ACIT, Circle - 4, Kolkata V. M/s. The Methoni Tea Co. Ltd., Kolkata

ITA 920/KOL/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75028 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 28-05-2009
• Court: TRIBUNAL
• Department Lawyers: NIRANJAN SATPATI
• Assessee Lawyers: P J BHIDE
• Keywords: Depreciation; Proportionate interest; Retrospective amendment; Question of law
• Section: 143(3); 14A; 32; 37

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 920/KOL/2009 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2002-03 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. M/S. MET HONI TEA CO. LTD. CIRCLE-4, KOLKATA. (PAN:AABCT3901H) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 06.01.2014 DATE OF PRONOUNCEMENT: 27.01.2014 FOR THE APPELLANT: SHRI NIRANJAN SATPATI, JCIT, SR. DR FOR THE RESPONDENT: SHRI P. J. BHIDE $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-IV, KOLKATA IN APPEAL NO. 19/CIT(A)-IV/05-06 DATED 27.01.2009. ASSESSMENT W AS FRAMED BY ACIT, CIRCLE-IV, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2002-03 VIDE HIS ORDER DATED 04.03.2005. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE MADE BY AO ON ACCOUNT OF CESS ON GREEN LEAVES. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: ON THE FACTS AND LAW THE CIT(A) HAS ERRED IN DELET ING THE ADDITION MADE BY DISALLOWANCE OF CESS ON GREEN LEAVES AMOUNTING TO R S.11,41,622/- WHEN THE CESS WAS PAID ONLY FOR AGRICULTURAL OPERATION AND AGRICULTUR AL INCOME ARRIVING FROM SUCH OPERATION IS NOT TAXABLE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE AO MADE DISALLOWANCE CLAIMED BY ASSESSEE FOR DE DUCTION OF CESS PAID FOR AGRICULTURE OPERATION. AT THE OUTSET, IT IS NOTICED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. VS. CIT (2004) 270 ITR 167 (CAL), W HEREIN HONBLE HIGH COURT HAS HELD AS UNDER: 2 ITA NO. 920/K/2009 METHONI TEA CO. LTD. , AY:2002-03 HAVING REGARD TO THE PROVISIONS CONTAINED IN RULE 8 WITH WHICH WE HAD OCCASION TO DEAL IN UNION OF INDIA V. WARREN TEA LTD. [2004) 266 ITR 226 (CAL), A.P.O. NO.792 OF 1999, DISPOSED OF BY US ON JANUARY 15, 2004, IT APPEARS T HAT IN RESPECT OF COMPUTATION OF INCOME OF TEA GROWN AND MANUFACTURED, A FICTION HAS BEEN CREATED UNDER WHICH BOTH THE AGRICULTURAL COMPONENT AND THE BUSINESS COMPONENT O F THE INCOME WOULD BE ASSESSED TOGETHER FOR THE PURPOSE OF COMPUTING THE INCOME UN DER THE ACT AND ONLY AFTER THE COMPUTATION OF THE TOTAL INCOME, THE APPORTIONMENT IS TO BE MADE DETERMINING 60 PER CENT, AS AGRICULTURAL INCOME AND 40 PER CENT. AS EX IGIBLE TO TAX UNDER THE ACT. DURING THE PROCESS OF THE COMPUTATION, ALL DEDUCTIONS ALLOWABL E AT THE TIME OF COMPUTATION ARE TO BE ALLOWED AND THAT WAS RIGHTLY ALLOWED. INASMUCH AS I F THE INCOME FOR TEA GROWN WAS ASSESSED UNDER THE AGRICULTURAL INCOME-TAX, IN THAT