DCIT, Circle - 4, Kolkata, Kolkata v. M/s. Dholai Tea Co. Pvt. Ltd., Kolkata

ITA 2251/KOL/2010 | 2006-2007
Pronouncement Date: 23-03-2011 | Result: Dismissed

Appeal Details

RSA Number 225123514 RSA 2010
Assessee PAN AAACD9301Q
Bench Kolkata
Appeal Number ITA 2251/KOL/2010
Duration Of Justice 3 month(s) 1 day(s)
Appellant DCIT, Circle - 4, Kolkata, Kolkata
Respondent M/s. Dholai Tea Co. Pvt. Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 23-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 23-03-2011
Assessment Year 2006-2007
Appeal Filed On 22-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE /AND . . !' ) [BEFORE HONBLE SRI MAHAVIR SINGH JM & HONBLE SHR I C. D. RAO AM] # # # # / I.T.A NO. 2251/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX VS M/S. DHOLAI TEA CO. PVT. LTD. CIRCLE-4 KOLKATA. (PAN AAACD 9301 Q) ( )* /APPELLANT ) (+ )*/ RESPONDENT ) FOR THE APPELLANT: SHRI S. I. BARA FOR THE RESPONDENT: N O N E !- / ORDER PER MAHAVIR SINGH JM ( ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-IV KOLKATA IN APPEAL NO.85/CIT(A)-IV/ 08-09 VIDE DATED 30.11.2009 . THE ASSESSMENT WAS FRAMED BY ACIT CIRCLE-4 KOLKATA UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006- 07 VIDE HIS ORDER DATED NIL. 2. AT THE OUTSET IT IS NOTICED THAT THIS APPEAL FI LED BY THE REVENUE IS DELAYED BY 72 DAYS AND THE REVENUE HAS FILED AFFIDAVIT STATING RE ASONS AND ALSO STATED THAT DELAY IS NOT DUE TO DELIBERATE OR MALAFIDE INTENSION OF REVENUE. IN VIEW OF THIS REASON WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING EXPENSES OF CESS PAID ON GREEN LEAF WITHO UT CONSIDERING FACT THAT IT IS FOR AGRICULTURAL OPERATION. FOR THIS THE REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) KOLKATA HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.20 32 9 80/- ON ACCOUNT OF CESS ON GREEN LEAF WITHOUT CONSIDERING THE FACT THAT EXPENSES ON ACCOUNT OF CESS ON GREEN LEAF IS RELATED TO 100% AGRICULTURAL OPERATION AND SLP IS P ENDING BEFORE THE HONBLE SUPREME COURT AGAINST THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. VS. CIT (270 ITR 167) IN THE LIGHT OF WHICH LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 2 ITA 2251/K/2010 DHOLAI TEA CO. PVT. LTD. A.Y 06-07 3. WE HAVE HEARD LD. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING OFFICER HAS DISALLOWED THE A SSESSEES CLAIM OF CESS PAYABLE ON THE QUANTITY OF GREEN LEAVES PLUCKED FROM ITS OWN T EA ESTATE IN ASSAM. THE ASSESSEE CLAIMED THE DEDUCTION WHILE COMPUTING ITS COMPOSITE INCOME FROM THE ACTIVITIES OF CULTIVATION AND MANUFACTURE OF TEA AT ITS GARDEN IN ASSAM. ACCORDING TO ASSESSING OFFICER THE EXPENDITURE ON ACCOUNT OF CESS IS NOT RELATED TO AGRICULTURAL ACTIVITY AND THEREFORE HE COMPUTED INCOME UNDER RULE 8 OF I. T. RULES AND DEDUCTION CLAIMED WAS DISALLOWED. AGGRIEVED ASSESSEE PREFERRED APPEAL B EFORE CIT(A) AND HE ALLOWED THE CLAIM OF ASSESSEE FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V A.F.T. INDUSTRIES LTD. (2004)270 ITR 167 BY GIVING FOLLOWING FINDING IN PARAS 6 & 7 OF HIS APPELLATE ORDER: 6. BEFORE ME ON BEHALF OF THE APPELLANT IT IS SUBM ITTED THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. REPO RTED IN 270 ITR 167 AND THE