2015 (12) TMI 1455 - AT - Income Tax

Allowance of claim of exemption u/s 10(30) - CIT(A) directing the ld. AO to verify the certificate issued by the Tea Board for the subsidy paid to the assessee - Held that - We have heard the ld. AR on this issue and held that in the interest of justice and fair play, this issue be restored to the file of the ld. AO to verify the certificate from Tea Board for the subsidies paid to the assessee during the assessment year under appeal and direct the ld. AO to grant exemption u/s 10(30) of the Act only to the extent of subsidies received during the year subject to production of certificate from Tea Board. Decided in favour of revenue for statistical purposes. Addition employees contribution to Provident Fund (P.F.) - CIT(A) deleted the addition - Held that - This issue is directly covered in favour of the assessee by the decision of the Hon ble Apex Court in the case of Vinay Cement reported in (2007 (3) TMI 346 - Supreme Court of India) wherein it has been held that statutory items like Provident Fund and ESI, if paid before the due date of filing the return of income have to be allowed irrespective of the fact whether the contributions related to the employee and employer. However, we are not able to verify from the materials available on record as to whether the provident fund remittances were indeed made before the due date of filing the return of income by the assessee. Accordingly, we set aside this issue to the file of the ld. AO with the direction to verify the dates of remittance and if the same is paid before the due date of filing of return of income, the deduction should be granted to the assessee - Decided in favour of revenue for statistical purposes. Deduction towards cess on green leaf - CIT(A) allowed claim - Held that - This issue is squarely covered by the decision of the Hon ble Calcutta High Court in the case of CIT vs AFT Industries Ltd. reported in ( 2004 (7) TMI 81 - CALCUTTA High Court) wherein held entire amount paid as cess on green leaf seems to be eligible for deduction - Decided against revenue Claim of subsidy for the purpose of ascertaining the book profit u/s 115JB - CIT(A) allowed claim - Held that - this issue is only consequential to the first ground raised by the revenue. There, we have directed the ld. AO to grant exemption u/s 10(30) of the Act towards tea plantation subsidy to the extent of subsidy received during the year subject to production of certificates from Tea Board to that effect. We hold that whatever is allowed by the ld. AO pursuant to that ground, the same amount had to be reduced from the net profit as per profit and loss account towards exemption u/s 10(30) of the Act for the purpose of ascertaining the book profit u/s 115JB of the Act - Decided in favour of revenue for statistical purposes.

Summary

Issues involved:
1. Verification of subsidy certificate from Tea Board for exemption u/s 10(30) of the Income Tax Act.
2. Allowance of deduction for employees' contribution to Provident Fund.
3. Deduction towards cess on green leaf based on Jurisdictional High Court decision.
4. Allowance of subsidy claim for book profit calculation u/s 115JB of the Act.

Issue 1: Verification of subsidy certificate for exemption u/s 10(30) of the Income Tax Act
The appeal concerned whether the CIT(A) was correct in directing the AO to verify the certificate issued by the Tea Board for the subsidy paid to the assessee for the allowance of exemption u/s 10(30) of the Act. The assessee, a tea grower and manufacturer, claimed exemption u/s 10(30) for subsidies received from the Tea Board. The AO allowed exemption only for subsidies received during the year, as certificate proof was lacking for other subsidies. The CIT(A) directed the AO to verify the certificate and grant exemption. The ITAT held that the issue be restored to the AO to verify the certificate and grant exemption only for subsidies received during the year subject to certificate production, allowing the appeal for statistical purposes.

Issue 2: Allowance of deduction for employees' contribution to Provident Fund
The question was whether the CIT(A) correctly deleted the addition made for employees' PF contribution remitted beyond the due date. The AO disallowed the deduction under section 36(1)(va) as the remittance was late. The CIT(A) ruled in favor of the assessee, citing a Supreme Court decision that allowed statutory payments if made before the due date of filing the return. The ITAT set aside the issue to verify the remittance dates and directed the AO to grant deduction if paid before the due date, allowing the appeal for statistical purposes.

Issue 3: Deduction towards cess on green leaf based on High Court decision
The dispute revolved around the allowance of deduction for cess on green leaf based on a Jurisdictional High Court decision. The AO sought to disallow the deduction related to agricultural activity, pending an SLP against the High Court ruling. The CIT(A) followed the High Court decision and deleted the addition. The ITAT upheld the CIT(A)'s decision, citing the High Court's ruling that allowed the deduction for the entire amount paid as cess under the Agricultural Income-tax Act, dismissing the revenue's appeal.

Issue 4: Allowance of subsidy claim for book profit calculation u/s 115JB
The final issue was whether the CIT(A) correctly allowed the entire claim of subsidy for book profit calculation u/s 115JB. The ITAT held that this issue was consequential to the first ground and directed the AO to grant exemption u/s 10(30) towards tea plantation subsidy, reducing the net profit for book profit calculation. The appeal was allowed for statistical purposes.

In conclusion, the ITAT addressed various issues related to verification of subsidy certificates, allowance of deductions, and the impact on book profit calculation. The decisions were made based on statutory provisions, case laws, and jurisdictional rulings, ensuring a fair and just resolution in each aspect of the appeal.