATING THAT ONLY A FEW ASSETS ARE DIRECTLY INCIDENTAL FOR GROWING TE A LEAVES E.G. TEA PLANTATION, KUCHHA WELLS, GARDEN SHADE, IRRIGATION SPARE AND PA RTS, TRACTOR, PUMP SETS ETC., THE REST OF THE ASSETS ARE USED BY THE ASSESS EE NOT ONLY FOR MANUFACTURING AND SALE OF TEA FROM TEA LEAVES GROWN IN OWN GARDEN BUT ALSO FROM TEA LEAVES BOUGHT FROM OUTSIDE. TO BE SPECIFIC , TOOLS & IMPLEMENTS, TROUGH HOUSE, PUMP SET, PLANT & MACHINERY, FACTORY BUILDING, GENERATOR, ROAD DEVELOPMENT FOR PLANT, ELECTRICAL INSTALLATIONS ETC . ARE SUCH ASSETS WHICH ARE USED BY THE ASSESSEE IN THE MANUFACTURE OF TEA NOT ONLY FROM ITS OWN GOWN LEAVES BUT ALSO FROM TEA LEAVES BOUGHT FROM OUTSIDE . IT IS EQUALLY TRUE THAT CYCLE, MOTOR VEHICLES, TRAILER ETC. ARE USED FOR TR ANSITING FINISHED PRODUCTS FROM THE FACTORY PREMISES TO THE AUCTION CENTERS AND ALS O FOR BRINGING RAW MATERIALS E.G. BOUGHT TEA LEAVES TO THE FACTORY PREMISES. ASS ETS LIKE COMPUTER, AIR- CONDITIONER, FIRE EXTINGUISHER, OFFICE APPLIANCES, TYPE WRITER ARE VERY MUCH NEEDED FOR OFFICIAL WORK AT FACTORY PREMISES AND CO RPORATE OFFICE FOR MAINTENANCE OF RECORDS, DOCUMENTATION AND OTHER ALL IED ACTIVITIES. AGAINST THIS BACKDROP DEPRECIATION AMOUNTING TO RS.59,53,231/- C ANNOT BE CONSIDERED AS WHOLLY COMPOSITE EXPENDITURE (SUBJECT TO RULE 8) AS HELD BY THE LD AO. KEEPING IN VIEW THE ABOVE FACTS THE BASIS OF ALLOCA TION OF COMMON EXPENSES BY THE LD AO IS HELD TO BE NOT JUSTIFIED. AS COMMON EXPENSES ARE INVOLVED WHICH CANNOT BE ALLOCATED SPECIFICALLY FOR EITHER O WN GROWN LEAVES OR BOUGHT LEAVES THE ATTEMPT TO ALLOCATE THEM BY THE LD. AO I S NOT PRACTICAL. THE EXPENSES INCURRED IN GARDEN MAINTENANCE IS DEFINITE LY EXCLUSIVELY FOR OWN GROW LEAVES BUT THERE IS SUBSTANTIAL FORCE IN THE A RGUMENT OF THE LD. AR THAT IT CANNOT BECOME NO ALLOCABLE BETWEEN OWN LEAVES AND B OUGHT LEAVES AS IT IS COMPENSATED BY COST OF BOUGHT LEAVE. THEREFORE, I H OLD THAT THE ALLOCATION OF EXPENSES IN THE RATIO OF CONSUMPTION OF OWN GROWN T EA LEAVES AND TEA LEAVES BOUGHT FROM OUTSIDE IS PROPER, REASONABLE AND APPRO PRIATE. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE CAME IN APPEAL BEFORE US. SHRI S.K. TULSIYAN, LD. AUTHORIZED REPRESENTATIVE A PPEARING ON BEHALF OF ASSESSEE AND SHRI ANIL KR. PANDE, LD. DEPARTMENTAL REPRESENTATIVE APPEARING ON BEHALF REVENUE. 4. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE US LD. DR REL IED ON THE ORDER OF AO WHEREAS LD. AR RELIED ON THE ORDER OF LD. CIT(A). F ROM THE FACTS OF THE CASE WE UNDERSTAND THAT THE ASSESSEE IS ENGAGED IN THE T WO SIMILAR BUSINESS ACTIVITIES AS DISCUSSED ABOVE. THERE WERE CERTAIN C OMMON EXPENDITURES SUCH ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 7 AS EMPLOYMENT COST, ADMINISTRATIVE COST AND DEPRECI ATION COST WHICH THE AO APPORTIONED 100% TO THE ACTIVITY I.E. GROWING AND M ANUFACTURING OF TEA LEAVES OF THE ASSESSEE ON THE GROUND THAT THESE COST HAVE TO BE NECESSARILY INCURRED BY THE ASSESSEE IRRESPECTIVE OF ANY OTHER THE BUSIN ESS ACTIVITY. THEREFORE THE ALLOCATION OF THESE EXPENSES IS NOT REQUIRED BETWEE N THE ABOVE SOURCES IS NOT REQUIRED. HOWEVER THE LD. CIT(A) DELETED THE ADDITI ON MADE BY THE AO. WE UNDERSTAND THAT FOR ANY ACTIVITY OF THE BUSINESS SE VERAL EXPENSES ARE REQUIRED TO BE INCURRED. THE ADDITION HAS BEEN MADE BY THE A O ON THE SURMISE THAT THESE EXPENSES ARE FIXED IN NATURE. THE LD. DR ALSO FAILED TO BRING ANYTHING ON RECORD CONTRARY TO THE FINDING OF THE LD. CIT(A). H ENCE, WE HAVE NO HESITATION IN UPHOLDING THE ORDER OF LD. CIT(A) AND THIS GROUN D OF REVENUES APPEAL IS DISMISSED. 