DCIT, Circle - 4, Kolkata, Kolkata v. M/s. The Chamong Tea Co. Ltd., Kolkata

ITA 1441/KOL/2010 | 2002-2003
Pronouncement Date: 28-07-2011

Appeal Details

RSA Number 144123514 RSA 2010
Assessee PAN AAACT9153C
Bench Kolkata
Appeal Number ITA 1441/KOL/2010
Duration Of Justice 1 year(s) 15 day(s)
Appellant DCIT, Circle - 4, Kolkata, Kolkata
Respondent M/s. The Chamong Tea Co. Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 28-07-2011
Assessment Year 2002-2003
Appeal Filed On 13-07-2010
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ . . . .!'# !$ ] [BEFORE HONBLE SHRI B. R. MITTAL JM & HO NBLE SHRI SHRI S.V. MEHROTRA AM] % / I.T.A. NO.1441/KOL/2010 &' ()/ ASSESSMENT YEAR : 2002-03 DEPUTY COMMISSIONER -VS.- M/S. THE CHAMONG TEA CO. LTD OF INCOME TAX CIRCLE-4 PAN: AAACT 9153C KOLKATA [ + /APPELLANT] -.+ / RESPONDENT] /' 0 % / C.O NO.123/KOL/2010 [ ARISING OUT OF ITA NO.1441/KOL/2010 ] &' ()/ ASSESSMENT YEAR : 2002-03 M/S. THE CHAMONG TEA CO. LTD -VS- DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-4 KO LKATA [ ASSESSEE ] [ DEPARTMENT ] FOR THE DEPARTME NT : SRI P.S DUTTA LD.DR FOR THE ASSESSEE : SRI R. SALARPURIA LD.AR !1 / O R D E R . . . SHRI B.R. MITTAL JM THE DEPARTMENT HAS FILED THIS APPEAL FOR THE ASSESS MENT YEAR 2002-03 AGAINST ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) DATED 30-10-2009 DISPUTING THE DELETION OF DISALLOWANCES MADE BY TH E ASSESSING OFFICER. 2. THE ASSESSEE HAS FILED CROSS OBJECTION [ NO.123/ KOL/2010 ] ON FOLLOWING EFFECTIVE GROUND:- 1. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE ASSESSING OFFICER WAS WHOLLY UNJUSTIFIED IN DISALL OWING A SUM ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 2 OF RS.1 97 020/- AND RS.40/- U/S. 14A AND THE CIT( A) WAS WHOLLY UNJUSTIFIED IN SETTING ASIDE THE MATTER TO THE ASSESSING OFFICER TO MAKE THE DISALLOWANCE AS PER RULE 8D. T HE ACTION OF THE ASSESSING OFFICER AND THE CIT(A) IS WHOLLY UNJ USTIFIED BAD AND ILLEGAL. THE DISALLOWANCE MADE BY THE AO & CIT (A) WAS HIGHLY EXCESSIVE AND WHOLLY UNREASONABLE. 3. FIRST WE TAKE UP THE APPEAL FILED BY THE DEPAR TMENT [ITA NO.1441/KOL/2010] 4. GROUND NO.1 TAKEN BY THE DEPARTMENT IS AS UNDER :- THAT LD.CIT(A) HAS ERRED IN LAW AS WELL AS IN FACT S IN DELETING THE ADDITION OF RS.7 06 500/- BEING DISALLOWANCE O F EXPENDITURE FOR PREPARATION OF MAPS CLAIMED BY TH E ASSESSEE WITHOUT CONSIDERING THAT THE BENEFIT OF INCURRING SUCH EXPENDITURE IS ENDURING IN NATURE AND IS NOT A RECU RRING EXPENDITURE. 5. THE ASSESSING OFFICER HAS STATED THAT THE ASSESS EE DEBITED AN AMOUNT OF RS.7 06 500/- UNDER MISCELLANEOUS EXPENSES ON ACCOU NT OF PAYMENT FOR PREPARATION OF MAPS. THE ASSESSING OFFICER HAS STATED THAT THE SAID EXPENSES HAVE BEEN INCURRED ON ACCOUNT OF EXTENSIVE SURVEY OF ENTIRE TEA AREA INCLUDING DETAILED MAPPING OF EVERY CORNER OF THE PLANTATION AND OTHER BUILDINGS. THUS THE CONTENTION OF THE ASSESSEE THAT THIS SURVEY HAS NOT FORMED ANY ASSET IS NOT ACCEPTABLE IN VIEW OF THE INHERENT ADVANTAGE ASSOC IATED WITH THE AVAILABILITY OF SUCH A DETAILED MAP. THE ASSESSING OFFICER HAS FURT HER STATED THAT THE ASSESSEE SUBMITTED THAT THIS EXERCISE HAS BEEN UNDERTAKEN A FTER ALMOST 15 YEARS. THEREFORE THE ASSESSING OFFICER HAS STATED THAT THE BENEFIT DERIVED IS ENDURING IN NATURE AND ADDED BACK THIS AMOUNT OF RS.7 06 500/- TO THE TOTAL INCOME TREATING THE SAME AS CAPITAL IN NATURE. 6. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFOR E THE 1 ST APPELLATE AUTHORITY AND MADE ITS SUBMISSIONS AS UNDER:- DURING THE YEAR YOUR PETITIONER PAID A SUM OF 706 500/- TO M/S. G.S BORPUZARY & SONS GOVT. APPROVED LAND SURV EYORS & VALUERS OF PANCHAVATI JORHAT (ASSAM) TOWARDS PAYME NT OF THEIR BILL NO.4004 DATED 02/04/2001 FOR RS.373 500/- AND BILL NO.44006 ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 3 DATED 24/07/2001 FOR RS.333 000/- FOR PREPARATION O F TEA GARDEN WALL MAP PHASE WISE ON THE GRANTS & PATTA LANDS AFT ER L.C EXCESS. XEROX COPIES OF BILLS ARE ANNEXED HERE TO M ARKED WITH LETTER A FOR YOUR KIND PERUSAL AND READY REFEREN CE. YOUR PETITIONER HAS NEVER SUBMITTED THAT THIS EXERCISE H AS BEEN TAKEN AFTER 15 YEARS AS CLAIMED BY THE A.O IN PARA 1 OF PAGE 2 OF THE ASSESSMENT ORDER. THIS TYPE OF EXPENSES ARE COMPLET ELY OF REVENUE NATURE AS PREPARING OF MAPS DOES NOT FORM IN FIXE D ASSETS AS CLAIMED BY THE A.O THE AFORESAID ADDITION AND DISALLOWANCE HAS BEEN MA DE SIMPLY ON SUSPICIONS AND SURMISES AND WITHOUT BRINI NG ANY EVIDENCE ON RECORD FOR JUSTIFYING SUCH DISALLOWANCE . AS FAR AS THE CASE OF YOUR APPELLANT IS CONCERNED AS AFORESAID PA YMENT IS IN REVENUE IN NATURE NOT AS CAPITAL NATURE AS CLAIM ED BY THE LD.A.O. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CONSIDERED THE ABOVE SUBMISSIONS OF THE ASSESSEE AND DIRECTED THE ASSESS ING OFFICER TO DELETE THE ADDITION BY OBSERVING AS UNDER :- I HAD CAREFULLY CONSIDERED THE VARIOUS JUDGMENTS UPON WHICH THE ASSESSEE RELIED AND ON THE GIVEN FACTS A ND CIRCUMSTANCES OF THE CASE. I DONT FIND ANY JUSTIFI CATION IN MAKING THE ADDITION OF RS.706 500/- ON ACCOUNT PREPARATIO N OF MAPS BY THE AO AS CAPITAL IN NATURE. AS THE FEES PAID TO A PPROVED VALUERS LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE AND DOES NOT FORM ANY ASSETS HENCE IT IS REVENUE IN NATURE. THE AO IS ACCORDINGLY DIRECTED TO DELETE TH E ADDITION/DISALLOWANCE. THE GROUND IS ALLOWED. 8. HENCE DEPARTMENT IS IN APPEAL BEFORE THE TRIBU NAL. 9. ON BEHALF OF THE DEPARTMENT THE LEARNED DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT THERE IS AN ENDURING BENEFIT TO THE ASSESSEE IN RESPECT OF SURVEY AND PREPARATION OF MAPS PREPARED FOR ENTIRE TEA GARDEN. HENCE THE EXPENDITURE IS CAPITAL IN NATURE. HE SUBMITTED THAT THE ASSESSING OFFICER IS JUSTIFIED TO ADD IT TO THE INCOME OF THE ASSESSEE. 10. ON THE OTHER HAND THE LEARNED AUTHORISED REPRE SENTATIVE FOR THE ASSESSEE REFERRED TO PAGE NOS. 7-8 OF THE ASSESSEES PAPER B OOK AND SUBMITTED THAT THE ASSESSEE GOT PREPARED MAPS OF TEA GARDEN ON THE GRA NTS & PATTA LANDS. IT WAS NEVER ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 4 SUBMITTED THAT THIS EXERCISE HAS BEEN TAKEN AFTER 1 5 YEARS. HE SUBMITTED THAT THE AMOUNT WAS PAID TOWARDS BILL RAISED BY GOVT. APPR OVED LAND SURVEYOR & VALUERS OF PANCHAVATI JORHAT(ASSAM). THUS THE PAY MENT OF THEIR BILLS AND THE EXPENSES ARE REVENUE IN NATURE AS PREPARATION OF M APS DOES NOT FORM IN FIXED ASSETS. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS OF THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE PERUS ED THE COPIES OF PAGE NOS. 7-8 OF THE ASSESSEES PAPER BOOK. WE AGREE THAT THE SAID PAYMENT AGGREGATING TO RS.7 06 500/- PAID BY THE ASSESSEE IS WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF ITS BUSINESS AND IT DOES NOT FORM/CREATE ANY ASSETS. THE SAID EXPENDITURE IS REVENUE IN NATURE. THEREFORE WE UPHOLD THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME- TAX (APPEALS) BY REJECTING THE GROUND NO.1 TAKEN BY THE DEPARTMENT. THIS GROUND OF THE REVENUES APPEAL IS DISMISSED. 