JCIT (OSD), CIR-11(1), KOLKATA, Kolkata V. M/s Khaitan India Ltd., Kolkata

ITA 979/KOL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6889 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER SRDR
• Assessee Lawyers: ARVIND AGARWAL; SANJ OY BHAT
• Keywords: Depreciation; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

1 ITA NOS.979 & 980/KOL/2016 M/S. KHAITAN INDIA LTD. AYS- 2001-02 & 2002-03 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH, C AT KOLKATA () . . , . , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NOS. 979 & 980/KOL/2016 ASSESSMENT YEARS: 2001-02 & 2002-03 JCIT (OSD) CIR 11(1), KOLKATA VS. M/S. KHAITAN IN DIA LTD. [PAN: AABCK 2326 B] APPELLANT RESPONDENT DATE OF HEARING 12.02.2019 DATE OF PRONOUNCEMENT 03.05.2019 FOR THE APPELLANT SHRI SHANKAR HALDER, SR. DR, JCI T FOR THE RESPONDENT SHRI ARVIND AGARWAL & SHRI SANJ OY BHATTCHARYA, FCA ORDER PER SHRI A.T.VARKEY, JM THESE ARE APPEALS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) 10, KOLKATA BOTH DATED 08.02.2016 FOR ASSESSMENT YEAR 2 001-02 AND 2002-03. THE GROUNDS OF APPEAL OF THE REVENUE ARE COMMON, SO WE CONSIDER TH E GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2001-02 WHICH ARE AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN ACCEPTING THE MARKET PRICE OF THE SUGARCANE @ RS. 8 4 PER QUINTAL AS CONTENDED BY THE ASSESSEE FOR THE PURPOSE OF RULE 7 OF THE I.T. RULE 1962 WHEN THE PREVALENT MARKET PRICE WAS RS. 75.54 PER QUINTAL AND WHEN ASSESSEE TRANSFE RRED 1,88,690/- QUINTAL OF SUGARCANE FROM AGRICULTURAL DIVISION TO SUGAR MILL DIVISION @ RS. 82.69 PER QUINTAL AT RS. 1,56,03,013/-. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THERE WAS NO VIOLATION OF RULE 7 OF THE I.T. RULE 1962 MADE BY THE ASSESSEE WHEN SUGARCANE PRODUCED IN AGRICULTURAL DI VISION WAS TRANSFERRED TO SUGAR MILL DIVISION AT A PRICE HIGHER THAN THE MARKET PRI CE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 95,42,450/- AND RS. 6, 70,554/-. 2. SINCE THE FACTS AND GROUNDS RAISED ARE IDENTICAL , WE GO ON TO ADJUDICATE ASSESSMENT YEAR 2001-02 AND ITS RESULT WILL FOLLOW FOR APPEAL OF ASSESSMENT YEAR 2002-03. THE BRIEF 2 ITA NOS.979 & 980/KOL/2016 M/S. KHAITAN INDIA LTD. AYS- 2001-02 & 2002-03 FACTS OF THE CASE FOR A.Y. 2001-02 IS THAT THE A.O. NOTED DURING THE REASSESSMENT PROCEEDINGS AFTER REOPENING THE ASSESSMENT U/S 148/ 147 THAT THE ASSESSEE HAD NOT COMPUTED ITS INCOME AS PER RULE 7 OF INCOME TAX RULES 1962 ( HEREINAFTER REFERRED TO AS THE RULES). DURING THE HEARING, THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS CLAIMED EXEMPTION OF RS. 12.56 LAKHS ON ACCOUNT OF AGRICULTURAL INCOME W HICH WAS ALLOWED IN THE ORIGINAL ASSESSMENT AND THAT THE ASSESSEE HAS COMPUTED THE A MOUNT OF EXEMPTION ON THE BASIS OF NET AGRICULTURAL INCOME TAKING INTO ACCOUNT, GROSS AGRI CULTURAL INCOME AND AGRICULTURAL EXPENSES. ACCORDING TO THE A.O., THE COMPUTATION OF AGRICULTURAL INCOME WAS NOT AS PER RULE 7 AND IN THE LIGHT OF JUDICIAL DECISIONS OF HO NBLE SUPREME COURT IN THIRU AROORAN SUGARS LTD. VS CIT 227 ITR 432 (SC). THEREAFTER, TH E A.O. COMPUTED THE TOTAL INCOME IN ACCORDANCE WITH RULE 7 OF THE RULES AND DISALLOWED ON ACCOUNT OF AGRICULTURAL EXPENSES CLAIMED AT RS. 95,42,450/-. THE A.O. DISALLOWED DEP RECIATION OF AGRICULTURAL DIVISION OF RS. 6,70,554/-. ACCORDING TO THE A.O. THE PREVALENT MARKET RATE OF SUGARCANE WAS RS. 75.54 PER QUINTAL AND THE ASSESSEE HAD TRANSFERRED 1,88,6 90 QUINTAL OF SUGARCANE FROM AGRICULTURAL DIVISION TO SUGAR MILL DIVISION @ OF RS. 82.69 PER QUINTAL AT RS. 1,59,03,013/- AND THEREAFTER, DETERMINED THE INCOME OF THE ASSESSEE A T RS. 14,12,574/- IN PLACE OF ASSESSEES RETURNED INCOME OF LOSS OF RS. 88,00,430/-. 3. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD. CIT(A) WHO GRANTED THE RELIEF BY HOLDING AS UNDER: 1. I HAVE EXAMINED THE ACTION OF THE AO IN DISALLO WING 95,42,450/- AND RS. 6,70,554/- ON ACCOUNT OF 'AGRICULTURAL EXPENSES' CLAIMED AND ' DEPRECIATION ON AGRICULTURAL DIVISION' RESPECTIVELY. I HAVE ALSO PERUSED THE SUB MISSIONS FILED BY THE APPELLANT / LD. A.R DURING THE COURSE OF APPEAL. 2. IT MAY BE WORTHWHILE IN THIS CONTEXT TO REPRODUC E RULE 7OF THE INCOME TAX RULES APPLICABLE FOR SEC 2(1A) OF THE INCOME TAX ACT. THI S RULE IS APPLICABLE FOR INCOME WHICH IS PARTIALLY AGRICULTURAL AND PARTIALLY FROM BUSINESS, THE SAME IS REPRODUCED AS BELOW: INCOME WHICH IS PARTIALLY AGRICULTURAL AND PARTIALL Y FROM BUSINESS. 7. (1) IN THE CASE OF INCOME WHICH IS PARTIALLY AGR ICULTURAL INCOME AS DEFINED IN SECTION 2 AND PARTIALLY INCOME CHARGEABLE TO INCOME-TAX UND ER THE HEAD 'PROFITS AND GAINS OF BUSINESS', IN DETERMINING THAT PART WHICH IS CHARGE ABLE TO INCOME-TAX THE MARKET VALUE OF ANY AGRICULTURAL PRODUCE WHICH HAS BEEN RAISED B Y THE ASSESSEE OR RECEIVED BY HIM AS RENT-IN-KIND AND WHICH HAS BEEN UTILISED AS A RAW M ATERIAL IN SUCH BUSINESS OR THE SALE 3 ITA NOS.979 & 980/KOL/2016 M/S. KHAITAN INDIA LTD. AYS- 2001-02 & 2002-03 RECEIPTS OF WHICH ARE INCLUDED IN THE ACCOUNTS OF T HE BUSINESS SHALL BE DEDUCTED, AND NO FURTHER DEDUCTION SHALL BE MADE IN RESPECT OF ANY E XPENDITURE