HONBLE ITAT C BENCH CALCUTTA IN THE APPELLANTS OWN CASE IN THE APPEAL FOR THE ASSESSMENT YEAR 1998-99 FOLLOWING THE SUPREME COURT DECISION IN THE CASE OF DEHRADUN COMPANY VS. CIT REPORTED IN 88 ITR 197 HAS HELD THAT AN ASSESSEE CARRYING ON BUSINESS OF CULTIVATION AND MANUFACTURE OF TEA IS ENTITLED TO DEDUCTION OF CESS PAYABLE ON THE QUANTITY OF GREEN LEAVES PLUCKED FROM ITS PLANTATION AND CONSUMED IN MANUFACTURE OF TEA. 7. RESPECTFULLY FOLLOWING THE AFORESAID DECISION TH E APPELLANTS APPEAL IS ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDU CTION IN RESPECT OF THE AFORESAID CESS OF RS.15 59 663/- PAYABLE BY THE APP ELLANT ON GREEN LEAVES PLUCKED AND CONSUMED IN ITS MANUFACTURING ACTIVITY. 4. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF AFT INDUSTRIES LTD. (SUPRA) W HEREIN HONBLE HIGH COURT HAS HELD AS UNDER: 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 20 04 IT APPEARS THAT IN RESPECT OF COMPUTATION OF INCOME OF TEA GROWN AND MANUFACTU RED A FICTION HAS BEEN CREATED UNDER WHICH BOTH THE AGRICULTURAL COMPONENT AND THE BUSINESS COMPONENT OF THE INCOME WOULD BE ASSESSED TOGETHER FOR THE PU RPOSE OF COMPUTING THE INCOME UNDER 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 EXIGIBLE TO TAX UNDER THE ACT. DURI NG THE PROCESS OF THE COMPUTATION ALL DEDUCTIONS ALLOWABLE AT THE TIME O F 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 DEDUCTIO N AT THE TIME OF COMPUTATION OF 3 ITA 2251/K/2010 DHOLAI TEA CO. PVT. LTD. A.Y 06-07 THE AGRICULTURAL INCOME. BUT WHEN BY FICTION IN RES PECT OF TEA GROWN AND MANUFACTURED THE AGRICULTURAL COMPONENT OF THE INC OME OUT OF THE TEA GROWN IS ALSO COMPUTED UNDER THE INCOME-TAX ACT ALONG WITH T HE INCOME OUT OF THE TEA MANUFACTURED FROM THE TEA GROWN. WHEN BY FICTION TH E INCOME AS COMPUTED AS AN INCOME UNDER THE ACT ALL DEDUCTIONS AS ARE AVAILAB LE BOTH FOR THE AGRICULTURAL COMPONENT AND FOR THE BUSINESS COMPONENT OF THE INC OME ARE TO BE ALLOWED AS A NATURAL COROLLARY TO THE FICTION SO CREATED. SUCH DEDUCTIONS WHICH ARE ALLOWED IN ORDER TO ARRIVE AT THE TOTAL INCOME EXIGIBLE 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 DEDU CTION FROM THE 60 PER CENT OF THE TOTAL INCOME SO COMPUTED IN THAT EVENT THIS 6 0 PER CENT WOULD BE AGAIN MADE ASSESSABLE UNDER THE AGRICULTURAL INCOME-TAX ACT WH ICH IS NOT PERMISSIBLE. IN THAT EVENT THE PURPOSE OF CREATING FICTION WOULD STAND FRUSTRATED. IT WOULD THEN BE A CONCEPT COMPLETELY FOREIGN TO THE FICTION SO CREATE D. THEREFORE THE ENTIRE AMOUNT PAID AS CESS ON GREEN LEAF SEEMS TO BE ELIGIBLE FOR DEDUCTION WITH REGARD TO WHICH WE DO NOT 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 ). 5. IN THE RESULT APPEAL OF REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN OPEN COURT ON 23RD DAY OF MA RCH 2011. SD/- SD/- . . !' (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 23RD DAY OF MARCH 2011 ./ $01 2 JD.(SR.P.S.) !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DCIT CIRCLE-4 KOLKATA. 2 + )* / RESPONDENT M/S. DHOLAI TEA CO. PVT. LTD. 33A J . L. NEHRU ROAD 10 TH FLOOR KOLKATA-71. 3 . -$ / THE CIT(A) KOLKATA 4. -$ ( )/ CIT KOLKATA 5 . => +$ / DR KOLKATA BENCHES KOLKATA 4 +/ TRUE COPY !-$?/ BY ORDER 1 /ASSTT. REGISTRAR .