5. NEXT ISSUE RAISED BY REVENUE IS THAT LD. CIT( A) ERRED IN GIVING RELIEF U/S. 80IB OF THE ACT. 5.1 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS OBSERVED FROM THE TAX AUDIT REPORT THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. BUT THE ASSESSEE FAILED TO FURNISH THE SUPPORTING D OCUMENTS FOR CLAIMING DEDUCTION U/S. 80IB OF THE ACT. THEREFORE, AO HAS D ISALLOWED THE CLAIM OF ASSESSEE U/S 80IB OF THE ACT. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). BEFORE LD. CIT(A) ASSESSEE SUBMITTED THAT RETURN OF INCOME WAS FILED DECLARING THE LOSS, THEREFORE NO DEDUCTION U/S. 80IB OF THE ACT WAS CLA IMED. HOWEVER, THE ASSESSMENT HAS BEEN FRAMED U/S. 143(3) OF THE ACT A T A TOTAL INCOME OF RS.23,32,260/-. THEREFORE, THE DEDUCTION U/S. 80IB OF THE ACT WAS CLAIMED. ACCORDINGLY, LD. CIT(A) DELETED THE ADDITION MADE B Y AO BY OBSERVING AS UNDER:- I HAVE CAREFULLY EXAMINED AND CONSIDERED THE SUBMI SSIONS OF THE LD AR AND ALSO PERUSED THE ASSESSMENT ORDER. I HAVE ALSO PERU SED THE REMAND REPORTS SUBMITTED BY THE LD. AO. AFTER CAREFUL CONSIDERATIO N I HOLD THAT THE L AO WAS ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 8 NO JUSTIFIED IN DENYING DEDUCTION U/S 80IB OF THE A CT TO THE ASSESSEE IN VIEW OF THE SPECIFIC COMMENTS OF THE AUDITORS ON PAGE 5 OF THE AUDITED ACCOUNTS FOR FY 2007-08 DECLARING THE ELIGIBILITY OF DEDUCTION U /S. 80IB OF THE ACT. ON PERUSAL OF THE ASSESSMENT ORDERS U/S. 143(3) FOR AY S 2005-06 AND 2006-07 PRODUCED BEFORE ME IT IS FOUND THAT THE AS WAS GRAN TED DEDUCTION U/S. 80IB BY THE LD AO IN THOSE ASSESSMENT YEARS. AS STATED IN T HE WRITTEN SUBMISSION DATED 13.03.2012 THE ASSESSEE COMPANY INITIALLY DID NOT PRESS DEDUCTION U/S. 80IB OF THE ACT SINCE THE RETURN OF INCOME FILED BY THE ASSESSEE SHOWED TOTAL LOSS OF RS.80,53,392/-. SUBSEQUENTLY THE CLAIM OF D EDUCTION U/S. 8IB OF THE ACT WAS RAISED BEFORE LD AO IN COURSE OF SCRUTINY PROCE EDINGS AS THE ASSESSMENT WAS PROPOSED TO BE COMPLETED AT POSITIVE TOTAL INCO ME. AS THE LD AO DENIED THE BENEFIT OF DEDUCTION U/S. 80IB OF THE ACT WHILE COMPLETING THE ASSESSMENT U/S. 143(3) AT TOTAL INCOME OF RS.23,32,260/- THE A SSESSEE HAS RAISED THIS ISSUE IN THIS GROUND OF APPEAL. IN THE PAPER BOOK S UBMITTED IN COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE HAS SUBMITTED FO RM NO. 10CCB DULY CERTIFIED BY THE CHARTERED ACCOUNTANTS ON 02.03.201 2 CERTIFYING DEDUCTION OF RS.6,99,678/- OUT OF PROFITS AND GAINS OF RS.23,32, 260/-. THE LD AO DID NOT GRANT DEDUCTION U/S. 80IB OF THE ACT STATING THAT T HE ASSESSEE HAD NOT SUBMITTED DOCUMENTARY EVIDENCE PROVING ITS ELIGIBIL ITY. THE LD AO IN THE ASSESSMENT ORDER HAS NOT SPECIFIED THE DOCUMENTS