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TMI Blog2008 (8) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we hold that the sum declared by the assessee company as agricultural income has to be accepted. The consequential disallowance and addition are deleted. This issue is decided in favour of the assessee. Disallowance of provident fund and ESI contributions - Even though the payments were not made before the due dates under the respective Acts, the payments were in fact made before the due date of filing of return of income. Therefore, the claim of the assessee has to be accepted. The disallowance is deleted. The AO is directed to deduct those amounts while computing the taxable income. This issue is decided in favour of the assessee. Levy of interest u/s 234D - the levy is applicable only from AY 2004-05 onwards as held by Special Bench in the case of ITO vs. Ekta Promoters (P) Ltd. [ 2008 (7) TMI 452 - ITAT DELHI-E] . In the present case. the AY is 2002-03. Therefore, s. 234D will not apply and the levy is not sustainable. It is deleted. This issue is also decided in favour of the assessee. The assessee is successful in its appeal filed before us. Written off liability - Existence/genuineness of liabilities - There is no doubt that the assessee has not written of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the assessing authority, the only expenses incurred by the assessee company related to cultivation charges and harvesting expenses. According to the AO, the above activities did not constitute agricultural activities. Accordingly, the amount of Rs. 10,76,155 has been treated as income of the assessee company under Income from other sources . 4. In its accounts, the assessee company has shown a foreign liability of Rs. 37,07,123 and an amount of Rs. 22,36,853 by way of other liabilities. These two liabilities were treated as income of the assessee company for the reason that particulars were not furnished by the assessee company. Thus, ultimately, the assessment was completed on a total income of Rs. 1,06,86,456. 5. The assessment was taken in first appeal. Regarding the question of agricultural income, the CIT(A) held that the assessee has not brought on record any evidence to prove that the assessee had carried primary agricultural operations. Accordingly, he confirmed the said addition of Rs. 10,76,155. The CIT(A) also confirmed the addition under s. 43B amounting to Rs. 5,41,058. Regarding liabilities reflected in the balance sheet, the CIT(A) deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lantation taken on lease. Obviously, the tea plants are of much age. Tea plants usually survive even beyond 100 years. It does not mean that once a tea plantation has become yielding, there is no need of any basic operations thereafter. Apart from planting the necessary bushes, weeding it and yielding these bushes, there are certain necessary expenses which are in the character of basic operations. Tea plantation requires utmost care and management. Tea bushes have to be replaced with new one. Pruning and filling have to be carried out on a regular basis in a tea estate. Pruning of tea plantation is a very serious work concerned with cultivation. It is not just like in the case of a seasonal crop. Filling is another important process which means planting new tea saplings which is nothing but a part of basic operation. Pest and disease management, is also an important, factor of tea cultivation. Weed management is also equally important. Therefore, it is not fair to reject the contention of the assessee by making a casual statement that expenses were incurred for secondary operations alone. The decision of Supreme Court relied on by the lower authorities in the case of CIT vs. Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rent paid by the assessee is an agricultural income in the hands of holding company and income earned by the assessee is again agricultural income in the hands of the assessee company. This is because the basic operations have already been carried out in the agricultural land. The only point is that the basic operations were carried out by the holding company, i.e. the lessor. That does not mean that the income ceased to be agricultural income. The assessee company as a lessee has carried out all the necessary activities to run the tea estate. The assessee company has carried out certain basic operations like filling and pruning. It has applied manure; it has applied pesticides; it has taken all measures to protect the crop. It is after these processes, it becomes ripe for harvesting. Therefore it is crystal clear that income earned by the assessee is agricultural income. The decision of Supreme Court in the case of CIT vs. Raja Benoy Kumar Sahas Roy, has no application in this case. 15. Therefore, in the facts and circumstances of the case, we hold that the amount of Rs. 10,76,155 declared by the assessee company as agricultural income has to be accepted. The consequential d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. yr. is 2002-03. Therefore, s. 234D will not apply and the levy is not sustainable. It is deleted. This issue is also decided in favour of the assessee. 21. The assessee is successful in its appeal filed before us. 22. In the appeal filed by the Revenue in ITA No. 2384/Mad/2006, the following grounds are raised: (1) The learned CIT(A) failed to appreciate the fact that the assessee has failed to furnish any satisfactory explanation with regard to the existence/genuineness of liabilities during the course of assessment proceedings or during the remand proceedings. (2) The claim of the assessee before the CIT(A) that Rs. 15,98,074 was written off as unclaimed as on 31st March, 2005 is not true. 23. We considered the issue. There is no doubt that the assessee has not written off any liability in its books of account pertaining to sum of Rs. 15,98,074. Therefore, irrespective of the question when in future the said amount was written off by the assessee, the question is whether the said amount could be treated as income of the impugned asst. yr. 2002-03. The simple answer is no because the AO has not brought anything on record to prove that those liabilities cease to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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