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2019 (8) TMI 398 - AT - Income TaxDisallowance of deduction u/s 80-IC (2) (b) - profit derived by the assessee on sale of black tea manufactured from green leaf purchased - HELD THAT - Until and unless the assessee engages with both the conditions of processing and raising of the plantation of tea, the assessee cannot be allowed, the deduction under section 80-IC(2)(b). That is, the assessee is not entitled to take the deduction u/s 80-IC (2) (b) in respect of green tea-leaf purchased from outside market. No merit in assessee's appeal, as the assessee is not eligible to claim deduction under section 80-IC(2) (b) of the Act, in respect of green tea-leaf purchased from outside market. Hence, we find no reason to interfere in the said order of the CIT(A) and the same is hereby upheld. Therefore, ground of appeal of Assessee is dismissed.
Issues Involved:
1. Eligibility for deduction under Section 80-IC(2)(b) of the Income Tax Act, 1961. 2. Interpretation of the terms "processing and raising of plantation crops" under the Fourteenth Schedule of the Act. 3. Applicability of the judgment in the case of M/s. Sewajpur Tea Co. Pvt. Ltd. Detailed Analysis: 1. Eligibility for Deduction Under Section 80-IC(2)(b) of the Income Tax Act, 1961: The assessee claimed a deduction under Section 80-IC(2)(b) for profits derived from both the cultivation and manufacture of tea from its own plantations and the manufacture of tea from purchased green leaf. The Assessing Officer (AO) disallowed the deduction for the profits derived from the purchased green leaf, arguing that the deduction is only applicable if the assessee is engaged in both "processing and raising" of plantation crops (tea). The AO emphasized that the statute requires the assessee to carry on both activities simultaneously to qualify for the deduction. 2. Interpretation of the Terms "Processing and Raising of Plantation Crops" Under the Fourteenth Schedule of the Act: The AO and the Tribunal examined the wording in the Fourteenth Schedule, particularly item 12, which uses "processing and raising of plantation crops." The AO argued that the use of "and" indicates that both activities must be conducted together to qualify for the deduction. The Tribunal supported this interpretation, stating that the legislative intent was to provide tax benefits to those engaged in both cultivation and processing of plantation crops. This interpretation was contrasted with other items in the schedule where "or" is used, indicating alternatives. 3. Applicability of the Judgment in the Case of M/s. Sewajpur Tea Co. Pvt. Ltd.: The Tribunal initially relied on the judgment in the case of M/s. Sewajpur Tea Co. Pvt. Ltd., which was engaged solely in the manufacturing of tea without cultivation, to deny the deduction. However, upon reconsideration, it was noted that the facts of the present case were different as the assessee did engage in both activities, although not exclusively. The Tribunal acknowledged the factual differences but upheld the AO's view that the deduction under Section 80-IC(2)(b) requires both activities to be carried out by the assessee. Conclusion: The Tribunal concluded that the assessee is not entitled to the deduction under Section 80-IC(2)(b) for the profits derived from the purchased green leaf. The interpretation of the statute and the Fourteenth Schedule mandates that both "processing" and "raising" of plantation crops must be conducted together to claim the deduction. The appeal filed by the assessee was dismissed, upholding the AO's and CIT(A)'s orders. Order Pronouncement: The order was pronounced in the open court on 24.04.2019, dismissing the appeal filed by the assessee concerning the disallowance of the deduction under Section 80-IC(2)(b) for the profits derived from the purchased green leaf.
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