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2015 (3) TMI 527 - AT - Income TaxDisallowance of belated deposit of employees' contribution to P.F. - CIT(A) deleted disallowance - Held that - In the present case, it is an admitted fact that the assessee has deposited the PF well before the due date of filing of the return. We find that it is allowable as per decision of the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusion Ltd reported in (2009 (11) TMI 27 - SUPREME COURT) - Decided against revenue. Disallowance made on account of Cess payable on Green Leaf - CIT(A) deleted disallowance - Held that - Similar issue has been adjudicated in the case of CIT Vs. AFT Industries Ltd 2004 (7) TMI 81 - CALCUTTA High Court wherein held as in respect of computation of income of tea grown and manufactured, a fiction has been created under which both the agricultural component and the business component of the income would be assessed together for the purpose 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. When by fiction the income is computed as an income under the Act, all deductions as are available both for the agricultural component and for the business component of the income are to be allowed as a natural corollary. Therefore, the entire amount paid as cess under the Agricultural Income-tax Act is eligible for deduction - Decided in favour of assessee. Disallowance on account of exchange fluctuation on the foreign loan - Held that - In the present case it is clear as to whether the term loan was capital in nature related to the purchase of assets or it was revenue in nature. We, therefore, restore this issue to the file of the AO, who will decide the same afresh in accordance with law after considering the ratio laid down by the Hon'ble Delhi High Court in the case of CIT Vs. Woodward Governor India P.Ltd 2007 (4) TMI 118 - HIGH COURT , DELHI - Decided in favour of assessee for statistical purposes. Disallowance u/s. 40A(3) - Held that - As it is not clear as to whether the AO has considered the payment of individual item or total items while making the disallowance u/s. 40A(3) of the Act. We, therefore, deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Belated deposit of employees' contribution to Provident Fund (PF). 2. Disallowance of cess payable on cultivation of green tea leaves. 3. Disallowance of foreign exchange fluctuation on the foreign loan. 4. Disallowance under Section 40A(3) of the Income Tax Act, 1961 for cash payments exceeding the prescribed limit. 5. Disallowance of loss in respect of Suffry Tea Estate. Detailed Analysis: 1. Belated Deposit of Employees' Contribution to Provident Fund (PF): The department appealed against the deletion of the disallowance of Rs. 5,27,971/- for the belated deposit of employees' contribution to PF. The Assessing Officer (AO) had made this addition by invoking section 36(1)(va) read with section 2(24)(x) of the Income Tax Act, 1961. The assessee contended that the delay was due to frequent Bandhs in Assam and that the payment was made before the due date of filing the return. The CIT(A) deleted the addition, referencing the Karnataka High Court's decision in CIT v. Sabari Enterprises and the Supreme Court's decision in CIT v. Alom Extrusions Ltd. The Tribunal upheld the CIT(A)'s decision, noting that the PF was deposited before the due date of filing the return, making it allowable. 2. Disallowance of Cess Payable on Cultivation of Green Tea Leaves: The department challenged the deletion of the disallowance of Rs. 1,99,20,614/- towards cess payable on green tea leaves. The AO argued that the amount was deductible only against agricultural income, computed as per Rule 8 of the Income Tax Rules, 1962. The CIT(A) deleted the disallowance, citing the Calcutta High Court's decision in CIT v. A.F.T Industries Ltd, which held that cess on green leaf was deductible under Rule 8 without further appropriation of expenses. The Tribunal upheld the CIT(A)'s decision, affirming the jurisdictional High Court's ruling. 3. Disallowance of Foreign Exchange Fluctuation on the Foreign Loan: The assessee's cross-objection involved the disallowance of Rs. 28,53,019/- due to exchange fluctuation on a foreign loan. The AO disallowed the loss, stating that the liability had not accrued. The CIT(A) upheld the disallowance, reasoning that the notional loss due to exchange fluctuation was not an allowable expenditure. The Tribunal, referencing the Delhi High Court's decision in CIT v. Woodward Governor India P. Ltd, remanded the issue to the AO to determine whether the loan was capital or revenue in nature and decide accordingly. 4. Disallowance under Section 40A(3) for Cash Payments Exceeding the Prescribed Limit: The AO disallowed Rs. 25,999/- under Section 40A(3) for cash payments exceeding Rs. 20,000/- on each occasion. The assessee argued that the payments were for staff welfare and were reimbursements for gas and medicines. The CIT(A) upheld the disallowance, stating that payments exceeding Rs. 20,000/- were made against a single bill. The Tribunal remanded the issue to the AO for re-examination and verification of whether individual items or total items were considered for disallowance. 5. Disallowance of Loss in Respect of Suffry Tea Estate: The assessee's cross-objection also involved the disallowance of Rs. 2,95,000/- for loss in respect of Suffry Tea Estate. The CIT(A) confirmed the disallowance, and the Tribunal noted that the issue had been decided against the assessee in a previous ITAT Kolkata order. Consequently, this issue was decided against the assessee. Conclusion: - The departmental appeals in ITA Nos. 1092 & 1093/Kol/2010 were dismissed. - Cross Objection No. 79/Kol/2010 was allowed for statistical purposes. - Cross Objection No. 80/Kol/2010 was partly allowed for statistical purposes. Order Pronounced in the Open Court on 30.1.2015.
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