EVENT, THE SAME CESS PAID OF GREEN LEAF WOULD HAVE BEEN ELIGIBLE FOR DEDUCTION AT THE TIME OF COMPUTATION OF THE AGRICULTURAL INCOME. BUT WHEN BY FICTION IN RESPECT OF TEA GROWN AND MANUFACTURED, THE AGRICULTURAL COMPONENT OF THE INCOME OUT OF THE TEA GROWN IS ALS O COMPUTED UNDER THE INCOME-TAX ACT ALONG WITH THE INCOME OUT OF THE TEA MANUFACTURED F ROM THE TEA GROWN. WHEN BY FICTION THE INCOME AS COMPUTED AS AN INCOME UNDER THE ACT, ALL DEDUCTIONS AS ARE AVAILABLE BOTH FOR THE AGRICULTURAL COMPONENT AND FOR THE BUSINESS COMPONENT OF THE INCOME ARE TO BE ALLOWED AS A NATURAL COROLLARY TO THE FICTION SO CR EATED. SUCH DEDUCTIONS, WHICH ARE ALLOWED IN ORDER TO ARRIVE AT THE TOTAL INCOME EXIG IBLE TO TAX, ARE TO BE ALLOWED AND THE APPORTIONMENT OF THE TOTAL INCOME SO COMPUTED IS TO BE MADE. IF THE AGRICULTURAL PART OF THE DEDUCTIONS IS MADE APPLICATION FOR DEDUCTION FR OM THE 60 PER CENT OF THE TOTAL INCOME SO COMPUTED, IN THAT EVENT, THIS 60 PER CENT WOULD BE AGAIN MADE ASSESSABLE UNDER THE AGRICULTURAL INCOME-TAX ACT WHICH IS NOT PERMISSIBL E. IN THAT EVENT, THE PURPOSE OF CREATING FICTION WOULD STAND FRUSTRATED. IT WOULD T HEN BE A CONCEPT COMPLETELY FOREIGN TO THE FICTION SO CREATED. THEREFORE, THE ENTIRE AMOUN T PAID AS CESS ON GREEN LEAF SEEMS TO BE ELIGIBLE FOR DEDUCTION WITH REGARD TO WHICH WE DO N OT FIND ANY CONFUSION. FOR THE AFORESAID REASONS, WE DO NOT FIND ANY SUBS TANTIAL QUESTION OF LAW INVOLVED IN THIS CASE. THE PETITION IS, THEREFORE, DISMISSED. RESPECTFULLY FOLLOWING THE HONBLE JURISDICTIONAL H IGH COURT DECISION, AS THE ISSUE IS EXACTLY SAME ON FACTS, WE UPHOLD THE ORDER OF CIT(A) AND DI SMISS THE REVENUES GROUND OF APPEAL. 4. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN DIRECTING THE AO TO ALLOW EXPENDITURE ON ACCOUNT OF INTEREST OF R S.1,92,954. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2: THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW EXPENDITURE ON ACCOUNT OF INTEREST FOR RS.1,92,954/- WITHOUT CONSIDERING THE FACT THAT IN THIS CASE INTEREST FREE ADVANCE WAS MADE OUT OF BORROWED FUND ON WHICH INTE REST WAS PROVIDED/PAID. 5. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT IT HAD PROVIDED LOANS TO VARIOUS PARTIES. THE AO NOTICED THAT THE ASSESSEE HAS BEEN CHARGING INTEREST FREE LOANS AND ADVANCES TO VARIOU S PARTIES BUT NOT CHARGING INTEREST FROM FOLLOWING PARTIES: BAGLA & CO. RS.85,00,000/- BAGLA CONSTRUCTION RS.25,00,000/- NICOLO VALENTITE RASHION EXPORT LTD. RS.10,00,0 00/- G. P. WOOD INDUSTRIES LTD. RS.10,00,000/- HARVISH KUMAR BAGLA RS.02,00,000/- RS.1,32,00,000/- 3 ITA NO. 920/K/2009 METHONI TEA CO. LTD. , AY:2002-03 BUT ASSESSEE HAS PAID INTEREST TO FOLLOWING: PAID TO UCO BANK RS. 11,130.00 PAID TO PUNJAB NATIONAL BANK RS. 18,195.00 PAID BANK GUARANTEE COMMISSION RS.1,10,541.69 PAID TO KOTAK MAHINDRA FOR