12. GROUND NO.2 OF REVENUES APPEAL IS AS UNDER:- THAT LD.CIT(A) HAS ERRED IN LAW AS WELL AS IN FAC TS IN DELETING THE ADDITION OF RS.6 01 885/- BEING DISALL OWANCE OF EXPENDITURE DEBITED TO THE P&L ACCOUNT TOWARDS PAYM ENT OF ARREAR WAGES UNDER THE HEAD PRIOR PERIOD EXPENSES RELYING ON A CIRCULAR DATED 22-08-2001 AND OPINED THAT THE LIABI LITY WAS CRYSTALLISED DURING THE INSTANT FINANCIAL YEAR I.E . F.Y 2001-02 RELEVANT TO A.Y 2002-03. HOWEVER THE A.O DISALLOWE D THE EXPENDITURE ON THE GROUND THAT THE LIABILITY DID N OT ARISE DURING THE INSTANT F.Y RELYING ON THE AGREEMENT THAT THE L IABILITY CRYSTALLISED ON 28.03.2001. 13. THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE DEBITED AN AMOUNT OF RS.6 01 885/- TOWARDS PAYMENT OF ARREAR WAGES UNDE R THE HEAD PRIOR PERIOD EXPENSES. THE ASSESSING OFFICER HAS STATED THAT TH E ASSESSEE FILED A COPY OF AGREEMENT WITH THE UNION TO SUBSTANTIATE THAT THE S AID LIABILITY HAD CRYSTALLIZED IN THE INSTANT YEAR. HOWEVER ON PERUSAL OF THE AGRE EMENT THE ASSESSING OFFICER HAS STATED THAT IT IS SEEN THAT THE SAID LIABILITY W AS CRYSTALLIZED ON 28.3.2001. THUS ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 5 THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF R S.6 01 885/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 14. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFO RE THE 1 ST APPELLATE AUTHORITY 15. BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) ON BEHALF OF THE ASSESSEE A COPY OF MEMORANDUM OF SETTLEMENT DATED 22/08/2001 BETWEEN ALL MEMBER TEA ESTATES OF TAIAB WAS FILED. IN THIS REGA RD CIRCULAR NO.73 DATED 22/08/2001 OF TEA ASSOCIATION OF INDIA ASSAM BRAN CH JORHAT RECEIVED BY THE ASSESSEE ON 19/09/2001 FOR REVISION OF PAY SCALES F OR SUB-STAFF EFFECTIVE FROM APRIL 2000 AND ON THE BASIS OF THE SAME THE ASSESS EE HAD MADE THE PAYMENT. THE ASSESSEE HAS ALSO FILED A COPY OF SAID MEMORANDUM O F UNDERSTANDING BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS).. 16. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE HAS DELETED THE S AID ADDITION. RELEVANT PART OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)S ORDER IS AS UNDER:- I HAVE GONE THROUGH THE CIRCULAR NO.73 DATED 22/0 8/2001 OF THE TEA ASSOCIATION OF INDIA FILED BY THE ASSES SEE ALONG WITH THE WRITTEN SUBMISSION FOR THE REVISION OF PAY SCALE F OR SUB-STAFF EFFECTIVE FROM APRIL 2000 AND ON THE BASIS OF THE SAID MEMORANDUM OF UNDERSTANDING ASSESSEE HAD MADE THE P AYMENTS OF ARREAR WAGES. THEREFORE I DONT AGREE WITH THE AO THAT THE LIABILITY CRYSTALLIZED ON 28.03.2001 WHERE AS THE SAME WAS CRYSTALLIZED ON 22/08/2001 WELL WITHIN THE CURRENT FINANCIAL YEAR. I HAD ALSO CAREFULLY CONSIDERED THE VARIOUS JUDGMENTS REFERRED BY THE ASSESSEE AND ACCORDINGLY DONT FIND ANY MERIT W HILE DISALLOWING A SUM OF RS.601 885/- ON ACCOUNT OF AR REAR WAGES AND THEREFORE DIRECT THE AO TO DELETE THE ADDITION/ DISALLOWANCE. 17. HENCE THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 18. AT THE TIME OF HEARING BEFORE US THE LEARNED DE PARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF THE ASSESSING OFFICER. O N THE OTHER HAND THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS REIT ERATED THE SAME SUBMISSIONS AS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). HE FURTHER ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 6 REFERRED TO PAGES 9-17 OF THE PAPER BOOK WHICH AR E THE COPIES OF CIRCULAR NO.73 IN RESPECT OF REVISION OF PAY SCALES FOR SUB-STAFF DATED 22-8-2001. 19. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS OF LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE PERUS ED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT PAGE NOS. 9-17 OF THE ASSE SSEES PAPER BOOK REGARDING CIRCULAR NO.73 DATED 22-08-2001 OF REVISION OF PAY SCALES OF SUB-STAFF. WE AGREE WITH THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) THAT THE LIABILITY FOR PAYMENT OF EARLIER PERIOD WAGES HAS BEEN CRYSTALLIZ ED ON 22-08-2001 AND NOT ON 28.03.2001 AS OBSERVED BY THE ASSESSING OFFICER. TH EREFORE WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) BY REJECTING GROUND NO.2 TAKEN BY THE DEPARTMENT. THIS GROUND OF THE REVENUE S APPEAL IS DISMISSED. 20. GROUND NO.3 OF THE REVENUES APPEAL IS AS UNDER :- THAT LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FAC TS IN DELETING THE ADDITION OF RS.10 94 583/- BEING DISAL LOWANCE OF EXPENDITURE ON ACCOUNT OF CULTIVATION EXPENSES SIN CE LD.CIT(A) TREATED THE EXPENDITURE AS REVENUE EXPENDITURE WIT HOUT CONSIDERING THE DECISION OF HONBLE KOLKATA HIGH CO URT PRONOUNCED IN THE CASE OF TASATI TEA CO. LTD [262 I TR 388] 21. THE ASSESSING OFFICER HAS STATED THAT THE ASSES SEE FILED THE FOLLOWING DETAILS OF EXPENSES AGGREGATING TO RS.10 94 583/- :- SHADE TREES & CUTTING RS. 57 263/- UPROOTING JUNGLE PLANTS RS.2 99 795/- IRRIGATION RS.7 37 525/ - RS.10 94 583/- 21.1 THE ASSESSING OFFICER HAS FURTHER STATED THAT THE ASSESSEE HAS FAILED TO FILE ANY EVIDENCE TO SUBSTANTIATE THAT THERE HAS BEEN NO EXTENSION PLANTING IN THE INSTANT ASSESSMENT YEAR. THE ASSESSING OFFICER RELYING ON THE DECISION OF THE HONBLE KOLKATA HIGH COURT IN THE CASE OF TASATI TEA CO. LT D REPORTED IN 262 ITR 388 HELD THAT THESE EXPENSES ARE ADDED BACK TO THE COMPOSITE INCO ME TREATING THE SAME AS CAPITAL IN NATURE. ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 7 22. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEF ORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 23. ON BEHALF OF THE ASSESSEE FOLLOWING SUBMISSION S WERE MADE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS):- SHADE TREES CUTTING RS.57 263: YOUR PETITIONER INCURRED THE EXPENSES TOWARDS CUTTING OF SHADE TREE WHOLLY AND E XCLUSIVELY FOR THE BUSINESS OF THE COMPANY AS YOUR PETITIONER I S ENGAGED IN GROWING AND MANUFACTURING OF TEA AND IT NECESSARY TO CUT THE UNNECESSARY TREES GROWN IN BETWEEN THE TEA BUSHES. DETAIL SHEET FOR THE SAID EXPENSES IS ANNEXED HERETO AND MARKED WITH LETTER E. UPROOTING JUNGLE PLANTS : RS.299 795/- : A DETAIL SHEET OF EXPENSES INCURRED TOWARDS UPROOTING THE JUNGLE PLAN TS IS ANNEXED HERETO AND MARKED WITH THE LETTER F. AND IN THIS RESPECT YOUR PETITIONER STATES THAT ENTIRE EXPENSES INCURRED TO WARDS UPROOTING THE JUNGLE WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE COMPANY. IRRIGATION RS.737 525/- : A DETAIL SHEET OF EXPENSES INCURRED TOWARDS IRRIGATION IS ANNEXED HERETO AND MARKED WIT H LETTER G AND IN THIS REGARD YOUR APPELLANT STATES THAT EXPEN SES INCURRED TOWARDS IRRIGATION IS WHOLLY AND EXCLUSIVELY FOR TH E BUSINESS OF THE COMPANY. ALL THE AFORESAID ADDITION AND DISALLOWANCES DURING THE YEAR MADE BY THE LD. A.O TREATING THE SAME AS CAPITAL IN NATURE WHERE AS FROM THE DETAILS OF THE EXPENSES YOUR GOOD SELF WIL L FIND THAT EXPENSES INCURRED BY PETITIONER TOWARDS LABOR WAGE S AND COST OF HIGH SPEED DIESEL OIL AND THE SAME ARE IN REVENUE IN NATURE NOT IN CAPITAL IN NATURE AS CLAIMED BY THE LD. A.O. THEREF ORE THE AFORESAID ADDITION AND/OR DISALLOWANCE OUT OF THE CULTIVATION EXPENSES ARE LIABLE TO BE DELETED. 24. LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) C ONSIDERED THE ABOVE SUBMISSIONS OF THE ASSESSEE AND HELD THAT THE SAI D EXPENSES ARE NOT CAPITAL IN NATURE BUT ARE TO BE ALLOWED IN REVENUE IN NATURE . RELEVANT PART OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)S ORDER IS AS UNDER :- ON PERUSING THE SUBMISSIONS OF THE ASSESSEE AND ALSO GOING THROUGH THE DETAILS OF THE EXPENSES FILED BY THE ASSESSEE I FIND THAT EXPENSES INCURRED BY THE ASSESSEE TOWARDS PAY MENT OF WAGES COST OF HIGH SPEED DIESEL FOR SHADE TREE CUTTING U PROOTING JUNGLE AND ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 8 IRRIGATION WHOLLY AND EXCLUSIVELY FOR THE BUSINES S OF THE ASSESSEE AND DONT AGREE WITH A.O THAT SUCH EXPENSES ARE CA PITAL IN NATURE. HENCE DISALLOWANCE OF RS.1 094 583/- ON ACCOUNT OF CULTIVATION EXPENSES IS ALLOWED AS EXPENSES OF REVENUE IN NATUR E AND THE AO IS ACCORDINGLY DIRECTED TO DELETE SUCH DISALLOWANCE/AD DITION. 25. HENCE THE DEPARTMENT IS IN APPEAL BEFORE THE TR IBUNAL. 26. DURING THE COURSE OF HEARING BEFORE US THE LEA RNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE ASSE SSING OFFICER AND SUBMITTED THAT THE SAID EXPENSES ARE CAPITAL IN NATURE. ON THE OTH ER HAND THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THAT THE EXPENSES WERE INCURRED IN NORMAL COURSE OF ITS BUSINESS ACTIVITIES TO REMOVE THE DEAD PLANTS/TREES. THERE WAS NO ADDITION OF PLANT/TREE IN THE ASSESSMENT YEAR UN DER CONSIDERATION AND THE EXPENSES WERE INCURRED MAINLY TO REPLANT OF THE TE A GARDEN. HE SUBMITTED THAT BASICALLY THE EXPENSES WERE INCURRED ON SHADE TREE S CUTTING UPROOTING JUNGLE PLANTS AND IRRIGATION AND REFERRED TO PAGE NO. 18- 22 OF THE PAPER BOOK WHEREIN DETAILS OF EXPENSES INCURRED ON SHADE TREES CUTTIN G UPGRADING JUNGLE PLANTS AND IRRIGATION ARE GIVEN. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO PERU SED THE DETAILS GIVEN AT PAGE NOS.18-22 OF THE ASSESSEES PAPER BOOK. WE AGREE WI TH THE LEARNED AUTHORISED REPRESENTATIVE THAT THE SAID EXPENSES HAVE BEEN INC URRED MAINLY ON WAGES. THERE IS NO EVIDENCE ON RECORD THAT THE SAID EXPENSES HAV E BEEN INCURRED TO PLANT NEW PLANTS/TREES. WE AGREE WITH THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSEE HAS INCURRED THE EXPENSES TO REMOVE THE DEAD PLANT S/TREES WHICH DIED IN THE NORMAL COURSE. THESE ARE NORMAL ACTIVITIES IN DAY TO DAY BUSINESS OF TEA GARDENS. WE ALSO OBSERVE THE DECISION OF THE HONBLE CALCUT TA HIGH COURT AS RELIED ON BY THE ASSESSING OFFICER IN THE CASE OF TASATI TEA CO. LTD (SUPRA) SUPPORTS THE STAND TAKEN BY THE ASSESSEE THAT THESE EXPENSES ARE REVE NUE IN NATURE AND NOT ON CAPITAL ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 9 ACCOUNT. HENCE WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) BY REJECTING GROUND NO.3 OF REVENUES APP EAL. THIS GROUND OF THE REVENUE IS DISMISSED. 28. GROUND NO.4 OF REVENUES APPEAL IS AS UNDER :- THAT LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FAC TS IN DELETING THE ADDITION OF RS.12 60 320/- BEING CESS ON GREEN LEAF ONLY IN VIEW OF THE DECISION OF HONBLE CALCUTTA HIGH CO URT PRONOUNCED IN THE CASE OF AFT INDUSTRIES LTD [270 ITR 167] WIT HOUT CONSIDERING THAT THE REVENUE HAS FILED SLP AGAINST THAT ORDER AND FINALITY IN THIS CASE HAS NOT ARRIVED YET. 29. WE OBSERVE THAT THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) HAS DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFI CER BY FOLLOWING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF A FT INDUSTRIES LTD REPORTED IN [(2004) 270 ITR 167]. HENCE THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). THER EFORE WE UPHOLD THE SAME BY REJECTING GROUND NO.4 TAKEN BY THE DEPARTMENT. T HIS GROUND OF THE DEPARTMENT IS DISMISSED. 