INCURRED BY THE ASSESSEE AS A CULTIVATOR OR RECEIVER OF RENT-IN-KIND. (2) FOR THE PURPOSES OF SUB-RULE (1) 'MARKET VALUE' SHALL BE DEEMED TO BE :- (A) WHERE AGRICULTURAL PRODUCE IS ORDINARILY SOLD I N THE MARKET IN ITS RAW STATE, OR AFTER APPLICATION TO IT OF ANY PROCESS ORDINARILY EMPLOYE D BY A CULTIVATOR OR RECEIVER OF RENT- IN-KIND TO RENDER IT FIT TO BE TAKEN TO MARKET, THE VALUE CALCULATED ACCORDING TO THE AVERAGE PRICE AT WHICH IT HAS BEEN SO SOLD DURING T HE RELEVANT PREVIOUS YEAR; (B) WHERE AGRICULTURAL PRODUCE IS NOT ORDINARILY SO LD IN THE MARKET IN ITS RAW STATE OR AFTER APPLICATION TO IT OF ANY PROCESS AFORESAID, T HE AGGREGATE OF- (I) THE EXPENSES OF CULTIVATION; (II) THE LAND REVENUE OR RENT PAID FOR THE AREA IN WHICH IT WAS GROWN; AND (III) SUCH AMOUNT AS THE S[ASSESSING OFFICER] FINDS , HAVING REGARD TO ALL THE CIRCUMSTANCES IN EACH CASE, TO REPRESENT A REASONAB LE PROFIT 3. IT IS SEEN THAT SUB-RULE (1) OF RULE 7 STIPULES THAT, IN CASE OF INCOME WHICH IS PARTIALLY AGRICULTURAL INCOME AND PARTIALLY TAXABLE INCOME UN DER THE HEAD OF 'BUSINESS, THE ONLY DEDUCTION PERMISSIBLE IN ORDER TO DETERMINE TH AT PART OF THE INCOME WHICH IS CHARGEABLE TO TAX IS THE MARKET VALUE OF ANY AGRICU LTURAL PRODUCE WHICH HAS BEEN RAISED BY THE ASSESSEE OR RECEIVED BY HIM AS RENT-IN-KIND AND WHICH HAS BEEN UTILIZED AS RAW MATERIAL IN SUCH BUSINESS OR THE SALE RECEIPTS OF W HICH ARE INCLUDED IN THE ACCOUNTS OF THE BUSINESS. FOR EXAMPLE, IF AN ASSESSEE GROWS SUG ARCANE IN HIS FIELDS AND UTILIZES THE SUGARCANE IN THE MANUFACTURE OF SUGAR, AND THEN SEL LS THE SUGAR, HE IS ENTITLED TO DEDUCT THE MARKET VALUE OF THE SUGARCANE USED. HE IS NOT E NTITLED TO CLAIM ANY OTHER EXPENDITURE INCURRED BY HIM AS A CULTIVATOR OF RECE IVER OF RENT-IN-KIND. 4, I ALSO FIND THAT IN LIGHT OF THE AO;S ACTION IT MAY BE MATERIAL TO EXAMINE THE DECISION OF THE HON'BLE APEX COURT IN THIRU AROORAN SUGARS L TD V CIT (1997) 227 ITR 432(SC) . IN THAT CASE, THE HON'BLE APEX COURT HAS STATED THA T THE 'MARKET VALUE' SPOKEN OF IN SUB-RULE(1) IS RULE 7 WILL HAVE TO BE DETERMINED IN THE MANNER LAID DOWN IN SUB-RULE(2). SUB-RULE (2) LAYS DOWN IN CLAUSE (A) THE WELL KNOWN FORMULA OF THE AVERAGE PRICE OF GOODS ORDINARILY SOLD IN THE MARKET AS MARKET VALUE OF THE GOODS. THE FORMULA CONTAINED IN CLAUSE (B) OF RULE 7(2) WILL APPLY ONL Y IN CASES WHERE AGRICULTURAL PRODUCE IS NOT ORDINARILY SOLD IN THE MARKET IN ITS RAW STA TE OR AFTER ANY PROCESS APPLIED TO IT TO MAKE IT MARKETABLE. UNDER RULE 7(1), IN COMPUTING T HE PROFITS AND GAINS OF BUSINESS, MARKET VALUE OF AN AGRICULTURAL PRODUCE IN RAW STAT E HAS TO BE DEDUCTED FROM THE PROFITS OF PARTLY AGRICULTURAL AND PARTLY INDUSTRIAL PRODUC TS. SUB-RULE 2 LAYS DOWN THE METHOD OF COMPUTATION OF THE MARKET VALUE. IF THE AGRICULT URAL PRODUCE IS ORDINARILY SOLD IN THE MARKET, RULE 7(2)(A) WILL APPLY. IF NOT RULE & 2(B) WILL APPLY. 