CAR RS. 53,088.14 PURCHASED ON INSTALMENT BASIS _____________ RS.1,92,954.83 AS THE ASSESSEE HAS NOT CHARGED INTEREST FROM THE ABOVE STATED PARTIES ON ADVANCED AMOUNT, THE AO DISALLOWED PROPORTIONATE INTEREST EX PENDITURE OF RS.1,92,54/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALLOWE D THE CLAIM OF ASSESSEE. AGGRIEVED, REVENUE NOW CAME IN APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS PAID INTEREST TO BANK S I.E. TO UCO BANK AT RS.11,130/- AND PUNJAB NATIONAL BANK AT RS.18,195/- TOTALLING TO RS.29,325 /-. INTEREST WAS ALSO PAID BY ASSESSEE TO KOTAK MAHINDRA LTD. FOR SPECIFIC BORROWING FOR PURC HASE OF CAR AT RS.53,088/-. IT IS A FACT THAT INTEREST PAID TO KOTAK MAHINDRA LTD. IS FOR SPECIFI C BORROWING I.E. FOR PURCHASE OF CAR SO THERE IS NO QUESTION OF DISALLOWANCE OF THIS INTEREST OF RS. 53,088/-. AS REGARDS TO THE OTHER CLAIM I.E. GUARANTEE COMMISSION PAID TO BANK AT RS.1,10,541/- THIS IS NOT AN INTEREST I.E. GUARANTEE COMMISSION AND REVENUE HAS MADE THIS DISALLOWANCE B Y TREATING THE SAME AS INTEREST, WHICH IS NOT AS PER THE PROVISIONS OF THE ACT AND CIT(A) HAS RIGHTLY DELETED THE SAME. AS REGARDS TO DISALLOWANCE OF INTEREST OF RS.29,325/-, THE ASSESS EES CONTENTION WAS THAT THE ADVANCES MADE TO VARIOUS PARTIES AS NOTED IN THE ASSESSMENT ORDER AN D REPRODUCED ABOVE HAVE ACTUALLY BEEN ADVANCED IN EARLIER YEARS FROM OWN FUND AND NOT OUT OF ANY BORROWED FUNDS. ONCE THIS IS THE POSITION, NO DISALLOWANCE CAN BE MADE AND HENCE, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 7. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AS R EGARDS TO THE ORDER OF CITA) DELETING THE DISALLOWANCE OF EXPENSES BY INVOKING THE PROVISIONS OF SECTION 14A R.W.S. RULE 8D OF THE I. T. RULES, 1962. FOR THIS, REVENUE HAS RAISED FOLLOWIN G GROUND NO.3: THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDI TION OF RS.96,246/- DISALLOWED U/S. 14A WITHOUT CONSIDERING THE RETROSPECTIVE EFFECT OF THE PROVISION OF RULE 8D OF I. T. RULE FOR DETERMINATION OF DISALLOWABLE EXPENSES UNDER SE CTION 14A AS HELD BY ITAT, MUMBAI BENCH, IN THE CASE OF DAGA CAPITAL MANAGEMENT LTD. 119 TTJ (MUMBAI) (SB) 289. 8. AT THE OUTSET, IT IS SEEN THAT THE ASSESSEE HAS EARNED INTER-CORPORATE DIVIDEND AT RS.2,80,000/- AND RULE 8D OF THE I. T. RULES, 1962 IS NOT APPLICABLE TO THE PRESENT ASSESSMENT YEAR I.E. AY 2002-03. HENCE, DISALLOWANCE U/S. 14 A OF THE ACT CAN BE RESTRICTED @ 1% AS HELD 4 ITA NO. 920/K/2009 METHONI TEA CO. LTD. , AY:2002-03 BY TRIBUNAL IN THE CASE OF. WE FIND THAT THE COORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITA NO. 101/K/2011 DCIT VS. INDIA FORGING & ENGG. C O. PVT. LTD. FOR AY 2006-07 DATED 20.12.2013 HAS HELD AS UNDER: AT THE OUTSET, IT IS TO BE MENTIONED THAT THE RELEV ANT ASSESSMENT YEAR INVOLVED IS 2006- 07 AND IT IS A FACT THAT RULE 8D WILL NOT APPLY TO THIS ASSESSMENT YEAR. HOWEVER, TRIBUNAL IS TAKING A CONSISTENT VIEW THAT 1% OF THE EXEMPTED INCOME SHOULD BE DISALLOWED. ACCORDINGLY, WE DIRECT THE AO TO RECOM PUTE THE DISALLOWANCE BY TAKING 1% OF THE EXEMPTED INCOME AND RESTRICT THE DISALLOWANC E TO THAT EXTENT. THIS GROUND OF REVENUES APPEAL IS DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE R ESTRICT THE DISALLOWANCE AT 1%. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 9. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AS R EGARDS TO THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF DEPRECIATION AT RS.7,69,009/- MADE U/S. 33AB(6) OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO. 4: THAT THE LD. CIT(A) HAS ALSO ERRED IN DELETING TH E DISALLOWANCE OF DEPRECIATION OF RS.7,69,009/- MADE U/S. 33AB(6) IGNORING THE FACT T HAT DEPRECIATION IS EXPENDITURE IN VIEW OF DECISION OF HONBLE KOLKATA HIGH COURT, IN THE CASE OF INDIAN JUTE MILLS ASSOCIATION (134 ITR 68). 10. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE CLAI MED DEPRECIATION AT RS.21,53,353/-. DURING THE YEAR UNDER CONSIDERATION ASSESSEE IMPORTED A CO LOUR SORTING MACHINE FOR A TOTAL PRICE OF RS.30,76,036/- AND CLAIMED DEPRECIATION ON THIS MAC HINE AT RS.7,69,009/- (THIS IS UNDER DISPUTE). THE ASSESSEE FOR PURCHASE OF THE COLOUR SORTING MACHINE WITHDREW A SUM OF RS.29,45,800/- FROM DEPOSITS MADE WITH NABARD IN TH E EARLIER YEARS. THIS SANVAC COLOUR SORTING MACHINE WAS IMPORTED FROM JAPAN FOR A TOTAL CONSIDERATION OF RS.30,76,036/-. ACCORDING TO AO, THE MACHINE WAS FUNDED BY ASSESSEE BY WITHDRAWAL FROM NABARD AND HENCE, IN SUB-SECTION (6) OF SECTION 33AB OF THE AC T ANY WITHDRAWAL MADE BY ASSESSEE FROM NABARD AND UTILISED THE SAME FOR THE PURPOSE OF ANY EXPENSES IN CONNECTION WITH BUSINESS IN ACCORDANCE WITH THE SCHEME, SUCH EXPENDITURE IS NOT ALLOWABLE IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS OR PROFESSION. ACCORDINGLY, AO DISALLOWED THIS DEPRECIATION BY FOLLOWING THE DECIS ION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INDIAN JUTE MILLS ASSOCIATION ( 1981) 6 TAXMAN 354 (CAL). AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONSID ERING THE PROVISIONS OF SECTION 33AB OF THE ACT AS WELL AS THE SCHEME FRAMED BY TEA BOARD, ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: I HAVE CONSIDERED THE ABOVE SUBMISSIONS AS WELL AS THE REASONS ADVANCED BY THE ASSESSING OFFICER FOR REJECTING THE APPELLANTS CLA IM. CONSIDERING THE SCHEME OF THE I.T. ACT, 1961, ESPECIALLY SEC.29 43AB, IT IS CLEAR TH AT THE INCOME OF THE ASSESSEE UNDER THE 5 ITA NO. 920/K/2009 METHONI TEA CO. LTD. , AY:2002-03 PROVISIONS OF PROFIT & GAIN AND BUSINESS HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SEC.29, WHICH IN TURN PROVIDES THAT S UCH INCOME WILL BE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SEC.30 