Dcit Kottayam v. M S Oil Palm India Ltd Kottayam

In The Income Tax Appellate Tribunal Cochin Bench Cochin Before Shri Abraham P George Am Shri George George K Jm Ita No 111 Coch 201 4 Asst Year 200 7 200 8 Ita No 112 Coch 201 4 Asst Year 2008 2009 Ita No 113 Coch 201 4 Asst Year 2009 2010 Ita No 390 Coch 201 4 Asst Year 2010 2011 Ita No 223 Coch 201 6 Asst Year 2012 2013 The Dy Commissioner Of Income Tax Kottayam Vs M S Oil Palam India Limited Xii 354 Old Star Theatre Road P B No 1715 Kottayam 6865 039 Pan Aaaco 369 5 C Appellant Respondent Appellant By Sri A Dhanaraj Sr Dr Respondent By Sri Raja Kannan Date Of Hearing 2 3 1 1 2017 Date Of Pronouncement 01 12 2017 O R D E R Per George George K Jm These Five Appeals At The Instance Of The Revenue Are Directed Against Various Order S Of Cit A The Relevant Assessment Years Are 2007 2008 2008 2009 2009 2010 2010 2011 And 2012 2013 Since Common Issue Is Raised In These Appeals They Are Heard Together And Are Being Disposed Of By This Consolidated Order 2 The Solitary Issue Argued By The Learned Departmental Representative Is Whether The Cit A Is Justified In Holding That The Agricultural Income Tax Paid By The Assessee During Ita No 111 Coch 201 4 Ors M S Oil Palm India Limited 2 The Assessment Years Concerned Can Be Deducted U S 43 B Of The Income Tax Act 3 Briefly Stated The Facts Of The Case Are As Follow 3 1 The Assessee Company Is A Joint Venture Of Government Of Kerala And Government Of India It Is Engaged In Cultivation Of Oil Palm And Manufacture Of Palm Oil For The Ass Essment Years 2007 2008 2008 2009 2009 2010 2010 2011 And 2012 2013 The Assessee Had Claimed Deduction Under The Income Tax Act The Agricultural Income Tax Paid During The Concerned Assessment Years According To The Assessee Since The Agricultural Income Tax Has Been Paid During The Respective Assessment Years Same Can Be Claimed As A Deduction Under The Income Tax Act On Payment Basis U S 43 B A Of The Act The Assessing Officer However Negatived The Claim Of The Assessee The Assessing Officer Held That Since Agricultural Income Is Exempt U S 10 1 Of The Income Tax Act The Agricultural Income Tax Paid On The Exempted Income Cannot Be Allowed As A Deduction Further The A O Held That Section 43 B A Will Not Have Application Since Agricultura L Income Tax Is Not A Tax Otherwise Allowable Under The Income Tax Act For Ready Reference The Reasoning Of The A O In Denying The Benefit Of Deduction Of Agricultural Income Tax Paid By Assessee For The Assessment Year 2012 2013 Reads As Follow However In The Computation Statement An Amount Of Rs 92 00 000 Has Been Deducted Towards Ita No 111 Coch 201 4 Ors M S Oil Palm India Limited 3 Agricultural Income Tax Paid The Claim Does Not Appear To Be In Order For The Following Reasons 1 Firstly Agricultural Income Tax Is A Tax On Agricultural Income And Is Paid Out Of Agricultural Income Earned Once The Agricultural Income Itself Is Exempted From The Purview Of Central Income Tax By Virtue Of Section 10 1 Of The Act There Appears No Reason Why A Payment Made Out Of The Agricultural Income Already Exempt Should Again Be Deducted From The Central Income 2 Assessees Claim Is Essentially Based On Clause A Of Section 43 B Which States That Any Sum Payable By Way Of Tax Under Any Law Can Be Allowed On Actual Payment Therefore Assessee F Eels That The Tax Paid Under Ait Would Qualify As A Deduction Provided That The Amount Is Actually Paid The Argument Is Patently Incorrect It Is To Be Noted That Section 43 B Starts With The Following Clause 43 B Notwithstanding Anything Contained In A Ny Other Provision Of This Act A Deduction Otherwise Allowable Under This Act In Respect Of A Any Sum Payable By The Assessee By Way Of Tax Duty Cess Or Fee By Whatever Name Called Under Any Law For The Time Being In Force 8 Here It Can Be S Een That Section 43 B Does Not Provide For Deduction Of Any Tax Or Duty On Actual Payment Only Those Deductions Otherwise Allowable Under The Income Tax Act Come Within The Purview Of Section 43 B That Is To Say Section 43 B Is Only Intended To Limit The Allowability Of Certain Deductions Otherwise Allowable To Be Effect That These Deductions Can Be Allowed Only On Actual Payment 9 Admittedly There Is No Clause In The It Act Which Provides That Ait Is An Allowable Business Ita No 111 Coch 201 4 Ors M S Oil Palm India Limited 4 Expense That Is Ait Doe S Not Qualify As A Deduction Otherwise Allowable Under The Act That Is To Say Ait Clearly Falls Outside The Purview Of Section 43 B In The Light Of Above Discussion I Am Not In A Position To Entertain The Claim Of Deduction Towards Ait Paid Amounting To Rs 92 00 000 3 2 Aggrieved By The Orders Of The A O Denying The Deduction For Agricultural Income Tax Paid The Assessee Filed Appeals Before The First Appellate Authority The Cit A By Placing Reliance On The Order S Of The Tribunal In Ita Nos 649 650 651 Coch 200 5 Dated 30 11 2007 Asst Years 1997 98 1998 99 And 1999 2000 In Assessees Own Case Directed The Assessing Officer To Allow The Agricultural Income Tax Paid As An Allowable Expense 3 3 The Revenue Being Aggrieved By The Order O F The Cit A Has Filed The Present Appeals Before The Tribunal 3 4 The Learned Departmental Representative Supported The Findings Of The Assessing Officer It Was Further Submitted That The Tribunal Order In Ita Nos 649 650 651 Coch 2005 Dated 30 11 2017 In Assessees Own Cas Relied On By The Cit A Does Not Have Application In The Instant Case It Was Submitted By The Learned Dr That The Itat In Ita Nos 649 650 651 Coch 2005 Had Only Remitted Back The Issue To The File Of The Assessing Officer To Re Compute The Income Based On The Order Of The Cit A 3 5 The Learned Ar On The Other Hand Relied On The Findings And Conclusions Of The Cit A Ita No 111 Coch 201 4 Ors M S Oil Palm India Limited 5 4 We Have Heard The Rival Submissions And Perused The Material On Record Admittedly The Agricultural Income Is Exempt From Central Income Tax By Virtue Of Provisions Of Section 10 1 Of The Income Tax Act When Agricultural Income Itself Is Exempt From The Purview Of Central Income Tax There Is No Reason Why A Payment Made Out Of Agricultural Income Al Ready Exempt Should Be Allowed As A Deduction In Computing The Business Income Under The Central Income Tax Act Section 43 B States That A Deduction Otherwise Allowable Under This Act Shall Alone Be Allowed As A Deduction U S 43 B A Since The Agricultu Ral Income Tax Is Not Tax Otherwise Allowable Under The Income Tax Act Payment Of Agricultural Income Tax In The Respective Assessment Years On Payment Basis Cannot Be Allowed As A Deduction U S 43 B A 4 1 The Order Of The Itat In Ita Nos 649 650 651 Coch 2005 Dated 30 11 2007 In Assessees Own Case Does Not Decide The Issue In Favour Of The Assessee On The Contrary The Tribunal Has Only Remitted Back The Issue To The Files Of The Assessing Officer To Re Compute The Income The Relevant Finding Of The Tribunal In Assessees Own Case For Asst Years 1997 98 1998 99 And 1999 2000 Reads As Follow We Have Heard The Learned Sr Dr For The Revenue On Perusal Of The Order Of The Cit A It Is Seen That The Cit A Has Restored The Matter To The Fil E Of The A O For Re Consideration With Certain Directions As Per Rule 7 Of The I T Rules We Fail To Understand Why The Revenue Is Aggrieved Against The Order Of The Cit A As The Directions Given By The Cit A Are Not Ita No 111 Coch 201 4 Ors M S Oil Palm India Limited 6 Specific Or In The Nature Of Any Fin Ding On Any Issue The Entire Matter Is Left Open And Restored To The Ao In Our Opinion The Revenue Should Not Have Any Grievance We Find No Merit In The Appeal Filed By The Revenue We Therefore Confirm The Orders Of The Cit A 4 2 The Dr As Well As The Ar Was Unable To Enlighten Us What Has Happened Subsequent To The Remand By The Tribunal In Assessees Own Case In Assessment Years 1997 98 1998 99 And 1999 2000 For Our Reasoning In Aforesaid Paragraph Para 4 And 4 1 We Hold That The Agricultu Ral Income Being Exempt From Taxation Under The Central Income Tax The Agricultural Income Tax Paid By The Assessee Cannot Be Allowed As A Deduction Under The Central Income Tax Therefore The Order Of The Cit A On This Issue Is Reversed It Is Ordered Accordingly 5 In The Result The Appeal S Filed By The Revenue Are Partly Allowed As Indicated Above Order Pronounced On This 01 St Day Of Decembe R 2017 Sd Sd Abraham P George George George K Accountant Member Judicial Member Cochin Dated 0 1 St December 2017 Devdas Ita No 111 Coch 201 4 Ors M S Oil Palm India Limited 7 Copy Of The Order Forwarded To True Copy By Order Asstt Registrar Itat Cochin 1 The Appellant 2 The Respondent 3 The Cit Kozhikode 4 Cit A Kozhikode 5 Dr Itat Cochin 6 Guard File