4 ITA NOS.979 & 980/KOL/2016 M/S. KHAITAN INDIA LTD. AYS- 2001-02 & 2002-03 5. FOR THE CASE IN HAND, IT IS SEEN THAT THE APPELL ANT, FOR THE PURPOSE OF COMPUTING THE COST OF SUGARCANE PRODUCED BY THE APPELLANT ITSELF, APPLIED THE RATE OF RS. 84 PER QUINTAL WHICH HAD ACTUALLY BEEN THE MARKET PRICE PAYABLE FO R SUGARCANE AT THE GATE OF THE SUGAR DIVISION OF THE APPELLANT. IT HAS ALSO BEEN SUBMITT ED THAT THE COMPLETE DETAILS IN RESPECT OF THE COST OF RS. 84 PER QUINTAL WERE SUBMITTED TO THE ASSESSING OFFICER DURING THE REASSESSMENT PROCEEDINGS FOR HIS NECESSARY EXAMINAT ION. HOWEVER, AS PER THE LD. AR THE ASSESSING OFFICER HAD FAILED TO APPRECIATE THAT THE APPELLANT'S APPLICATION OF RATE OF RS.84 PER QUINTAL HAD BEEN IN ACCORDANCE WITH THE P ROVISION OF RULE 7(1). IN THE ASSESSMENT ORDER PASSED U/S 147/143(3), ACCORDING T O THE LD. AR, THE ASSESSING OFFICER MIXED UP THE ISSUE OF THE APPELLANT'S CLAIM FOR EXE MPTION OF AGRICULTURAL INCOME AND THE ASSIGNMENT OF COST OF SUGARCANE AT THE MARKET RATE FOR THE APPELLANT'S SUGAR DIVISION. THE NECESSARY DOCUMENTS HAVE ALSO BEEN FILED IN THE PAPER BOOK IN APPEAL, AND ARE AVAILABLE AT PAGES 65 TO 75 OF THE PAPER BOOK. IT I S OBSERVED THAT THE NET PROFIT AND LOSS AS PER THE P&L ACCOUNT OF THE TOTAL BUSINESS OF THE APPELLANT-ASSESSEE WAS ONLY,RS.11,82,280/- AND NOT THE FIGURE TAKEN BY THE AO, I THEREFORE FIND MERIT IN THE CONTENTION OF THE LD A.R THAT EVEN WHILE THE AO HAS DISALLOWED A SUM OF RS.95,42,45O AS AGRICULTURAL EXPENSES ALLEGEDLY CLAIMED, BUT NOW HERE IN THE ASSESSMENT ORDER HAS BE SHOWN AS TO HOW THE IMPUGNED FIGURE OF RS.95,42,450 WAS ARRIVED AT. THEREFORE IT IS NOT CLEAR AS TO FROM WHERE THE AO ARRIVED AT THE FIGURE OF RS. RS.118.23 LACS AS MENTIONED IN THE REASONS RECORDED FOR REOPENING. IT IS ALSO S EEN THAT THE APPELLANT HAS CLAIMED NO OTHER EXPENDITURE ON ACCOUNT OF THE AGRICULTURAL DI VISION OTHER THAN AGRICULTURAL ACTIVITY. THEREFORE I DO NOT FIND THAT THERE HAS BE EN ANY VIOLATION OF RULE 7 BY THE APPELLANT, AND THE ACTION OF THE AO IS NON-SPEAKING AND MISPLACED' 6. I HAVE ALSO EXAMINED THE CLAIM OF THE APPELLANT THAT FROM THE ORDER OF REASSESSMENT IT WILL BE NOTED THAT THE ASSESSING OFFICER MADE A DIS ALLOWANCE OF RS.6,70,554 