30. GROUND NO.5 OF THE REVENUES APPEAL IS AS UNDER :- THAT LD.CIT(A) HAS ERRED IN LAW AS WELL AS IN FAC TS IN DELETING THE ADDITION OF RS.37 090/- BEING DISALLOWANCE OF EXPENDITURE TOWARDS POLLUTION CONTROL BOARD FEES SINCE LD. CIT (A) TREATED THE EXPENDITURE AS REVENUE EXPENDITURE WITHOUT CONSI DERING THAT THE BENEFIT OF INCURRING SUCH EXPENDITURE IS ENDURING IN NATURE AND IS NOT A RECURRING EXPENDITURE. 31. THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE CLAIMED AN AMOUNT OF RS.10 945/- AND RS.26 145/- ON ACCOUNT OF POLLUTION CONTROL BOARD FEE AT DUFLATING TEA ESTATE & TITABAR TEA FACTORY RESPECT IVELY AS DEDUCTION. HE ALSO STATED THAT SAID FEE IS PAYABLE FOR A PERIOD OF THR EE YEARS AND ACCORDINGLY IS CAPITAL IN NATURE ON ACCOUNT OF ENDURING BENEFIT. THUS THE ASSESSING OFFICER HAS DISALLOWED THE SAID AMOUNT OF RS.37 090/- AND ADD ED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 10 32. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFO RE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 33. ON BEHALF OF THE ASSEEE IT WAS CONTENDED THAT THE ASSESSEE PAID FEE FOR WATER AND AIR POLLUTION AND RENEWAL OF WATER CONSEN T FOR THE YEAR 2001-02 TO THE POLLUTION CONTROL BOARD. XEROX COPIES OF THE RESPEC TIVE LETTERS ADDRESSED TO THE EXECUTIVE ENGINEERS POLLUTION CONTROL BOARD COUNT ER FOILS OF THE FORM TOWARDS PURCHASE OF THE D/DRAFTS POSTAL RECEIPTS AND ACKNO WLEDGEMENT CARDS WERE ALSO FILED BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) 34. LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AF TER CONSIDERING THE ABOVE FACTS HAS DELETED THE SAID DISALLOWANCE AGGREGATI NG TO RS.37 090/ BY OBSERVING AS UNDER:- UPON PERUSING THE DOCUMENTS AND SUPPORTING FILED B Y THE ASSESSEE I DONT AGREE WITH THE AO THAT THE SUC H FEES ARE PAYABLE FOR A PERIOD OF THREE YEARS AND TREATING THE SAME AS CAPITAL IN NATURE. HENCE DONT FIND ANY MERIT AS THE SAME W ERE INCURRED BY THE ASSESSEE FOR WATER AND AIR POLLUTION FOR THE YEAR 2001-02 AS SUCH ALLOWABLE AS EXPENSES TREATING THE SAME AS R EVENUE IN NATURE. IN THE CIRCUMSTANCES I DIRECT THE A.O TO DELETE ADDITION/DISALLOWANCE A SUM OF RS.37 090/-. THIS GR OUND IS ALSO ALLOWED. 35. HENCE DEPARTMENT IS IN APPEAL BEFORE THE TRIB UNAL. 36. DURING THE COURSE OF HEARING BEFORE US THE LEA RNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE ASSES SING OFFICER. ON THE OTHER HAND LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). HE AL SO REFERRED TO PAGES 23-26 OF THE ASESSEES PAPER BOOK WHICH ARE THE COPIES OF BILLS AND LETTERS ADDRESSED TO POLLUTION CONTROL BOARD EVIDENCING THE PAYMENT OF RS.37 090/- AS POLLUTION CONTROL FEE. HE SUBMITTED THAT THE SAID EXPENDITUR E IS A REVENUE EXPENDITURE. 37. ON CONSIDERATION OF THE FACTS OF THE CASE AND NATURE OF EXPENSES THAT THE SAID PAYMENT WAS MADE BY THE ASSESSEE FOR WATER AND AIR POLLUTION FOR THE YEAR ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 11 2001-02. WE HOLD THAT THE SAID EXPENDITURE IS REV ENUE IN NATURE AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS JUSTIFIED T O DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. THEREFORE WE UPHOLD THE OR DER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) BY REJECTING T HIS GROUND TAKEN BY THE DEPARTMENT. GROUND NO.5 TAKEN BY THE DEPARTMENT IS DISMISSED. 