9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 808 - HC - Income TaxExpenditure u/s 10(1) - onus to prove basis of agricultural operation being carried out in raising clonal plants, Sugarcane and coconuts in relation to assessment year 2007-08 - Whether Tribunal has correctly interpreted Explanation to Section 2(1A) in holding the same as retrospective in nature by disregarding that neither Finance Act, 2008 nor Explanatory Circular No. 1 of 2009 dated 27.3.2009 specifically express retrospectivity of the same ? - HELD THAT - So far as substantial question of law Nos. 1 and 2 are concerned the issue stands squarely covered by the decision in Commissioner of Income Tax Vs. Soundarya Nursery 1998 (8) TMI 37 - MADRAS HIGH COURT as well as the decision in Commissioner of Income Tax Vs. Green Gold Tree Farmers (P) Ltd. 2007 (2) TMI 160 - UTTARAKHAND HIGH COURT . That apart we note that in assessee s own case for the assessment years 2005-06 and 2006- 07 these questions were answered in favour of the assessee. Apart in CBDT Circular No. 1 of 2009 dated 27th March, 2009 the scope of the expression agriculture income was widened to hold that if the nursery is maintained independently without resorting to basis operations of law then the income from such nursery would not be agriculture income and would be liable to be included in total income. This circular will not have any effect on the assessee s case as on facts, the Commissioner Appeals has noted the submission of the assessee that in order to cultivate the seeds the assessee engages in the activities of preparing of land, levelling, preparation of beds, sowing of seeds, planting etc. and after a certain stage the best responsive plant is earmarked as the mother seed. Therefore, de hors the circular issued by CBDT, the conclusion arrived at by the Tribunal, affirming the view taken by the Commissioner of Income Tax (Appeal), cannot be faulted. Deduction under Section 80IA - two captive power under takings at Bhadrachallam - As per AO assessee was not entitled to the aforesaid deduction since it had supplied power only to the paper undertakings belonging to the assessee itself and not to any outsider? - HELD THAT - It is not in dispute that the said question is covered in favour of the assessee and against the revenue in assessee s own case for the assessment year 2002-03 as held unable to hold that the benefit under Section 80IA is not available to the assessee because the power generated was consumed at home or by other business of the assessee. It is now well-settled that a statute granting incentives for promoting growth and development should be construed liberally so as to advance the objective of the provision and not to frustrate it. Deduction u/s 80IC - captive undertaking is not entitled to deduction under the said provision for the notional profit since the products have only been supplied to the Food Business Division (FBD) of the assessee and not to outsider - HELD THAT - As in certain special category states. It is not in dispute that the said eligible undertaking was not manufacturing any of the goods as listed in 13th schedule to the Act. The principle which was laid down in the assessee s own case in the issue relating to Section 80IA as reported in 2015 (7) TMI 450 - CALCUTTA HIGH COURT will equally apply to the claim of deduction under Section 80AC - CIT-A rightly took note of the fact that Section 80AC (7) specifically provides that the provisions of sub-Section 5 and sub-Section 7 to 12 of Section 80IA will equally apply to Section 80IC, and therefore, the eligibility for claiming deduction under Section 80IA in respect of captive undertaking will, therefore, also apply to Section 80IC. - That apart we should take note of the fact that the provision is a special provision conferring certain benefits on undertakings in certain special category states. In the assessee s case as reported 2015 (7) TMI 450 - CALCUTTA HIGH COURT the Hon ble Division Bench while considering the scope of Section 80IA pointed out that Statute grating incentives for promoting growth and development should be considered liberally so as to advance the objective of the provision and not to frustrate it - Tribunal decided the correctness of the said finding and in paragraph 5.1 of the impugned order took note of the Section 80IA (8) and held that the said provision is applicable to Section 80IC and accordingly approved the finding recorded by the CITA. Deduction under Section 43B - amount of employees contribution towards PF/ESI paid after the expiry of due date prescribed under the respective PF/ESI - HELD THAT - We are conscious of the fact that certain appeals have been admitted by this Court on the very same issue. But, however, we note that the tax implication on the said issue is far lesser than the threshold limit fixed by CBDT for filing of the appeal. Since all four substantial question of law have been answered against the revenue the solitary question which remains is with regard to the claim for deduction under Section 43B. We have perused the assessment year and we find that the disallowance on the said head is Rs.4,06,052/-. This being below the threshold limit fixed by the CBDT for pursuing the appeal, the appeal fixed by the revenue on this ground has to be dismissed on the ground of low tax effect. Consequently, the substantial question of law has to be left open.
Issues:
1. Allowance of expenditure under Section 10(1) of the I.T. Act, 1961 2. Interpretation of Explanation to Section 2(1A) of the I.T. Act, 1961 3. Claim of deduction under Section 80IA of the I.T. Act, 1961 4. Claim of deduction under Section 80IC of the I.T. Act, 1961 5. Claim of deduction under Section 43B of the I.T. Act, 1961 Analysis: Issue 1: The first substantial question of law raised was regarding the allowance of expenditure under Section 10(1) of the I.T. Act, 1961. The Court referred to previous decisions in the assessee's own case and held that the issue was settled in favor of the assessee. The Court noted that the circular issued by CBDT regarding agriculture income did not impact the case as the Tribunal's decision aligns with the Commissioner of Income Tax (Appeal)'s view. Consequently, substantial questions of law 1 and 2 were answered against the revenue. Issue 2: The second issue revolved around the interpretation of the Explanation to Section 2(1A) of the I.T. Act, 1961. The Court relied on past decisions in the assessee's case and concluded that the legal issues were resolved in favor of the assessee. The Court affirmed that the benefits under Section 80IA should be construed liberally to promote growth and development. Therefore, substantial question of law no. 3 was answered against the revenue. Issue 3: Regarding the claim of deduction under Section 80IA of the I.T. Act, 1961, the Court referenced a decision in the assessee's case for the assessment year 2002-03 and ruled in favor of the assessee. The Court emphasized the importance of promoting growth and development through statutory incentives and upheld the decision of the CITA. Substantial question of law No. 4 was answered against the revenue. Issue 4: The next issue involved the claim of deduction under Section 80IC of the I.T. Act, 1961. The Court reiterated the principles laid down in previous cases related to Section 80IA and applied them to Section 80IC. The Court highlighted the liberal interpretation of provisions aimed at encouraging industrialization and economic growth. Consequently, substantial question of law No. 4 was answered against the revenue. Issue 5: The final issue pertained to the claim made by the assessee for deduction under Section 43B of the I.T. Act, 1961. The Court noted that the tax implication on this issue was below the threshold limit set by the CBDT for filing an appeal. As all previous substantial questions of law were decided against the revenue, the Court dismissed the appeal on the grounds of low tax effect. Therefore, substantial question of law No. 5 was left open. In conclusion, the Court dismissed the appeal and applications, with no order as to costs, based on the detailed analysis and resolution of the substantial questions of law raised in the case.
|