WH ICH THE ASSESSEE HAD NOT SUBMITTED. IN CASE THE LD AO WAS REFERRING TO F ORM NO. 10CCB AS THE DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM OF DED UCTION US. 80IIB OF THE ACT THE ASSESSEE COULD NOT HAVE ATTACHED IT WITH RETURN OF INCOME OR PRODUCED IT IN COURSE OF ASSESSMENT PROCEEDINGS AS THE ASSESSEE WA S SHOWING TOTAL LOSS OF RS.89,53,392/-. IN SPITE OF HAVING ELIGIBILITY FOR DEDUCTION U/S 80IB OF THE ACT THE ASSESSEE COULD NOT CLAIM IT CONSIDERING THE RET URNED LOSS OF RS.80,53,392/-. FURTHER, THE LD AO HAS NOT BROUGHT OUT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE DID NOT FULFILL THE ELIGI BILITY CRITERIA FOR CLAIMING DEDUCTION U/S. 80IB OF THE ACT. THE LD. AR HAS GIVE N IN DETAIL THE FULFILLMENT OF THE ELIGIBILITY CRITERIA FOR CLAIMING DEDUCTION U/S . 80IB OF THE ACT IN HIS WRITTEN SUBMISSION DATED 13.03.2012. THE LD AO HAS NOT FURN ISHED ANY ADVERSE COMMENT REGARDING THE FULFILLMENT OF THE ELIGIBILIT Y CRITERIA FOR CLAIMING DEDUCTION U/S. 80IB OF THE ACT IN HIS REMAND REPORT S. KEEPING IN VIEW THE ABOVE FACTS I HOLD THAT THE ASSESSEE IS ELIGIBLE FO R DEDUCTION U/S 80IB OF THE ACT DEPENDING UPON THE FINAL COMPUTATION OF POSITIV E PROFITS AND GAINS OF BUSINESS. THEREFORE, THIS GROUND OF APPEAL OF THE A SSESSEE IS TREATED AS ALLOWED . BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS WE FIND THAT THE ASSESSEE DI D NOT SUBMIT THE RELEVANT DETAILS AT THE TIME RETURN FILING FOR THE DEDUCTION UNDER SECTION 80IB OF THE ACT ON THE PRESUMPTION THAT THE RETURN OF INCOME WAS FI LED DECLARING LOSS. SO THERE WAS NO POINT TO CLAIM THE DEDUCTION UNDER SECTION 8 0IB OF THE ACT. HOWEVER ITA NO.887/KOL/2013 A.Y. 2008-09 ACIT CIR-3 SLG. V. M/S NANDI TEA CO. PVT. LTD . PAGE 9 WHEN THE AO FRAMED THE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT AT POSITIVE INCOME THEN THE ASSESSEE RAISED THE ISSUE OF SAID DEDUCTION. HOWEVER THE SAME WAS DISALLOWED BY THE AO IN THE AB SENCE OF SUFFICIENT DOCUMENTS IN SUPPORT OF THE CLAIM UNDER SECTION 80I B OF THE ACT. IN THE INSTANT CASE THE ORDER OF THE AO WAS REVERSED BY THE LD. CI T(A) AND WE UPHELD THE ORDER OF THE LD. CIT(A). SO AS A RESULT THE LOSS CL AIMED BY THE ASSESSEE HAS BEEN RESTORED. THEREFORE IN THE EVENT OF THE LOSS R ETURN FILED BY THE ASSESSEE, THE QUESTION FOR CLAIMING THE DEDUCTION UNDER SECTI ON 80IB OF THE ACT DOES NOT ARISE. ACCORDINGLY IN OUR CONSIDERED VIEW THE ISSUE OF 80IB OF THE ACT BECOMES IRRELEVANT FOR THE YEAR UNDER CONSIDERATION. THEREF ORE WE ARE NOT ADJUDICATING THE SAME IN THE LIGHT OF THE PROVISIONS OF THE ACT. HENCE, WE DECIDE THIS EFFECTIVE GROUND AGAINST REVENUE. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 18/ 03/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 18 / 03 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ACIT, CIRCLE-3, AAYKAR BHAWAN, PARIBAHAN NAGAR, MATIGARA SILIGURI, DIST. DARJEELING-734010 2. /RESPONDENT-M/S NANDI TEA CO.PVT. LTD. SAROJINI VI LLA119, RAJA RAM MOHAN ROY ROAD, HAKIM PARA, SILIGURI-734001 3. ) *+ , , - / CONCERNED CIT SILIGURI 4. , , -- / CIT (A) SILIGURI 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,