38. GROUND NO.6 OF REVENUES APPEAL IS AS UNDER:- THAT LD.CIT(A) HAS ERRED IN LAW AS WELL AS IN F ACTS IN DELETING THE ADDITION OF RS.3 77 186/- BEING DISA LLOWANCE OF EXPENDITURE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES WITHOUT EXAMINING THE ACCOUNTS OF THE ASSESSEE THAT THE A SSESSEE EXPORTED BLACK TEA TO VARIOUS EUROPEAN COUNTRIES THROUGH RE COGNIZED HOUSES. 39. AT THE TIME OF ASSESSMENT PROCEEDINGS THE ASS ESSING OFFICER HAS MADE THE SAID DISALLOWANCE OF RS.377 186/- BY OBSERVING AS UNDER :- UPON PERUSAL OF THE DETAILS OF TRAVELING & CONVE YANCE FILED BY THE ASSESSEE IT IS SEEN THAT THE ASSESSEE HAS D EBITED AN AMOUNT OF 3 77 186/- ON ACCOUNT OF FOREIGN TRAVEL. THE SAME IS NOT ALLOWABLE IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT EXP ORTED ANY TEA IN THE INSTANT YEAR TO EUROPEAN COUNTRIES WHERE THE FOR EIGN TRAVEL HAS BEEN TO BE MADE. IN VIEW OF THE ABOVE THIS AMOU NT IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME . 40. THE ASSESSEE DISPUTED THE SAID ADDITION BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND SUBMITTED THAT THE ASSESSE E EXPORTED TEA TO VARIOUS OVERSEAS COUNTRIES THROUGH RECOGNIZED EXPORT HOUSES ; GOOD QUANTITY OF BLACK TEA BY MAKING EFFORTS AND VISITING TO OVERSEAS COUNTRI ES BY SRI C.K.PASARI WHOLE TIME DIRECTOR OF THE COMPANY. THE ASSESSEE BEFORE THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS) FILED DETAIL SHEET OF PRIVATE SALE EXPORT ALONG WITH FORM NO.14 RECEIVED FROM VARIOUS EXPORT HOUSES. HE FURT HER CONTENDED THAT SRI PASARI WHOLE TIME DIRECTOR OF THE COMPANY VISITED U.K FOR FINDING BUSINESS OPPORTUNITIES FOR EXPORT OF TEA. 41. LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CO NSIDERED THE ABOVE SUBMISSIONS OF THE ASSESSEE AND HAS DELETED THE SA ID DISALLOWANCE BY OBSERVING AS UNDER:- ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 12 I DONT AGREE WITH THE AO FOR DISALLOWING A SUM OF RS.377 176/- ON ACCOUNT OF FOREIGN TRAVEL STATING REASON THAT ASSESSEE HAS NOT EXPORTED ANY TEA IN THE INSTANT YEAR WHERE AS UPON PERUSING THE SUPPORTING DOCUMENTS FILED BY T HE ASSESSEE. I FIND THAT IN THE INSTANT YEAR HAS BEEN ABLE TO E XPORT BLACK TEA TO VARIOUS COUNTRIES THROUGH RECOGNIZED EXPORT HOUSE . THEREFORE ADDITION MADE BY THE A.O ON ACCOUNT OF FOREIGN TRA VEL EXPENSES IS DELETED. 42. THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL 43. DURING THE COURSE OF HEARING BEFORE US THE LEA RNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSIN G OFFICER AND SUBMITTED THAT THE ASSESSEE DID NOT MAKE ANY EXPORT TO EUROPEAN COUN TRIES. THEREFORE THE FOREIGN VISIT OF SRI C.K.PASARI WHOLE TIME DIRECTOR OF T HE ASSESSEE COMPANY WAS NOT FOR THE PURPOSE OF BUSINESS BUT WAS FOR HIS PERSONAL PURPOSES. HE SUBMITTED THAT THE ACTION OF THE ASSESSING OFFICER BE CONFIRMED. 44. ON THE OTHER HAND THE LEARNED AUTHORISED REPR ESENTATIVE RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) . HE REFERRED TO PAGE NOS. 28- 37 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESS EE HAD MADE EXPORT IN THE FY RELEVANT TO THE AY UNDER CONSIDERATION THROUGH R ECOGNIZED EXPORT HOUSES. HE FURTHER SUBMITTED THAT VISIT OF SRI C.K.PASARI W HOLE TIME DIRECTOR OF THE ASSESSEE COMPANY WAS TO VARIOUS FOREIGN COUNTRIES TO EXPLO RE BUSINESS OPPORTUNITIES. HE SUBMITTED THAT THE ISSUE COULD BE RESTORED TO TH E ASSESSING OFFICER TO VERIFY THE ABOVE FACTS THAT THE ASSESSEE MADE EXPORTS TO OVERS EAS COUNTRIES IN THE A.Y UNDER CONSIDERATION. 