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2013 (5) TMI 561 - AT - Income TaxDepreciation Claim As per AO assessee failed to furnish the evidence in support Held that - From the order of CIT(A), it is clear that evidences that these machineries were put to use as on 31.03.2005 were filed before him for the first time and these are not filed before the tribunal. Thus, the matter is remitted back to AO. Therefore, issue is set aside to file of AO and assessee will provide evidence before him to substantiate its claim that these machineries were put to use on or before 31.03.2005. Deletion of addition on account of cess on green leaf Held that - Issue is squarely covered in favour of the assessee and against the revenue by the decision of jurisdictional High Court in the case of AFT Industries Ltd. Vs. CIT (2004 (7) TMI 81 - CALCUTTA High Court). The petition is, therefore, dismissed. Restriction of income at Rs.4,58,302/- instead of the income assessed by AO at Rs.10,91,762/- on account of profit from purchase of green leaf Held that - Assessee has given a working to arrive at profit earned out of sale of tea processed out of purchased green tea leaves and on plucked tea green leaves and in view of this working the CIT(A) restricted the disallowance at Rs.4,58,302/- instead of computed by AO at Rs.10,91,762/-. As the Ld. Sr. DR could not point out any defect in computation of income, order of CIT(A) is upheld. Deletion of addition on account that sale of tea plant is not agricultural income and does not come under declared objective of the assessee company and also allowed deduction being agricultural income from Book Profit u/s. 115JB As per AO the book profit does not indicate the total taxable income of the assessee Held that - Assessee before the AO as well as before CIT(A) has produced the evidences in the shape of agricultural receipts on account of sale of tea plants, which are agricultural income. We agree with the findings of CIT(A) that this sale of tea plants treated by assessee as agricultural receipts exclusively out of agricultural activity. As to composite income of sale proceeds to tea plant at 60% of book profit Rs.30,12,347/- is in the nature of agricultural income which is exempt u/s. 10(1) of the Act. Since these two items are of agricultural income it should be allowed as deduction while computing income u/s. 115JB of the Act being book profit of the assessee company. Thus, the order of CIT(A) is upheld.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Allowance of depreciation claimed by the assessee. 3. Deletion of addition on account of cess on green leaf. 4. Restriction of income from the sale of purchased green leaf. 5. Treatment of sale of tea plants as agricultural income and its inclusion in book profit under section 115JB of the Income-tax Act. Detailed Analysis: 1. Condonation of Delay: The revenue's appeal was barred by a 137-day delay. The revenue filed a condonation petition along with an affidavit explaining the reasons for the delay. The assessee's counsel had no objection to the condonation. Consequently, the delay was condoned, and the appeal was admitted. 2. Allowance of Depreciation: The revenue contested the CIT(A)'s decision to allow depreciation of Rs. 6,43,245/- claimed by the assessee. The AO had disallowed the depreciation due to the lack of evidence showing that the machinery was put to use as of 31.03.2005. The CIT(A) allowed the claim based on the Tax Audit Report and other documents provided by the assessee. However, the Tribunal noted that the assessee could not produce evidence before it or the AO to substantiate the claim. Therefore, the issue was remitted back to the AO for verification of the evidence. 3. Deletion of Addition on Account of Cess on Green Leaf: The revenue challenged the CIT(A)'s deletion of Rs. 37,96,014/- added by the AO on account of cess on green leaf. The Tribunal found that the issue was covered by the jurisdictional High Court's decision in the case of AFT Industries Ltd. v. CIT, which held that the entire amount paid as cess on green leaf is eligible for deduction. Respectfully following this precedent, the Tribunal upheld the CIT(A)'s order and dismissed the revenue's ground of appeal. 4. Restriction of Income from Sale of Purchased Green Leaf: The revenue contested the CIT(A)'s decision to restrict the income from the sale of purchased green leaf to Rs. 4,58,302/- instead of Rs. 10,91,762/- assessed by the AO. The AO had calculated the income by treating 23% of the total income as attributable to the purchased green leaf. The CIT(A) recalculated the income after deleting the disallowances on depreciation and cess on green leaf. The Tribunal upheld the CIT(A)'s order, finding no defect in the computation of income provided by the assessee. 5. Treatment of Sale of Tea Plants as Agricultural Income: The revenue challenged the CIT(A)'s decision to treat Rs. 2,50,000/- from the sale of tea plants as agricultural income and allow it as a deduction from book profit under section 115JB. The AO had added this amount under the head "income from other sources." The CIT(A) found that the sale proceeds were exclusively from agricultural activity and directed the AO to treat it as agricultural income. The Tribunal agreed with the CIT(A)'s findings and upheld the decision, allowing the deduction of agricultural income while computing book profit under section 115JB. Conclusion: The appeal of the revenue was partly allowed for statistical purposes, with the issue of depreciation remitted back to the AO for verification. All other grounds raised by the revenue were dismissed, and the CIT(A)'s decisions were upheld. The order was pronounced in the open court on 14.05.2013.
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