STATING THAT THE SAID AMOUNT IS ON ACCOUNT OF DEPRECIATION IN AG RICULTURAL DIVISION. THE APPELLANT HAS SUBMITTED THAT ITS CLAIM OF EXEMPTION OF RS. 12 ,56,009/- HAD BEEN MADE BY REDUCING EXPENSES AGGREGATING TO RS.2,38,89,454 AND DEPRECIA TION OF RS.6,70,554 AGGREGATING TO RS,2,45,60,008 FROM THE GROSS INCOME FROM AGRICULTU RAL ACTIVITIES OF RS.2,58,16,017. THIS I FIND TO BE CORRECT IN FACTS ON THE BASIS OF THE DOCUMENTS SUBMITTED BY THE APPELLANT. THEREFORE THERE IS MERIT IN THE SUBMISSI ON THAT IN VIEW OF THE APPELLANT'S CLAIM OF EXPENSES OF RS.2,38,89,454 AND DEPRECIATIO N OF RS. 6,70,554 IN ITS AGRICULTURAL DIVISION ITS CLAIM FOR EXEMPTION U/S 10(1) TOWARDS AGRICULTURAL INCOME, GOT REDUCED BY THE AGGREGATE EXPENSE AND DEPRECIATION OF RS. 2,45, 60,008/-. ALSO, IT HAS BEEN SUBMITTED BY THE APPELLANT THAT THE DEPRECIATION HAD NOT BEEN CLAIMED IN COMPUTING THE TAXABLE INCOME OF SUGAR DIVISION AND THEREFORE NO SUCH DISA LLOWANCE SHOULD HAVE BEEN MADE. IN VIEW OF THE ABOVE FINDINGS, I AM IN AGREEMENT WI TH THE APPELLANT, AND FIND THAT THE AO'S ACTION IN THIS MATTER CANNOT BE SUSTAINED. THE ADDITIONS MADE THEREFORE STAND DELETED AND THESE GROUNDS ARE ADJUDICATED IN FAVOUR OF THE APPELLANT-ASSESSEE. 05. GROUND NO. 7 5 ITA NOS.979 & 980/KOL/2016 M/S. KHAITAN INDIA LTD. AYS- 2001-02 & 2002-03 THIS GROUND IS IN RELATION TO ADMISSION OF ADDITION AL GROUND ETC. AS THE APPELLANT HAS NOT PRAYED FOR ANY ADDITIONAL GROUNDS OR ALTERNATIO NS IN ANY GROUNDS OF APPEALS, THE SAME IS NOT REQUIRED TO BE ADJUDICATED. 4. AGGRIEVED BY THE AFORESAID ACTION OF THE LD. CIT (A), THE REVENUE IS BEFORE US BY RAISING THE AFORESAID GROUNDS TAKEN (SUPRA). WE HAV E HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE NOTE THAT IN THE ORIGINAL ASSESSMENT, T HE ASSESSEE HAD FILED ITS RETURN OF INCOME DISCLOSING A BUSINESS LOSS OF RS. 88,04,085/- WHICH WAS ASSESSED UNDER 143(3) VIDE AN ORDER DATED 31.03.2004 FOR A TOTAL LOSS OF RS. 34,92,062/ -. THEREAFTER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO GIVE RELIEF TO THE ASSESSEE AND, THEREFORE, THE ASSESSEES INCOME WAS REVISED TO THE BUSINESS LOSS OF RS. 88,0 0,430/- AS RETURNED BY THE ASSESSEE. THEREAFTER, NOTICE U/S 148 WAS ISSUED BY A.O ON THE REASON THAT THE ASSESSEE HAD NOT COMPUTED ITS AGRICULTURAL INCOME AS PER RULE 7 OF T HE RULES. WE NOTE THAT THE A.O. IN THE REASSESSMENT PROCEEDINGS HAS BEEN DISALLOWED RS. 95 ,42,450/- ON ACCOUNT OF AGRICULTURAL EXPENSES CLAIMED BY THE ASSESSEE AND RS. 6,70,554/- ON ACCOUNT OF DEPRECIATION CLAIMED BY THE ASSESSEE ON AGRICULTURAL