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TMI Blog2001 (7) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by the AO on the ground that the expenses were not attributed to business. The learned senior counsel further submitted that the expenditure incurred by the company was not disputed either by the AO or by the first appellate authority. According to the learned senior counsel, the first appellate authority has observed that the expenses on account of sundries and petty expenses including vegetable garden cannot be categorised as expenses solely from business point of view. The learned senior counsel further submitted that the assessee has debited a total sum of Rs. 86,93,304 which includes messing allowance for visiting agents, sundries and petty expenses for meeting the day-to-day administration of the 16 tea garden estates owned by the assessee-company and a vegetable garden for the welfare of the employees of the assessee-company, and also the maintenance of motor car for the purpose of business by the managers and assistant manager of the assessee-company. According to the learned counsel the first appellate authority disallowed a sum of Rs. 75,000 as against Rs. 1,00,000 by the AO only on the ground that the sundry and petty expenses including the vegetable garden canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel on behalf of the assessee that the very same matter came up before this Tribunal for the asst. yrs. 1984-85 and 1985-86 and this Tribunal has held that the assessee is entitled to the relief in respect of the sundry and petty expenses and also vegetable garden. The learned senior counsel submitted that a large number of employees are working in the 16 tea estates and there is no market nearby for purchasing vegetables for the daily use of the employees and their families so, for the purpose of welfare of the assessee s employees in order to give a better working condition the assessee is maintaining a vegetable garden so that the fruit of the same can be enjoyed by all of its employees which will definitely give better working atmosphere for its employees and that will promote the business of the assessee-company to achieve its object and target. It is not disputed on behalf of the Revenue that the vegetable garden is maintained by the assessee only for the welfare of the employees. It is also not the case of the Revenue that the assessee is maintaining a vegetable garden for the purpose of marketing it separately. Since this vegetable garden is maintained by the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also for construction of sheds for young tea plants the assessee is required to cultivate bamboo. The learned counsel further submitted that in respect of previous year a similar claim for cultivating bamboo was allowed by the Revenue authorities. The learned counsel further submitted that in respect of the asst. yrs. 1984-85 and 1985-86 this Tribunal has allowed the expenditure incurred by the assessee for the purpose of growing bamboo vide its order dt. 27th Oct., 1997, passed in ITA Nos. 295 and 296/Gau/1990. Since this Tribunal held that the bamboo is required for extensive use for the construction of labour quarters and for young tea plants and allowed the entire claim, there is no reason for the Revenue to take a different view in respect of the assessment year under appeal. 8. On the contrary, the learned Departmental Representative submitted that for cultivation of bamboo no expenditure is required and no evidence of spending any amount for the purpose of cultivation of bamboo was produced before the AO. 9. We have considered the arguments of both the sides in the light of the materials available on record. The AO disallowed the claim on the ground that this amount i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the waiver of the claim by the respective creditors the abovesaid amount was transferred to capital reserve during the relevant year. According to the learned counsel, the AO has committed a serious error in making the addition under s. 41(1) of the Act in the hands of the assessee after the amalgamation. The learned senior counsel submitted that under s. 41(1) the addition can be made to the assessee if the identity of the assessee is one and the same. In the present case the Sterling Tea Co. has lost its identity after the amalgamation with the assessee-company and hence the AO cannot make any addition in the hands of the assessee-company under s. 41(1) of the Act since the identity of the assessee-company is not as of the Sterling Tea Co. According to the senior counsel the identity of the Sterling Tea Co. ceased immediately after the amalgamation. The learned counsel has also relied upon a judgment in the case of Saraswati Industrial Syndicate Ltd. vs. CIT reported in (1990) 88 CTR (SC) 61 : (1990) 186 ITR 278 (SC). On the contrary, the learned Departmental Representative submitted that the transfer of capital reserve was carried out without being routed through P L a/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced so as to make liable the successor of the business to pay the tax. However, the above amendment came into effect only from 1st April, 1993. The assessment year now in question is 1986-87. Hence, we are of the opinion that the amended provisions of s. 41(1)(b) which came into effect from 1st April, 1993, would not be applicable to the present case. In view of our discussion as held above and following the judgment of the Hon ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. vs. CIT, we are of the considered opinion that the amount of Rs. 29,94,778 is not exigible to tax under s. 41(1) of the Act in the hands of the assessee after the amalgamation. Accordingly, we have no hesitation to set aside the findings of both the authorities below and direct the AO to delete the said amount from the total income of the assessee. 13. The 5th ground of appeal is in respect of sales-tax collected during the relevant previous year which was disallowed by the AO and confirmed by the first appellate authority. The learned senior counsel submitted that a sum of Rs. 86,627 was collected as sales-tax. The learned counsel very fairly admitted that even though the assessee collec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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