45. IN VIEW OF THE FACTS AND CONSIDERING THE SUBMI SSIONS OF LEARNED REPRESENTATIVES OF BOTH THE PARTIES WE SET ASIDE T HE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE ISSUE TO THE ASSESSING OFFICER WIT H THE DIRECTION THAT HE WILL VERIFY THE ISSUE AS TO WHETHER FOREIGN VISIT UNDERTAKEN BY THE ASSESSEE OF SRI C.K.PASARI WHOLE TIME DIRECTOR OF THE ASSESSEE COMPANY WAS FOR THE BUSINESS PURPOSE OR FOR ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 13 PERSONAL PURPOSE ON THE BASIS OF EVIDENCE AS MAY B E FILED BY THE ASSESSEE BEFORE HIM. IN CASE THE ASSESSEE ESTABLISHES THAT SAID VI SIT OF SRI C.K.PASARI WHOLE TIME DIRECTOR OF THE ASSESSEE COMPANY WAS FOR THE BUSINE SS PURPOSE THE ASSESSING OFFICER WILL ALLOW THE CLAIM OF THE ASSESSEE BEING BUSINESS EXPENDITURE . ACCORDINGLY THIS GROUND OF REVENUES APPEAL IS ALL OWED FOR STATISTICAL PURPOSE. 46. NOW WE TAKE C.O FILED BY ASSESSEE BEING C.O NO. 123/KOL/2010 47. IN RESPECT OF C.O THE LEARNED AUTHORISED REPRE SENTATIVE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS DI RECTED THE ASSESSING OFFICER TO MAKE DISALLOWANCE ON ACCOUNT OF INTEREST PAID AN D DIVIDEND EXPENSES BY FOLLOWING THE DECISION OF THE HONBLE SPECIAL BEN CH ITAT MUMBAI IN THE CASE OF ITO VS. DAGA CAPITAL MANAGEMENT PVT. LTD REPORT ED IN [(2008/2009) 26 SOT 603/312 ITR (AT) 1]. THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE DISALLOWANCE AS PER RULE 8D OF THE INCOME- TAX RULES1962. THE LEARNED AUTHORISED REPRESENTATI VE FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD VS. DCIT [(2010) 328 IT R 81 (BOM); RULE 8D IS HELD PROSPECTIVE IN NATURE AND IS APPLICABLE TO THE AY 2008-09 AND NOT TO THE A.Y UNDER CONSIDERATION. HE SUBMITTED THAT IN VIEW OF ABOVE THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) BE REVERSED AN D THE ISSUE BE RESTORED TO HIM TO DECIDE THE SAME ON THE BASIS OF EVIDENCE A S MAY BE FILED BY THE ASSESSEE BEFORE HIM. 48. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT HE HAS NO OBJECTION TO ABOVE SUBMISSIONS OF THE LEARNED AUTHORISED REP RESENTATIVE. 49. IN VIEW OF ABOVE SUBMISSIONS OF LEARNED REPRE SENTATIVES OF BOTH THE PARTIES AND CONSIDERING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. GODREJ BOYCE MFG. CO. LTD (SUPRA) WE AGREE WI TH THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT RULE 8D IS APPLICABLE FROM AY 2008-09 AND THE DECISION OF THE HONBLE SPE CIAL BENCH [ITAT MUMBAI] ITA NO.1441/KOL/2010 & CO NO.123/KOL/2010- A-BRM 14 IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD(SUP RA) HAS BEEN OVERRULED. HENCE WE ALLOW CROSS OBJECTION FILED BY THE ASSES SEE BY SETTING ASIDE THE ISSUE TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) TO DECIDE THE SAME AFRESH ON THE BASIS OF THE EVIDENCE AS MAY BE FILED BEFORE HIM AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER LAW. ACCORDINGLY C.O OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 50. IN THE RESULT THE APPEAL OF THE REVENUE [ITA NO.14 41/KOL/2010] IS ALLOWED IN PART FOR STATISTICAL PURPOSE AND THE CROSS OBJECTI ON [NO.123/KOL/2010] OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE.. ' !1 $2! 3 2& 4 '5 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT.28-0 7-2011 SD/- SD/- ( . .!'# !$ ( S.V.MEHROTRA ) ACC OUNTANT MEMBER . . ) ( B.R. MITTAL ) JUDICIAL MEMBER ( (( (7$ 7$ 7$ 7$) )) ) DATE: 28-07-2011 !1 9 -0 :!0(; / COPY OF THE ORDER FORWARDED TO: 1. . + / THE APPELLANT : DY. COMMISSIONER OF INCOME-TAX CIR-4 P-7 CHOWRINGHEEE SQ 8 TH FL. KOL-69. 2 -.+ / THE RESPONDENT- M/S. THE CHAMONG TEA CO. LTD 12 GOVT PL (E) KOL-69. 3. 1& / THE CIT 4. 1& ( )/ THE CIT(A) 5 . 4 -& / DR KOLKATA BENCH 6 . GUARD FILE . .0 -/ TRUE COPY !1&2/ BY ORDER ' < / ASSTT REGISTRAR . *PRADIP* => &?< @