DCIT, CC-XXV, KOLKATA, Kolkata v. M/s Warren Tea Ltd., Kolkata

ITA 111/KOL/2014 | 2004-2005
Pronouncement Date: 19-10-2016

Appeal Details

RSA Number 11123514 RSA 2014
Assessee PAN AAACW2894H
Bench Kolkata
Appeal Number ITA 111/KOL/2014
Duration Of Justice 2 year(s) 8 month(s) 30 day(s)
Appellant DCIT, CC-XXV, KOLKATA, Kolkata
Respondent M/s Warren Tea Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 19-10-2016
Date Of Final Hearing 06-10-2016
Next Hearing Date 06-10-2016
Assessment Year 2004-2005
Appeal Filed On 20-01-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENC H KOLKATA BEFORE SHRI WASEEM AHMED AM & SHRI K. NARASIMHA C HARY JM ./ ITA NO.110 TO 113/KOL/2014 ( / ASSESSMENT YEAR :2003-2004 TO 2006-2007) DCIT CC-XXV KOLKATA 110 SHANTI PALLY 5 TH FLOOR KOLKATA-700107 VS. M/S WARREN TEA LTD. 4B HUNGERFORD STREET SUVIRA HOUSE KOLKATA-700017 ./ ./PAN/GIR NO. : AAACW 2894 H ( /APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI BISHWANATH DAS JCIT /ASSESSEE BY : SHRI AGNIBESH SENGUPTA / DATE OF HEARING : 06/10/2016 /DATE OF PRONOUNCEMENT 19/10/2016 / O R D E R PER SHRI K. NARASIMHA CHARY JM: THE ABOVE FOUR APPEALS ARE DIRECTED BY THE REVENUE AGAINST THE RESPECTIVE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXV KOLKATA IN CASE OF ONE ASSESSEE FOR THE DIFFERENT ASSESSMENT YEARS I.E. AYS.2003-04 2004-05 2005-06 & 2006-07 RESPECTIVELY. 2. SINCE COMMON GROUNDS ARE INVOLVED IN ALL THE APP EALS OF THE REVENUE THEREFORE FOR THE SAKE OF CONVENIENCE WE PROCEED TO DISPOSE OFF ALL THE APPEALS BY THIS CONSOLIDATED ORDER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN VOLVED IN THE BUSINESS OF GROWING MANUFACTURING AND TRADING OF T EA AND TRAVELS SERVICES. IN THE ASSESSMENT YEARS 2003-04 2004-05 2005-06 & 2006-07 THE ASSESSEE FILED RETURNS OF INCOME DECLARING TOTA L INCOME OF ITA NOS.110-113/14 2 RS.40 94 950/- RS.8 43 75 420/- 3 33 13 452/- AND RS.3 02 12 856/- RESPECTIVELY. WHILE PROCESSING THE RETURNS THE AO HOWEVER REFUSED TO ALLOW THE DEDUCTIONS CLAIMED BY THE ASSESSEE U/S.33 AB(7) OF THE ACT AND ADDED BACK SUCH AMOUNTS TO THE INCOME OF THE ASSESS EE. IN RESPECT OF ASSESSMENT YEAR 2003-04 THE ASSESSEE CLAIMED DAMAG E TO THE TEA IN THE TRANSPORT TO A TUNE OF RS.20 307 KGS. AND REDUCED T O ITS CLOSING STOCK BY SUCH AN EXTENT. THE AO COMPARED THE SAME WITH THE D AMAGE CLAIMED IN THE EARLIER YEARS AND ADDED BACK A SUM OF RS.2 LAKH S ON ESTIMATE BEING DISALLOWANCE OF CLAIM ON THIS ACCOUNT. AGGRIEVED BY THE ADDITION OF THE AMOUNTS IN RESPECT OF ASSESSMENT YEARS 2003-04 TO 2 006-07 THE ASSESSEE CARRIED THE MATTERS IN APPEAL BEFORE THE L D. CIT(A). LD. CIT(A) WHILE DISPOSING OFF THESE APPEALS BY SEPARATE ORDE RS AGREED WITH THE CONTENTION OF ASSESSEE AND DELETED THE ADDITIONS MA DE BY THE AO ON ACCOUNT OF SECTION 33AB(7) IN RESPECT OF ASSESSMENT YEARS AND THE ADDITION OF RS.2 LAKHS IN RESPECT OF DAMAGE TO TEA FOR THE ASSESSMENT YEAR 2003-04. CHALLENGING THE SAID ORDERS OF LD. CI T(A) THE REVENUE CARRIED THE MATTER IN THESE APPEALS ON THE FOLLOWIN G GROUNDS :- GROUNDS RAISED IN ITA NO.110/KOL/2014 (AY : 2003-20 04) ARE AS UNDER :- THE FOLLOWING GROUNDS OF APPEAL ARE APPROVED FOR FI LING APPEAL TO ITA.T KOLKATA AGAINST THE ORDER DT. 17.09.2013 O F THE CIT(A) IV KOLKATA IN APPEAL NO.76/ CIT(A)-IV/06-07 IN CASE OF M/S WARREN TEA LTD. FOR A.Y. 2003-04: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF WITHDRAWAL FROM N ABARD AND GRANTING RELIEF TO THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT THE EXPENDITURE CLAIMED AS UTILIZATION OF NABARD WI THDRAWAL MADE IN THE A.Y 2003-04 WAS IN FACT INCURRED IN THE A.Y 2002- 03 INSTEAD OF A.Y 2003-04 I.E. YEAR OF WITHDRAWAL VIOLATING PROVISIONS OF SEC. 33AB(7) OF THE IT.ACT 1961 AND T HUS NOT ELIGIBLE FOR CLAIM OF DEDUCTION AS PER PROVISION OF THE ACT. ITA NOS.110-113/14 3 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF TH E CIT(A) HAS ERRED IN DELETING DISALLOWANCE MADE BY THE A.O IN T HE RESPECT OF 'LOSS ON DAMAGED TEA' WITHOUT PROPERLY APPRECIATING THE RATIONALE BEHIND SUCH DISALLOWANCE AS STATED IN THE ASSESSMENT ORDER GROUNDS RAISED IN ITA NO.111/KOL/2014 (AY : 2004-20 05) ARE AS UNDER :- THE FOLLOWING GROUNDS OF APPEAL ARE APPROVED FOR FI LING APPEAL TO ITA.T KOLKATA AGAINST THE ORDER DT. 17.09.2013 O F THE CIT(A) IV KOLKATA IN APPEAL NO.183/CIT(A)-IV/06-07 IN CASE OF M/S WARREN TEA LTD. FOR A.Y. 2004-05: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF WITHDRAWAL FROM N ABARD AND GRANTING RELIEF TO THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT THE EXPENDITURE CLAIMED AS UTILIZATION OF NABARD WI THDRAWAL MADE IN THE A.Y 2004-05 WAS IN FACT INCURRED IN THE A.Y 2003- 04 INSTEAD OF A.Y 2004-05 I.E. YEAR OF WITHDRAWAL VIOLATING PROVISIONS OF SEC. 33AB(7) OF THE IT.ACT 1961 AND T HUS NOT ELIGIBLE FOR CLAIM OF DEDUCTION AS PER PROVISION OF THE ACT. GROUNDS RAISED IN ITA NO.112/KOL/2014 (AY : 2005-20 06) ARE AS UNDER :- THE FOLLOWING GROUNDS OF APPEAL ARE APPROVED FOR FI LING APPEAL TO ITA.T KOLKATA AGAINST THE ORDER DT. 17.09.2013 O F THE CIT(A) IV KOLKATA IN APPEAL NO.232/CIT(A)-IV/07-08 IN CASE OF M/S WARREN TEA LTD. FOR A.Y. 2005-06: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF WITHDRAWAL FROM N ABARD AND GRANTING RELIEF TO THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT THE EXPENDITURE CLAIMED AS UTILIZATION OF NABARD WI THDRAWAL MADE IN THE A.Y 2005-06 WAS IN FACT INCURRED IN THE A.Y 2004- 05 INSTEAD OF A.Y 2005-06 I.E. YEAR OF WITHDRAWAL VIOLATING PROVISIONS OF SEC. 33AB(7) OF THE IT.ACT 1961 AND T HUS NOT ELIGIBLE FOR CLAIM OF DEDUCTION AS PER PROVISION OF THE ACT. GROUNDS RAISED IN ITA NO.113/KOL/2014 (AY : 2006-20 07) ARE AS UNDER :- THE FOLLOWING GROUNDS OF APPEAL ARE APPROVED FOR FI LING APPEAL TO ITA.T KOLKATA AGAINST THE ORDER DT. 17.09.2013 O F THE CIT(A) IV KOLKATA IN APPEAL NO.236/CIT(A)-IV/08-09 IN CASE OF M/S WARREN TEA LTD. FOR A.Y. 2006-07: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF WITHDRAWAL FROM N ABARD AND GRANTING RELIEF TO THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT THE EXPENDITURE CLAIMED AS UTILIZATION OF NABARD WI THDRAWAL MADE IN THE A.Y 2006-07 WAS IN FACT INCURRED IN THE A.Y 2005- ITA NOS.110-113/14 4 06 INSTEAD OF A.Y 2006-07 I.E. YEAR OF WITHDRAWAL VIOLATING PROVISIONS OF SEC. 33AB(7) OF THE IT ACT 1961 AND T HUS NOT ELIGIBLE FOR CLAIM OF DEDUCTION AS PER PROVISION OF THE ACT. 4. IT IS THE ARGUMENT OF LD. DR THAT U/S.33AB WHENE VER ANY AMOUNT THAT WAS REALIZED IN PREVIOUS YEAR BY THE NATIONAL BANK WAS NOT UTILIZED EITHER IN WHOLE OR IN PART IN THE PREVIOUS YEAR SU CH UNEXPEND AMOUNT SHALL BE DEEMED TO BE THE PROFIT AND GAINS OF BUSIN ESS AND ACCORDINGLY SHALL BE CHARGEABLE TO INCOME TAX AS THE INCOME OF THE PREVIOUS YEAR AND WHILE FOLLOWING THIS MANDATE OF THIS PROVISION OF L AW THE AO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE. INASMUCH AS IN THE RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2003-04 TO 2006-07 THE ASS ESSEE CLAIMED THE EXPENSES INCURRED IN THE FINANCIAL YEARS 2001-02 TO 2004-05 RESPECTIVELY WHICH HAPPENED TO BE THE PRECEDING PREVIOUS YEARS. ON THIS ACCOUNT LD. DR JUSTIFIES THE ACTION OF LD. AO. HE FURTHER SUBMI TTED THAT IN RESPECT OF ASSESSMENT YEAR 2003-04 THE ASSESSEE DID NOT SUBMI T ANY MATERIAL BEFORE THE AO TO SUPPORT AND ALMOST HUNDRED PERCENT INCREASED IN THE DAMAGE OCCURRED IN THAT FINANCIAL YEAR WHEN COMPARE D TO THE RELEVANT PREVIOUS FINANCIAL YEAR AS SUCH INSTEAD OF DISALLOW ING THE TOTAL AMOUNT THE AO HAS TAKEN A VIEW ON ESTIMATE BASIS THAT ADDITION OF AMOUNT OF RS.2 LAKHS WOULD MEET THE PURPOSE. ON THESE GROUNDS LD. DR PRAYED TO ALLOW ALL THE APPEALS AND RESTORE THE ORDERS OF AO. 5. PER CONTRA IT IS THE ARGUMENT OF LD. AR THAT ON EARLIER OCCA SIONS ALSO THE AO DISALLOWED THE DEDUCTIONS CLAIMED U/S.3 3AB(7) ON THE GROUND THAT THE WITHDRAWN AMOUNT WAS NOT SPENT IN THE PREV IOUS YEAR BUT IN THE PRECEDING PREVIOUS YEAR AND ON THE APPEALS PREFERR ED BY THE ASSESSEE ITA NOS.110-113/14 5 THE ITAT ANSWERED THE ISSUES IN FAVOUR OF THE ASSES SEE HOLDING THAT THE SPENDING AND WITHDRAWAL OF THE AMOUNT WAS A CONTINU OUS PROCESS AND A PARTICULAR PAYMENT CANNOT BE IDENTIFIED WITH DESIGN ATED DISALLOWANCE. THOUGH THIS POINT WAS RAISED BEFORE THE AO LD. AO DID NOT ACCEPT THE SAME STATING THAT THE REVENUE HAS NOT ACCEPTED THE FINDING OF THE ITAT AS SETTLED ISSUE BUT AN APPEAL WAS PREFERRED U/S.260A OF THE ACT AND TO PROTECT THE INTEREST OF REVENUE ADDITION WAS NECESS ARY. LD. AR FURTHER JUSTIFIED THE FINDING OF LD. CIT(A) IN RESPECT OF D AMAGE TEA STATING THAT THE DAMAGED PORTION CANNOT HAVE ANY DIRECT OR INVERSE P ROPORTION TO THE TOTAL PRODUCTION OF THE TEA AND IN THE OPTIONS OF THE EVI DENCE WHATSOEVER TO THE CONTRARY THE LD. AO IS NOT JUSTIFIED IN DISBELIEVI NG THE CLAIM OF THE ASSESSEE. FOR THIS REASONS LD. AR PRAYED TO DISMIS S THE APPEALS. 6. GROUND NO.1 IN ALL THE APPEALS :- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF WITHDRAWAL FROM N ABARD AND GRANTING RELIEF TO THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT THE EXPENDITURE CLAIMED AS UTILIZATION OF NABARD WI THDRAWAL MADE IN THE A.Y 2003-04 WAS IN FACT INCURRED IN THE A.Y 2002- 03 INSTEAD OF A.Y 2003-04 I.E. YEAR OF WITHDRAWAL VIOLATING PROVISIONS OF SEC. 33AB(7) OF THE IT.ACT 1961 AND T HUS NOT ELIGIBLE FOR CLAIM OF DEDUCTION AS PER PROVISION OF THE ACT. A PERUSAL OF THE RECORD SHOWS THAT THE ASSESSEE CLA IMED TO HAVE INCURRED AN EXPENDITURE OF RS.5 91 90 400/- IN THE FINANCIAL YEAR 2001-02 FOR EXTENSION OF FACTORY AND CONSTRUCTION OF ROADS AND BRIDGES AN AMOUNT OF RS.1 17 49 000/- FOR CONSTRUCTION OF LABOUR QUAR TERS MODIFICATION OF LABOUR AND STAFF QUARTERS NOW AND FOR PROVIDING I NFRASTRUCTURAL FACILITIES AT VARIOUS TEA ESTATES IN THE FINANCIAL YEAR 2002-03 AN AMOUNT OF ITA NOS.110-113/14 6 RS.1 06 60 000/- AND RS.80 90 00 000/- IN THE FINAN CIAL YEAR 2003-04 AND IN FINANCIAL YEAR 2004-05 FOR THE PURCHASE OF PLANT AND MACHINERY. 7. THE ASSESSEE WITHDREW AN EQUAL AMOUNT FROM THE N ABARD IN THE NEXT FINANCIAL YEAR I.E. 2002-03 TO 2005-06 AND REI MBURSED SUCH AMOUNTS TOWARDS THE EXPENDITURE INCURRED IN THE ASSESSMENT YEAR. THE ASSESSEE CLAIMED THIS WITHDRAWN AMOUNT AS DEDUCTION U/S.33AB (7). HAVING OBSERVED THAT THE EXPENDITURE TOOK PLACE IN THE PRE CEDING PREVIOUS YEAR AND THE WITHDRAWAL TOOK PLACE IN THE PREVIOUS YEAR THE AO HELD THAT THIS DEDUCTION CANNOT BE ALLOWED INASMUCH AS THE UTILIZ ATION OF FUNDS HAD NOT TAKEN PLACE EITHER IN WHOLE OR IN PART IN THE YEAR IN WHICH THE WITHDRAWAL TOOK PLACE. ON THIS PREMISE THE AO DISALLOWED THE CLAIM OF DEDUCTION AND ADDED BACK SUCH AMOUNT TO THE TOTAL INCOME OF THE A SSESSEE. 8. A PERUSAL OF THE ASSESSMENT ORDERS CLEARLY ESTAB LISHED THAT THE AO DOES NOT DISPUTE THE GENUINENESS OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE PRECEDING YEARS OR THE UTILIZATION OF THE AMOUNTS WITHDRAWN FROM THE NABARD IN THE PREVIOUS YEAR FOR REIMBURSEMENT OF SUCH EXPENDITURE INCURRED IN THE PRECEDING PREVIOUS YEARS. THE ENTIRE DISPUTE REVOLVES ROUND THE QUESTION AS TO WHETHER T HE EXPENDITURE WAS TAKEN PLACE IN THE YEAR OF WITHDRAWAL OR THE REIMBU RSEMENT OF THE EXPENDED AMOUNT IS VALID TO CLAIM THE DEDUCTION U/S .33AB(7) OF THE ACT. 9. IN HIS ORDER ITSELF THE AO RECORDED THAT IT WAS BROUGHT TO NOTICE THAT THE ITAT KOLKATA BENCH HAD ALREADY HELD IN ASSESSEE S OWN CASE FOR THE EARLIER ASSESSMENT YEARS HOWEVER THE AO FURTHER R ECORDED THAT THE REVENUE HAS NOT ACCEPTED THE DECISION OF ITAT AND P REFERRED AN APPEAL ITA NOS.110-113/14 7 U/S.260A OF THE ACT. AS SUCH IN VIEW OF THE MATTER BEING NOT AT SETTLED TO PROTECT THE INTEREST OF REVENUE THE AO PROCEEDED TO ADD THE AMOUNT. LD. CIT(A) ALSO REFERRED TO THE ORDERS DATED 21.04.2004 PASSED IN ITA NO.1773/KOL/1997 AND ORDER DATED 30.09.2005 PASSED IN ITA NO.863&864/KOL/2005 & OTHER CONNECTED APPEALS. COPI ES OF ORDERS ARE PRODUCED BEFORE US VIDE PAGE NOS.25 TO 46 OF THE PA PER BOOK. THE RELEVANT FINDINGS OF THE ITAT ARE NECESSARY TO BE E XTRACTED FOR PROPER UNDERSTANDING FOR THE APPROACH OF ITAT ON THIS ASPE CT. VIDE PARA NO.9 IN THE ORDER DATED 21.04.2004 PASSED IN ITA NO.1773/KO L/1997 IT WAS HELD AS UNDER :- 9. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ON THE POINT OF DELETING THE D ISALLOWANCE OF RS.3 CRORES WE ARE IN AGREEMENT WITH THE FINDINGS O F THE LEARNED CIT(A) INASMUCH AS THE LEARNED CIT(A) ON THE BASIS OF THE SCHEME AS APPLICABLE TO THE ASSESSEE FOR DEVELOPMENT DEPOS IT SCHEME APPLIED ON THE APPROPRIATE FORM FOR WITHDRAWAL OF A SUM OF RS.3 CRORES. NABARD WAS THE AGENCY IT GRANTED RS.3 CRORE S FOR DIRECTING THE ASSESSEE'S BANK FOR UTILIZATION TO ENCOURAGE IN VESTMENT IN INDUSTRIAL UNDERTAKING. THE A.O. MISDIRECTED HIMSEL F TO HOLD THAT THE UTILIZATION HAS TO BE FROM THE DESIGNATED AMOUNT O NLY. AS PER THE A.O. HIMSELF THE REMITTANCES AFTER DECEMBER 1991 W AS CONSIDERED FOR THE PURPOSE OF CAPITAL EXPENDITURE WHICH OTHERW ISE WAS BEING INCURRED IN ACCORDANCE WITH THE SCHEME OF CAPITAL E XPENDITURE BY THE ASSESSEE. 'WE ARE THEREFORE INCLINED TO HOLD THAT IT WAS A CONTINUOUS PROCESS AND NO SEPARATE PAYMENT CAN BE I DENTIFIED FROM A DESIGNATED A/C FOR DISALLOWANCE. THERE CANNOT BE DIRECT LINK BETWEEN UTILIZATION AND THE EXPENDITURE INCURRED FO R THE SPECIFIED PURPOSE. THIS FACT IS FURTHER STRENGTHENED ON THE B ASIS OF THE ARGUMENTS AS CONSIDERED BY THE AO FOR THE PURPOSE O F THE DISALLOWANCE OF RS.1.84 CRORES U/S 32AB(5B). THE DE TAILS OF THE EXPENDITURE VAS CONSIDERED BY THE CIT(A) AND WERE Q UANTIFIED FOR ALLOWANCE ON AN EXTENSION STANDING AT RS. 80.86 LAK HS REPAYMENT OF NABARD LOAN OF RS. 32.43 LAKHS AND PLANT AND MAC HINERY PURCHASED AMOUNTING TO RS.1.61 CRORES. THE LEARNED CIT(A) HELD THAT THE REPLANTING DID NOT COMPLY WITH THE PROVISI ONS OF THE INVESTMENT DEPOSIT SCHEME 1986 WHICH WAS REVENUE I N NATURE. THEREFORE WE ARE IN CONFORMITY WITH THE LEARNED CI T(A) OF SUSTAINING THE DISALLOWANCE AMOUNTING TO RS.38.46 L AKHS. ON BOTH THESE ACCOUNTS WE DO NOT FIND MERIT IN THE ARGUMENT S OF THE LEARNED DR SUPPORTING THE ORDER OF THE AO LAND DISMISS THE SAME. ITA NOS.110-113/14 8 HOWEVER THE THIRD GROUND AGITATED BY THE REVENUE WE FIND FORCE IN THE ARGUMENTS OF THE LEARNED DR WHO HAS CLEARLY TRI ED TO BRING ON RECORD THAT THE DIRECTION BY THE ITAT WAS WITH RESP ECT TO THE DEDUCTION U/S.80HHC WHICH DID NOT HAVE ANY BEARING ON THE EXCHANGE LOSS SUFFERED AND ACCOUNTED FOR BY THE ASS ESSEE AS CONSIDERED FOR DISALLOWANCE BY THE AO IN HIS ORDER U/S.143(3). WE ARE ALSO INCLINED TO HOLD THAT THE SUBMISSION BY TH E ASSESSEE BEFORE THE LOWER AUTHORITIES FOR CONSIDERATION OF ALLOWANC E OF THE EXCHANGE LOSS WAS NOT AS BROUGHT OUT WHICH APPEARS TO BE ON HYPOTHETICAL ACCOUNTING OF A LOSS AS ON THE DATE OF THE BALANCE SHEET OTHER THAN IN BUILT FOR ACCOUNTING OF LOSS FOR THE PURPOSE OF DEDUCTION U/S.80HHC. HOWEVER IN THE INTEREST OF JUSTICE IT W ILL BE APPROPRIATE IF THE ISSUE IS RESTORED TO THE FILE OF THE LEARNED CIT(A) WHO SHOULD CONSIDER THE CLAIM OF EXCHANGE LOSS BY THE ASSESSEE IN ACCORDANCE WITH THE ACCOUNTING AS SUBMITTED BY THE ASSESSEE BE FORE THEM INSTEAD OF BEING GUIDED BY THE DIRECTION PROPERLY I N THE ORDER OF THE ITAT FOR THE ASSESSMENT YEAR 1987-88 DURING WHICH PERIOD THE SAME CONTENTION ALSO MAY HAVE BEEN CONSIDERED FOR T HE REMAINING ASSESSMENT YEARS IN THE CASE OF THE ASSESSEE AND AC CEPTED OR OTHERWISE BY THE DEPARTMENT. AN OPPORTUNITY BE GIVE N TO THE ASSESSEE FOR EXPLAINING AS TO HOW THE DIRECTION OF THE ITAT FALLS OUT FOR THIS YEAR AS IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1987-88 BY THE TRIBUNAL. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES AS DIRECTED ABOVE. PARAGRAPH NOS.25 26 & 27 IN THE ORDER DATED 30.09 .2005 PASSED IN ITA NO.863&864/KOL/2005 ARE AS FOLLOWS :- 25. THE REVENUE HAS DISPUTED THE CLAIM OF THE APPEL LANT OBSERVING THAT THE APPELLANT HAS ALREADY ACQUIRED S UCH MACHINERY DURING THE PRECEDING YEAR OF THE PREVIOUS YEAR WHER EAS THE AMOUNT WAS WITHDRAWN BY THE ASSESSEE ONLY IN THE PREVIOUS YEAR FROM NABARD AND THEREFORE NO QUESTION ARISES AS TO UTIL IZATION OF FUND PRIOR TO RELEASE THEREOF. HOWEVER WE FIND THAT THE APPELLANT HAS UTILIZED THE MONEY TOWARDS EXTENSION OF PLANTING A DDITIONS TO BUILDINGS ACQUISITION OF PLANT AND MACHINERY CONS TRUCTION OF ROADS AND BRIDGES AND PURCHASE OF MOTOR CARS OUT OF ITS O WN RESOURCES AND SUBSEQUENTLY WHEN THE EQUIVALENT MONEY WAS WITH DRAWN FROM NABARD REIMBURSED THE SAME TO ITSELF. WE ALSO FIND THAT NABARD RELEASED FUNDS ONLY AFTER SCRUTINIZING THE DETAILS FURNISHED BY THE ASSESSEE FOR THE PURPOSES SPECIFIED IN THE TEA DEVE LOPMENT ACCOUNT SCHEME AS APPLICABLE. THE APPLICATIONS WERE DULY FILED WITH NABARD WITH ALL SUPPORTING DOCUMENTS AND NABAR D AFTER FULLY SCRUTINIZING THE DETAILS RELEASED THE FUNDS. THE DETAILS OF THE AMOUNT OF WITHDRAWAL IS ALSO DULY CERTIFIED BY A CH ARTERED ACCOUNTANT. THE REVENUE HAS NOT DISPUTED THE GENUIN ENESS OF THE PURCHASES/UTILIZATIONS. THE REVENUE HAS ALSO NOT CO NTROVERTED THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THA T IT WAS REQUIRED TO FURNISH THE BILLS BEFORE NABARD TO ENABLE IT TO GET THE AMOUNT RELEASED AGAINST SUCH PURCHASE OF MACHINERY. ITA NOS.110-113/14 9 26. WE ALSO FIND THAT THE ABOVE PROVISION WAS INSER TED WITH THE INTENTION TO FACILITATE MOBILIZATION OF INTERNAL RE SOURCES OF INDIAN TEA INDUSTRY FOR THE PURPOSE OF INVESTMENTS IN NEW AREA S FRESH PLANTING REPLANTING ETC. WE ARE ALSO OF THE OPINION THAT PRO VISIONS SHOULD BE INTERPRETED LIBERALLY WHICH DERIVES SUPPORT FROM TH E JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMP O LTD. REPORTED IN 196 ITR 188 (SC). ACCORDINGLY IN OUR C ONSIDERED OPINION THE CONTENTION OF THE ID. COUNSEL FOR THE ASSESSEE THAT SUCH UTILIZATION OF MONEY AMOUNTING TO RS.4 12 01 5 00/- THOUGH UTILIZED IN THE PRECEDING YEAR QUALIFY AS ASSETS PU RCHASED BY THE ASSESSEE AGAINST WITHDRAWAL MADE BY IT FROM NABARD IS A VALID ONE. THE ABOVE PROPOSITION ALSO DERIVES SUPPORT FRO M THE DECISION OF THE COORDINATE BENCH OF THE ITAT IN THE CASE OF SCOTISH ASSAM INDIA LTD. KOLKATA VS ACIT VIDE ORDER DATED 28.7.2 004 IN ITA NO.2638/K/2004 FOR ASSESSMENT YEAR 2001-02. 27. CONSIDERING THE TOTALITY OF THE FACTS OF THE CA SE WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE REVENUE TO ALLOW THE CLAIM OF THE APPELLANT TOWARDS DEDUCTION U/S 33AB(7) OF THE AMOU NT WITHDRAWN FROM NABARD. IT THEREFORE CLEAR THAT WHILE FOLLOWING THE DECISI ON REPORTEDIN BAJAJ TEMPO LTD. 196 ITR 188(SC) THE COORDINATE BENCH OF THIS TRIBUNAL HAS CHOSEN TO GIVE LIBERAL INTERPRETATION TO THE PROVISIONS OF SECTION 33AB(7) AND HELD THAT THE UTILIZATION OF MONEY IN THE PRECEDING PREV IOUS YEAR WILL QUALIFY AS THE EXPENDITURE INCURRED BY THE ASSESSEE AGAINST TH E WITHDRAWAL MADE BY IT FROM THE NABARD. IT FURTHER FOUND SUPPORT FROM T HE DECISION REPORTED IN SCOTISH ASSAM INDIA LTD. 2638/KOL/2004. 10. IT IS ARGUED BY LD. AR BEFORE US THAT IN ORDER TO GET THE WITHDRAWALS OF THE AMOUNT FROM THE NABARD THE ASSESSEE HAS TO SUBMIT ALL THE RELEVANT PAPERS SUPPORTING THE CLAIM THAT WITHDRAWA L AND IS ONLY AFTER A CAREFUL SCRUTINY OF THE DETAILS THE NABARD WOULD RE LEASE THE FUNDS. IT SUGGESTS THAT FOR GETTING WITHDRAWAL OF THE FUNDS F ROM THE NABARD THE ASSESSEE HAS TO INCUR THE EXPENDITURE AND SUBMIT TH E DETAILS AND DOCUMENTS. THIS ASPECT WAS ADVERTED TO BY THE ITAT VIDE ORDER DATED ITA NOS.110-113/14 10 30.09.2005 IN ITA NO.863&864/KOL/2005. THEREFORE T HE CIRCUMSTANCES MADE IT CLEAR THAT THE NABARD ALLOWS THE WITHDRAWAL OF FUNDS FOR REIMBURSEMENT OF THE EXPENDITURE ALREADY MADE AND T HAT IS THE REASON WHY IT WAS HELD THAT SUCH UTILIZATION OF THE WITHDR AWAL AMOUNTS FOR THE PURPOSE OF REIMBURSEMENT WILL QUALIFY THE CLAIM FOR DEDUCTION THEREOF IN THE RELEVANT PREVIOUS YEAR IN WHICH THE REIMBURSEME NT TOOK PLACE. THOUGH IT IS SUBMITTED BY LD. DR THAT THE ORDERS OF ITAT I N ITA NO.1773/KOL/1997 AND IN ITA NOS.863&864/KOL/2005 WERE CARRIED IN APP EAL U/S.260A OF THE ACT NO FACT DISTURBING SUCH REASONING OR DECISION THEREIN IS BROUGHT TO OUR NOTICE. IN THESE CIRCUMSTANCES WE FIND EVERY FORC E IN THE REASONING OF THE LD. CIT(A) AND ALSO THE ARGUMENT OF LD. AR TO SUSTAIN THE FINDING OF THE LD. CIT(A). WE THEREFORE DO NOT FIND ANY REASON T O INTERFERE WITH THE FINDING OF THE LD. CIT(A) IN RESPECT OF ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S.33AB(7) OF THE ACT. THIS GROUNDS IN A LL THESE APPEALS IS ACCORDINGLY DISMISSED. 11. GROUND NO. IN ITA NO.100/KOL/2014 (AY : 2003-04 ) IS AS UNDER :- 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE CIT(A) HAS ERRED IN DELETING DISALLOWANCE MADE BY THE A.O IN T HE RESPECT OF 'LOSS ON DAMAGED TEA' WITHOUT PROPERLY APPRECIATING THE RATIONALE BEHIND SUCH DISALLOWANCE AS STATED IN THE ASSESSMEN T ORDER. THIS GROUND OF REVENUE RELATES TO DISALLOWANCE OF C LAIM TO REDUCE THE CLOSING STOCK BY 20371 KGS. CLAIMING TO BE DAMAGED IN TRANSIT. THE AO OBSERVED THAT IN THE IMMEDIATE PRECEDING YEAR THE D AMAGE DURING TRANSIT WAS 10240 AND THERE IS AN INCREASE IN SUCH DAMAGE B Y 100% IN THE RELEVANT PRECEDING YEAR. THE AO LOOKED FOR SATISFAC TORY EVIDENCE AND ITA NOS.110-113/14 11 HELD THAT SINCE THERE IS NO EVIDENCE SUCH HUGE AMO UNT OF DAMAGE CANNOT BE ALLOWED WHEN THE INCREASE IN THE TURNOVER IS ONL Y MARGINAL. 12. ON THIS ASPECT THE LD. CIT(A) OBSERVED THAT IN TEA INDUSTRY THE EXTENT OF DAMAGE DOES NOT DEPEND UPON THE QUANTIFIC ATION OF TURNOVER BUT ON SOME OTHER FACTORS SURROUNDING THE PROCESS OF TR ANSIT. LD. CIT(A) HELD THAT IT IS NOT POSSIBLE TO CORRELATE THE DAMAGE QUA NTITY OF TEA AND PROFITS BECAUSE THE ASSESSEE WILL BE RECEIVING THE INSURANC E CLAIM. IT IS ARGUED BY LD. AR THAT WHEN THE ASSESSEE MAKES INSURANCE CL AIM THE INSURANCE COMPANY WILL BE SCRUTINIZE ALL THE FACTORS GOING IN DEEP CLAIM MADE BY THE ASSESSEE AND AS A MATTER OF FACT THE AO HAS NOT CO NSIDERED THIS FACT AT ALL. WHILE CONSIDERING ALL THESE ASPECTS LD. CIT(A) FOUND THAT ADDING A SUM OF RS.2 LAKHS IS PURELY BASED ON GUESS AND THERE IS NO EVIDENCE EITHER TO SUPPORT THE ESTIMATE OF THE AO ALSO. 13. ON A CAREFUL CONSIDERATION OF THE REASONING GIV EN BY THE AO AND LD. CIT(A) WE FIND THAT THE LD. CIT(A) IS RIGHT IN HOLD ING THAT THE DAMAGE IN TRANSIT IS NOTHING TO DO WITH THE INCREASE OR DECR EASE IN THE TURNOVER AND AT THE SAME TIME IT MAY NOT HAVE ANY IMPACT ON THE PROFIT EARNING OF THE ASSESSEE. LD. AO PROCEEDED ON SUSPICION AND IT IS S ETTLED PRINCIPLE OF LAW THAT SUSPICION HOWEVER GRAVE IT CANNOT TAKE THE PLACE OF REAL EVIDENCE OF PROOF. IN THESE CIRCUMSTANCES WE FIND THAT THE APP ROACH OF LD. CIT(A) IS QUITE REASONABLE IN HOLDING THE ADDITION OF RS.2 LA KH MADE BY THE AO ON PRESUMPTION BASIS. 14. VIEWING FROM MANY ANGLES WE FIND THAT THE FIND ING RECORDED IN THE IMPUGNED ORDERS WAS UNASSAILABLE AND THEY DO NOT SU FFER ANY ILLEGALITY OR ITA NOS.110-113/14 12 IRREGULARITY. WE THEREFORE INCLINED TO UPHOLD THEM AND CONSEQUENTLY PROCEED TO DISMISS ALL THE GROUNDS PLEADED BY THE R EVENUE AS A RESULT OF WHICH ALL THESE FOR APPEALS STANDS DISMISSED. 15. IN THE RESULT ALL APPEALS OF REVENUE ARE DISMI SSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19/ 10/2016. SD/ - (WASEEM AHMED) SD/ - (NARASIMHA CHARY) $ / MEMBER ACCOUNTANT $ / JUDICIAL MEMBER /KOLKATA ; $% DATED 19/10/2016 & ()* /PRAKASH MISHRA . / PS %&' (' / COPY OF THE ORDER FORWARDED TO : / BY ORDER / ( ASSTT. REGISTRAR) / ITAT 1. / THE APPELLANT-DCIT CC-XXV KOLKATA 2. / THE RESPONDENT-M/S WARREN TEA LTD. 3. 4 ( ) / THE CIT(A) KOLKATA. 4. 4 / CIT 5. 56 7 8 8 / DR ITAT KOLKATA 6. 7 9 / GUARD FILE. 5 //TRUE COPY//