DIVISION. WE NOTE THAT THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE COST OF SUGARCANE PRODUCED BY THE ASS ESSEE ITSELF HAD APPLIED THE RATE OF RS. 84 PER QUINTAL WHICH HAD ACTUALLY BEEN THE MARKET P RICE PAYABLE FOR SUGARCANE AT THE GATE OF SUGAR DIVISION OF ASSESSEE COMPANY. WE NOTE THAT TH E LD. CIT(A) AFTER GOING THROUGH THE RULE 7(1) & (2) AND AFTER REPRODUCING THE PROVISION S OF LAW HAS CORRECTLY INTERPRETED THE LAW BY FOLLOWING THE RATIO DECIDENDI OF THE HONBLE SUP REME COURT IN THIRU AROORAN SUGARS LTD. VS CIT 227 ITR 432. WE NOTE THAT THE LD. CIT(A ) HAS TAKEN NOTE THAT THE ASSESSEE HAD CORRECTLY FOLLOWED THE DICTUM OF LAW AS PER RULE 7( 1) AND COMPUTED THE AGRICULTURAL INCOME FROM SUGARCANE. WE NOTE THAT UNDER RULE 7(1), WHILE COMPUTING THE PROFITS AND GAINS OF BUSINESS, MARKET VALUE OF AN AGRICULTURAL PRODUCE I N RAW STATE HAS TO BE DEDUCTED FROM THE PROFITS OF PARTLY AGRICULTURAL AND PARTLY INDUSTRIA L PRODUCTS. SUB-RULE (2) LAYS DOWN THE METHOD OF COMPUTATION OF MARKET VALUE. IF THE AGRIC ULTURAL PRODUCE IS ORDINARILY SOLD IN THE MARKET THEN RULE 7(2)(A) WILL APPLY. IF NOT THEN ON LY RULE 7(2)(B) WILL APPLY. THE HONBLE SUPREME COURT IN THIRU AROORAN SUGARS LTD. (SUPRA) HAS HELD THAT WHEN THE QUESTION ARISES AS TO WHETHER SUGARCANE IS ORDINARILY SOLD IN THE M ARKET IN RAW STATE EVEN THOUGH THE PRICES ARE CONTROLLED BY LAW, THE HONBLE SUPREME COURT AN SWERED IN THE AFFIRMATIVE THAT SUGARCANE IS ORDINARILY SOLD IN THE MARKET, THEN RU LE 7(2)(A) WILL APPLY. THE ASSESSEE COMPANY ITSELF WAS BUYING MORE SUGARCANE THAN IT WA S PRODUCE FROM ITS OWN FIELDS. 6 ITA NOS.979 & 980/KOL/2016 M/S. KHAITAN INDIA LTD. AYS- 2001-02 & 2002-03 THEREFORE, THE ASSESSEE APPLYING THE RATE OF RS. 84 PER QUINTAL ON ITS OWN SUGARCANE WHICH IT HAS GROWN AND PRODUCED IS CORRECT BECAUSE RS. 84 PE R QUINTAL WAS THE MARKET PRICE PAYABLE FOR SUGARCANE AT THE GATE OF SUGAR DIVISION OF THE ASSESSEE. THE LD. CIT(A) HAS TAKEN NOTE THAT THE NET PROFIT AND LOSS AS PER THE P&L A/C OF THE TOTAL OF THE ASSESSEE WAS ONLY RS. 11,82,280/- AND HAS RECORDED A FINDING OF FACT THAT THE A.O. WAS ERRONEOUS IN TAKING A DIFFERENT FIGURE. THE LD. CIT(A) HAS TAKEN NOTE THA T THE FIGURE OF RS. 95,42,450/- WHICH THE A.O. HAS DISALLOWED, AS CLAIMED BY THE ASSESSEE AS AGRICULTURAL EXPENSES WERE NOT EMANATING FROM THE DOCUMENTS FILED BY THE ASSESSEE. THE LD. CIT(A) WONDERED AS TO HOW THE A.O. HAS PICKED UP THE FIGURE OF RS. 95,42,450/ - WHICH THE A.O SAYS HAS BEEN CLAIMED BY THE ASSESSEE AS AGRICULTURAL EXPENSES. DURING HE ARING, THE LEARNED DR COULD NOT THROW ANY LIGHT AS TO HOW THE A.O. HAS TAKEN NOTE OF RS. 95,42,450/- AS AGRICULTURAL EXPENSES CLAIMED BY THE ASSESSEE. THE LD. CIT(A) HAS FOUND T HAT THAT THE ASSESSEE HAD CLAIMED NO OTHER EXPENDITURE ON ACCOUNT OF AGRICULTURAL DIVISI ON OTHER THAN AGRICULTURAL ACTIVITY AND HAS GIVEN A FINDING THAT THERE IS NO VIOLATION OF R ULE 7 OF RULES BY THE ASSESSEE. WE NOTE THAT THE A.O. HAS MADE A DISALLOWANCE OF RS. 6,70,5 54/- FOR THE REASON THAT THE SAID AMOUNT IS ON ACCOUNT OF DEPRECIATION IN AGRICULTURAL DIVIS ION. THE LD. CIT(A) HAS TAKEN NOTE THAT THE ASSESSEE HAS CLAIMED EXEMPTION OF RS. 12,56,009 /- BY REDUCING EXPENSES AGGREGATED TO RS. 2,38,89,454/- AND DEPRECIATION OF RS. 6,70,554/ - AGGREGATED TO RS. 2,45,60,008/- FROM THE GROSS INCOME FROM THE AGRICULTURAL ACTIVITY OF RS. 2,58,16,017/-. THESE FACTS HAVE BEEN FOUND TO BE CORRECT BY THE LD. CIT(A) AFTER PERUSAL OF THE PAPER BOOK FILED BEFORE HIM WHICH FINDING OF FACT COULD NOT BE CONTROVERTED BY THE REVENUE BEFORE US. IN VIEW OF THE AFORESAID FACTS, THE LD. CIT(A) HAS FOUND THAT THE ASSESSEES CLAIM OF EXPENSES OF RS. 2,38,89,454/- AND DEPRECIATION OF RS. 6,70,554/- IN ITS AGRICULTURAL DIVISION CLAIMED FOR EXEMPTION U/S 10(1) OF THE ACT TOWARDS AGRICULTURAL INCOME GOT REDUCED THE AGGREGATE EXPENSES AND DEPRECIATION OF RS. 2,45,60,008/-. WE ALSO NOTE THAT THE LD. CIT(A) HAS TAKEN NOTE THAT THE ASSESSEE HAS NOT CLAIMED DEPRECIATION WHILE COMPUTING THE TAXABLE INCOME OF THE SUGAR DIVISION AND, THEREFORE, DISALLOWANCES ON THIS SCORE WAS NOT WARRANTED. IN THE LIGHT OF THE AFORESAID FACTS, WE DO NOT FIND ANY ME RIT IN THE APPEAL PREFERRED BY THE REVENUE AND, THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT (A) AND DISMISS THE APPEAL OF THE REVENUE. 7 ITA NOS.979 & 980/KOL/2016 M/S. KHAITAN INDIA LTD. AYS- 2001-02 & 2002-03 5. SINCE, WE HAVE DISMISSED THE REVENUE APPEAL FOR A.Y. 2001-02 AND TAKING NOTE THAT SIMILAR FACTS AND SIMILAR GROUNDS HAVE BEEN RAISED IN THE APPEAL FOR A.Y. 2002-03 WE ARE INCLINED TO DISMISS THE SAME ALSO ON THE SAME REASO N GIVEN FOR A.Y. 2001-02. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3RD MAY , 2019 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3RD MAY, 2019 BISWAJIT (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT JCIT(OSD) CIR 11(1), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. 2 RESPONDENT M/S. KHAITAN INDIA LTD. 46C, J.L. NEHR U ROAD, EVEREST HOUSE, 18 TH FLOOR, KOLKATA 700 071. 3 . THE CIT(A), 4. 5. CIT , DR, / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O ITAT, KOLKA