43D. THE SE SECTIONS SPEAK OF DEDUCTIONS IN RESPECT OF EXPENDITURE INCURRED BY AN ASSESSEE ACCO RDING TO ITS REGULARLY FOLLOWED METHOD OF ACCOUNTNG. THESE SECTIONS PROVIDE FOR EX PENDITURE OF REVENUE NATURE INCURRED BY AN ASSESSEE ON PAYMENT OF RENT, RATES, TAX, REPA IRS, INSURANCE, REPAIRS & INSURANCE ON PLANT AND MACHINERY, EXPENDITURE BY INTEREST, AND A BOVE ALL EXPENDITURE INCURRED BY AN ASSESSEE WHOLLY AND EXCLUSIVELY FOR ITS PURPOSE OF BUSINESS WHERE SUCH EXPENDITURE IS ALSO NOT OF CAPITAL NATURE OR PERSONAL. THE OTHER S ECTIONS I.E., 32, 33, 34 AND 35 ALLOW DEDUCTION IN RESPECT OF PAYMENTS WHICH ARE TERMED A S CAPITAL PAYMENTS. ONE SUCH SEC. IS SEC.32, WHICH ALLOWS DEDUCTION FOR DEPRECIATION DET ERMINED AT PERCENTAGE OF COST OF AN ASSET SPECIFIED THEREIN. SEC.33A, 33AB ALLOW DEDUCT ION BY WAY OF DEPOSITS WHICH ARE AGAIN OF CAPITAL NATURE. THESE DEDUCTIONS ARE ALLOW ED TO PROMOTE BUSINESS AND INDUSTRY. ESPECIALLY, PAYMENTS COVERED UNDER 33AB OF THE ACT. ON PERUSAL OF SECTION 33AB WHICH WAS INSERTED W.E.F 1.4.1986 AND SUBSEQUENTLY SUBSTI TUTED BY FINANCE ACT, 1990 W.E.F. 01.04.1991. IT APPEARS THAT BOTH THE SECTIONS ARE P ARA MATERIA EXCEPT A FEW CLAUSES SUCH AS IN THE EARLIER CLAUSES THE ACTUAL COST OF PLANT & MACHINERY WAS TO BE REDUCED BY THE AMOUNT UTILSED OUT OF WITHDRAWAL FROM NABARD FOR T HE PURPOSE OF ASCERTAINING THE ACTUAL COST ON WHICH DEPRECIATION IS ALLOWABLE WHER EAS IN THE NEWLY INSERTED SUB-SECTION NO SUCH RESTRICTION HAS BEEN IMPOSED. FURTHER MORE IN THE NEWLY INSERTED SECTION 33AB SUB-SECTION 4 RESTRICTION IS IMPOSED ON UTITIZATION ON CERTAN ITEMS INCLUDING THE ITEMS ON WHICH 100% DEPRECIATION IS ALLOWABLE. IN OTHER WORD S, THERE IS NO RESTRICTION ON ACCOUNT OF ALLOWABILITY OF DEPRECIATION ON THE ASSETS PURCH ASED OUT OF WITHDRAWAL FROM NABARD. AFTER CONSIDERING THE A/O/S FINDINGS AND THE ARGUME NT ADVANCED BY A.R. AND RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ITAT, KOLKATA IN THE CASE OF CIT VS. GOODRICK GROUP LTD., IN ITA NO. 2557/KOL/2004. I FIND CONSIDERABLE FORCE IN THE ARGUMENT OF A.R. AND HENCE DIRECT THE A.O. TO DELETE THE ADDITION MADE O N THIS ACCOUNT. I HAVE ALSO EXAMINED SCHEME FRAMED BY THE TEA BOARD FOR PURPOSE OF SEC.3 3AB. THE SCHEME PROVIDES FOR UTILIZATION OF THE AMOUNTS WITHDRAWN FROM DEPOSITS MADE EARLIER ON ACCOUNT OF EXPENDTURE ON TEA PLANTATION AS WELL AS FOR PAYMEN TS FOR PURCHASE OF PLANT AND MACHINERY. SUCH COST INCLUDES GUARANTEE COMMISSION OF RS. 1,10,542/- REFERRED IN THIRD GROUND. THE APPELLANTS CLAIM FOR DEPRECIATION IS, THEREFOR E, ALLOWED TO THE EXTENT AND IN THE MANNER SPECIFIED ABOVE. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 11. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS IN BRIEF ARE THAT THE TEA BOARD HAS FRAME D A SCHEME IN TERMS OF SECTION 33AB OF THE ACT. UNDER THE SAID SECTION AN ASSESSEE CARRYING ON BUSINESS AMONGST OTHERS OF GROWING AND MANUFACTURING TEA HAS TO DEPOSIT BEFORE THE DATES S PECIFIED THEREIN A SPECIFIED PERCENTAGE OF ITS INCOME WITH NABARD. THE AMOUNT SO DEPOSITED HAS TO BE UTILIZED BY THE ASSESSEE IN TERMS OF THE SAID SCHEME FOR PURCHASE OF PLANT AND MACHINERY ETC. IN THE EARLIER PREVIOUS YEARS THE APPELLANT HAD DEPOSITED SUBSTANTIAL AMOUNTS WITH NA BARD IN ACCORDANCE WITH THE SAID SCHEME AND HAS BEEN ALLOWED DEDUCTION IN RESPECT OF SUCH DEPOSITS U/S.33AB OF THE ACT. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER THE APPEAL (F.Y. 2001-02), THE ASSESSEE WITHDREW A SUM OF RS.29,45,800/- FROM NABA RD AND PURCHASED A COLOUR SORTING MACHINE SANVAC IMPORTED FROM JAPAN AT A COST OF RS .29,30,000/-, PAID CUSTOM DUTY THEREON OF 6 ITA NO. 920/K/2009 METHONI TEA CO. LTD. , AY:2002-03 RS.1,46,036. THE ASSESSEE IN ITS BOOKS OF ACCOUNT C APITALIZED THE SAME AND THE SAME IS INCLUDED WITH THE ADDITION TO PLANT & MACHINERY APPEARING AT RS.38,96,301/- IN SCHEDULE III OF ITS BALANCE SHEET BEING SCHEDULE OF FIXED ASSETS. THE A PPELLANT CLAIMED DEPRECIATION IN RESPECT OF THE SAID AMOUNT I.E. COST OF THE AFORESAID PLANT & MACHINERY. IN TERMS OF SECTION 33AB(5) THE AMOUNT WITHDRAWN BY THE ASSESSEE FROM NABARD ACCOUN T HAS BEEN CONSIDERED BY THE APPELLANT AND THE ASSESSING OFFICER AS ASSESSEES I NCOME FROM COMPOSITE BUSINESS. HOWEVER, WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFIC ER HELD THAT IN RESPECT OF THE SAID PLANT & MACHINERY THE ASSESSEE WAS NOT ENTITLED TO DEPRECIA TION WHICH ACCORDING TO THE ASSESSING OFFICER WAS NOT ALLOWABLE AND THEREFORE WAS NOT COV ERED BY THE PROVISIONS OF SECTION 32 OF THE ACT. THE ASSESSEE RELIES UPON THE BOMBAY HIGH COURT JUDGMENT REPORTED IN 118 ITR PAGE 39 AND SUBMITTED THAT THAT THE DEPRECIATION IS NOT AN EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF WHICH DEDUCTION IS ALLOWED TO THE APPELL ANT U/S.32 OF THE ACT. IT IS ALSO SUBMITTED THAT DEPRECIATION WAS NOT EXPENDITURE WITHIN THE AF ORESAID SEC. 33AB(6) OF THE ACT AND HENCE ASSESSEES CLAIM FOR DEPRECIATION SHOULD HAVE BEEN ALLOWED IN FULL BY THE ASSESSING OFFICER. A.O. HAS DISALLOWED THE DEPRECIATION ON PLANT & MAC HINERY HOLDING THE DEPRECIATION WAS IN NATURE OF EXPENDITURE AND AS SUCH WAS NOT ALLOWABLE AS DEDUCTION AS PER THE PROVISIONS OF SECTION 33AB(6) . IT IS ALSO SUBMITTED THAT SECTION 33AB WAS INSERTED BY FINANCE ACT 1984 W.E.F. . 