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2013 (12) TMI 480 - AT - Income TaxCess on green leaf - Held that - Following CIT vs AFT Industries Ltd. 2004 (7) TMI 81 - CALCUTTA High Court - Deduction is eligible after computing the income under Rule 8 and the apportionment is to be made only after the income is so computed - Such apportionment cannot be made before the deduction. Rule 8 of the Income-tax Rules, 1962, requires that the computation is to be made as if by fiction the entire income out of the tea grown and manufactured as income assessable under the Income-tax Act, 1961 - Decided against Revenue. Employees Contribution to ESI and PF - Held that - Following CIT vs M./s Vijay Shree Limited 2011 (9) TMI 30 - CALCUTTA HIGH COURT - The amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature - It is applicable retrospectively with effect from 1st April, 1988 - Such being the position, the deletion of the amount paid by the Employees Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act - Decided against Revenue. Interest income - Held that - The interest income as liable to be assessed only under the head profits and gains of business and that too only the net of the interest - The assessee is carrying on the business for past several years - In the course of carrying on of its business, the assessee borrowed funds on which interest is paid - On occasions when the company left with surplus business funds, which were deployed in making short-term inter-corporate deposits and loans and advances - Such activity of lending money is carried on systematically and in an organized manner with a view to commercially exploit the business funds of the assessee company - The interest income is assessable as business income, more so when admittedly, the return from these loans was much higher than yield form the bank deposits - Decided against Revenue.
Issues:
1. Addition of cess on green leaf 2. Allowance of employees' contribution to P.F. 3. Treatment of interest income as business income Analysis: Issue 1: Addition of cess on green leaf The Revenue challenged the deletion of the addition of Rs.5,23,094 on account of cess on green leaf by the ld. CIT(A). The Revenue argued that the expenses related to cess on green leaf were connected to 100% agricultural operation and cited a pending SLP before the Supreme Court. The AR, on the other hand, contended that the issue was settled by the decision of the Jurisdictional High Court. The ITAT upheld the decision of the ld. CIT(A), stating that the issue was correctly decided based on the precedent set by the Jurisdictional High Court. Therefore, Ground No.1 of the Revenue's appeal was dismissed. Issue 2: Allowance of employees' contribution to P.F. The Revenue contested the direction of the ld. CIT(A) to allow Rs.65,508 & Rs.41,166 on account of employees' contribution to P.F., arguing that it contravened section 36(1)(va). The AR referred to a decision by the Jurisdictional High Court to support their case. The ITAT found that the issue was squarely covered by the decision of the Jurisdictional High Court and upheld the decision of the ld. CIT(A). Consequently, Ground No.2 of the Revenue's appeal was dismissed. Issue 3: Treatment of interest income as business income The Revenue objected to the treatment of interest income as income under the head 'profit and gains of business' by the ld. CIT(A), arguing that it should be taxed under 'income from other sources.' The AR cited a Co-ordinate Bench's decision to support the treatment of interest income as business income. The ITAT examined the arguments and upheld the decision of the ld. CIT(A) based on the precedent set by the Co-ordinate Bench. Therefore, Ground No.3 of the Revenue's appeal was dismissed. The Revenue's appeal was dismissed in its entirety, and the order was pronounced on 05.12.2013.
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