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2017 (9) TMI 1600 - AT - Income TaxPayment of cess on green leaf - whether production of green leaf which is 100% agricultural activity and not an admissible deduction under income chargeable ? - Held that - We find that the issue under dispute is squarely covered by the decision of the Hon ble Supreme Court in favour of the assessee in the case of CIT vs. APEEJAY Tea Co. Ltd. 2015 (8) TMI 1260 - SUPREME COURT as held Expenditure on cess should be allowed as a deduction before computing the composite income under Rule 8 and the apportionment is to be made after the income is so computed. Disallowance of depreciation on assets acquiring with NABARD fund - Held that - As relying on decision of assessee s own case we find force in the arguments made by the learned Counsel on behalf of the respondent assessee and we very much appreciate the conclusion arrived at by the Ld. CIT(A) while deleting the addition. Going through the provisions of law and appreciating the Scheme of NABARD the Ld. CIT(A) has rightly allowed the depreciation on the assets purchased from out of withdrawal of NABARD fund. We therefore uphold the order of the Ld. CIT(A) and dismiss the Revenue s appeal Disallowance of loss incurred on instant tea - CIT(A) allowing the loss incurred on instant tea export to be set off from the business income as arrived at after application of Rule 8 - assessee had only sought for rectification of a particular claim vide its letter dated 21.12.2005 before finalization of computing of total income of the assessee - Held that - In the instant case the time limit for filing revised return u/s 139(5) of the Act had already expired and in view of fact the assessee is only seeking to rectify the particular claim already made in the return there is no need to make such a claim only by way of revised return. It is enough if the same is made by way of a letter filed duly before the Ld. AO. We find that the assessee had brought to the attention of the Ld. AO vide its letter dated 21.12.2005 seeking for rectification of aforesaid mistakes committed by it in the return. This is evident from the copy of the said letter dated 21.12.2005 which is placed on record before us. We find that the Ld. AO had considered the other mistakes pointed out by the assessee while completing the assessment but had omitted to consider the rectification pleaded on account of loss on instant tea amounting to 55, 85, 622/- alone. No infirmity in the direction given by the Ld. CIT(A) to the ld. AO to consider the instant tea loss of 55, 85, 622/- to the computation of composite income and correspondingly exclude the same from the business income computing after application of Rule 8(1) of the Rules Revenue appeal dismissed.
Issues Involved:
1. Disallowance of Cess on Green Leaf 2. Disallowance of Lease Rent Paid 3. Disallowance of Depreciation on Assets Acquired with NABARD Fund 4. Disallowance of Loss Incurred on Instant Tea Detailed Analysis: 1. Disallowance of Cess on Green Leaf: The primary issue was whether the cess on green leaf paid by the assessee could be deducted from the composite income. The assessee, engaged in the manufacturing and growing of tea, claimed a deduction of ?1,18,20,026/- for cess on green leaf. The Assessing Officer (AO) disallowed this claim based on the judgment of the Guwahati High Court in the case of Jorahat Group Ltd. vs. Agricultural ITO. However, the assessee cited the jurisdictional High Court's decision in CIT vs. A.F.T. Industries Ltd., which allowed such deductions from composite income. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the assessee's contention and deleted the disallowance. The Tribunal, referencing the Supreme Court's ruling in CIT vs. APEEJAY Tea Co. Ltd., confirmed that the cess paid should be excluded while computing the income under Rule 8 of the Income Tax Rules, 1962. Consequently, the Tribunal dismissed the Revenue's appeal on this ground for both assessment years. 2. Disallowance of Lease Rent Paid: The assessee paid lease rent of ?36,48,000/- to Koomber Properties & Leasing Co. Ltd. (KPLCL) for business premises. The AO disallowed this expense to maintain judicial consistency, referencing earlier years' decisions. The CIT(A) deleted this disallowance, relying on previous Tribunal decisions in favor of the assessee. The Tribunal noted that this issue had been consistently resolved in favor of the assessee in earlier years and upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this ground for both assessment years. 3. Disallowance of Depreciation on Assets Acquired with NABARD Fund: The AO disallowed depreciation of ?13,36,356/- on assets acquired using NABARD funds, citing Section 33AB(6) of the Income Tax Act, which prohibits deductions for expenditures from the Tea Deposit Account. The CIT(A) overturned this disallowance, referencing the Tribunal's previous decision in the assessee's favor. The Tribunal confirmed this view, emphasizing that depreciation is not an expense and that the withdrawal from NABARD was for capital expenditure, not for depreciation. The Tribunal dismissed the Revenue's appeal, following the precedent set in the assessee's own case for earlier years. 4. Disallowance of Loss Incurred on Instant Tea: The assessee incurred a loss of ?55,85,662/- from instant tea activities, which was mistakenly included in the composite income. The AO disallowed the correction of this error, insisting on a revised return, which the assessee had not filed. The CIT(A) directed the AO to adjust the loss against 100% centrally taxable income, noting that the error was brought to the AO's attention before finalizing the assessment. The Tribunal upheld the CIT(A)'s decision, referencing the Delhi High Court's ruling in CIT vs. Bharat Aluminium Co. Ltd., which permits rectification of errors without a revised return if all facts are on record. The Tribunal dismissed the Revenue's appeal on this ground. Conclusion: The Tribunal dismissed the Revenue's appeals on all grounds, confirming the CIT(A)'s decisions. The Tribunal's rulings were based on established judicial precedents and consistent interpretations of relevant laws and rules. The judgments emphasized the importance of judicial consistency and the proper application of legal principles in tax assessments.
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