1.4.1986 WHEREIN ACCORDING TO SUB SECTION 3A THE ACTUAL COST OF ASSETS WAS REQUIRED TO BE REDUCED BY THE AMOUNT WHICH WAS UTILIZED OUT OF WITHDRAWAL FROM NABARD WHEREAS IN CASE OF PRESENT SECTION 33AB WHICH HAS BEEN SUBSTIT UTED W.E.F. 1.4.1991 NO SUCH RESTRICTION HAS BEEN IMPOSED. THEREFORE, IT IS SUBMITTED THAT HAD I T BEEN INTENTION OF LEGISLATURE THAT AMOUNT WITHDRAWN FROM NABARD SHOULD BE REDUCED OF THE ACTU AL COST OF PLANT & MACHINERY. THE IDENTICAL WORDING SHOULD HAVE BEEN INSERTED IN THE PRESENT SECTION 33AB. IT IS ALSO POINTED OUT THAT THE RESTRICTION IS ON ACCOUNT OF DOUBLE ALLOWA NCE OF THE SAME DEDUCTION AND NOT OTHERWISE. GOING THROUGH THE FACTS IN ENTIRETY AND THE LEGAL P OSITION AS DISCUSSED ABOVE, WE CONFIRM THE ORDER OF CIT(A). THIS GROUND OF APPEAL OF REVENUE I S DISMISSED. 12. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION OF RS.4,39,555/- ON ACCOUNT OF FOREIGN TRA VEL EXPENSES. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.5: THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDI TION OF RS.4,39,555/- (I.E. RS.5,47,944/- - RS.1,08,389/-) ON ACCOUNT OF FOREIG N TRAVEL EXPENSES, WITHOUT CONSIDERING THE BASIC CONDITION LAID DOWN IN SEC. 3 7 OF THE I. T. ACT THAT EVERY SUCH EXPENDITURE SHOULD BE WHOLLY AND EXCLUSIVELY INCURR ED FOR THE PURPOSE OF BUSINESS ONLY. 7 ITA NO. 920/K/2009 METHONI TEA CO. LTD. , AY:2002-03 13. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IT IS UNDISPUTED FACT THAT ASSESSEE AS SALES MANAGER VISITED JAPAN AND EUROPEAN COUNTRIES FOR EXPLORING POSSIBILITIES FOR EXPORTING TEA TO THESE COUNTRIES. THE EXPENDITURE INCURRED BY ASSESSEE AT RS.4,39,502/- WAS ON FOREIG N TRAVEL INCLUDING COST OF TICKETS AND OTHER EXPENSES. THE BALANCE EXPENDITURE OF RS.1,08,389/- REPRESENTED CONVEYANCE EXPENSES INCURRED AT KOLKATA AND FOR THIS ASSESSEE HAS PRODUCED COMPL ETE VOUCHER. IT IS AN ADMITTED FACT THAT THE FOREIGN TRAVEL IS UNDERTAKEN FOR THE PURPOSE OF BUS INESS BY COMPANYS EXECUTIVE OFFICERS AND NOT THE RELATIVES OR THE MANAGING DIRECTOR FOR PLEA SURE TRIP. THE CIT(A) CONSIDERED THIS ISSUE AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPE LLANT. THE LOCAL CONVEYANCE OF RS.1,08,389/- COULD NOT HAVE BEEN DISALLOWED BY THE ASSESSING OFFICER. THE BALANCE OF THE EXPENSES INCURRED FOR FOREIGN VISITS COST OF TICKET AND OTHER EXPENSES COULD NOT BE DISALLOWED ON THE GROUND THAT IN THIS YEAR T HE APPELLANT DID NOT EXPORT ITS PRODUCTS TO THESE COUNTRIES. EVERY EXPENDITURE INC URRED BY THE APPELLANT NEED NOT RESULT IN IMMEDIATE GAIN, SUCH EXPENDITURE MAY PROV E FRUITFUL IN SUBSEQUENT YEAR. THE APPELLANTS CLAIM FOR TRAVELLING EXPENSES IS THEREF ORE ALLOWED IN FULL. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THI S ISSUE OF REVENUES APPEAL IS ALSO DISMISSED. 14. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 15. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27.01. 2014 SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27TH JANUARY, 2013 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT ACIT, CIRCLE-4, KOLKATA. 2 ./,- / RESPONDENT M/S. METHONI TEA CO. LTD., P-15/2/1, SOUTHERN AVENUE, KOLKATA-20 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .