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TMI Blog2015 (3) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee carried the matter to the ld.CIT(A), who deleted the addition by observing as under:- 3.1 I have carefully considered the submission of the ld.A.R. In the case under consideration though the payment was effected beyond the time prescribed in section 36(1)(va) but the same was duly paid by the appellant within the close of accounting year, hence well before the due date of furnishing of the return. Hence considering the decision of the Hon'ble Karnataka High Court in the case of Commissioner of Income Tax v Sabari enterprises (2008) 298 ITR 141(Karn) and duly affirmed by the Apex Court in the ratio of CIT vs. Alom Extrusions Ltd [319 ITR 306] and the recent decision of the Hon'ble Delhi High Court in the case of Commissioner of Income Tax v AIMIL Limited the disallowance of ₹ 5,27,971/- on account of belated payment P.F contribution made by the AO u/s.43B/36(1)(va) of the Act is deleted. The appellant will get necessary relief accordingly. Now, the department is in appeal before us. 8. The ld.DR has strongly supported the order of the AO. 9. In his rival submissions, the ld. Counsel for the assessee has submitted that the amount was duly paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution after April 1, 2004, would get the benefit of deduction under section 43B of the Act. In our view, therefore, the Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from April 1, 1988, when the first proviso was introduced. It is true that Parliament has explicitly stated that the Finance Act, 2003, will operate with effect from April 1,2004. However, the matter before us involves the principle of construction to be placed on the provisions of the Finance Act, 2003. 10.1 In view of the above, we do not see any merit in this ground of the departmental appeal. The same is dismissed. 11. The next issue relates to deletion of disallowance made by the AO on account of Cess payable. 12. The facts relating to this issue in brief are that the assessee has debited a sum of ₹ 1,99,20,614/- on account of Cess on Green Leaf. 13. The AO was of the view that the said amount was allowable as a deduction against the agricultural income only, which is computed as per Rule 8 of the Income Tax Rules, 1962 at 60% of the composite income. The submission of the assessee was that the said amount was eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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. 18. We, therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional Calcutta High Court in the aforesaid referred to case, do not see any infirmity in the order of the ld.CIT(A) on this issue. We uphold the same. This issue of departmental appeal is dismissed. C.O No.79/Kol/2010 arising out of ITA No.1092/Kol/2010 for the A.Y 2006-07. 19. In this Cross Objection, the assessee has raised the following grounds:- 1. That on the facts and in the circumstances of the case, ld.CIT(A) has erred in holding that liability in respect of foreign loan due to exchange fluctuation has not accrued and thereby confirming the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowable as the assessee has maintained the books of account on mercantile system of accounting. Therefore, as per AS-II, the impugned loss was allowable. Reliance was placed on the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Woodward Governor India P.Ltd reported in (2007) 294 ITR 451(Del). 25. In his rival submission, the ld.DR has strongly supported the orders of the authorities below. 26. We have considered the rival submissions of both the parties and carefully gone through the material available on record. On a similar issue the Hon'ble Delhi High Court in the case of CIT Vs. Woodward Governor India P.Ltd (supra) has held as under:- (ii) That there was no provision for the assessment of the actual cost at a stage subsequent to the date of acquisition of the asset. Depreciation had to be worked out thereafter only on the basis of the actual cost at the time of acquisition to provide for subsequent revisions to the actual cost. In computing the capital gains arising to the assessee on the sale or transfer of a capital asset acquired by him from abroad on deferred payment terms or against a foreign loan, the additional rupee liability incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had incurred cash expenses aggregating to ₹ 1,29,993/- in excess of ₹ 20,000/- on each occasion and the auditor indicated that ₹ 25,999/- was not allowable u/s.40A(3) of the Act. 30. Being aggrieved, the assessee carried the matter to the ld.CIT(A). Before him the assessee submitted as under:- (i) Ld. AO has made the disallowance by referring to Tax Audit report (Appendix-VI) which gives details of cash payments aggregating to ₹ 1,29,993/-. It is not denied that each payment constituting the aggregate figure is in excess of ₹ 20,000/- (ii) The appellant explained the reason for which cash payment aggregating to ₹ 1,29,993/- was made. Ld.AO has rejected such explanation on the ground that the reason is not cogent or convincing. (iii) The particulars of cash payments as reported in Appendix VI of TAR is reproduced for the sake of convenience as under:- (iv) Perusal of expenditure detailed above will show that entire payment was for the welfare of Staff labour. The expenses related mainly for payment to gas agency for supply of gas in connection with running of canteen for the staff. The remaining expenses repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. ITA No.1093/Kol/2010 for the A.Y 2006-07 (by the department) 35. In the departmental appeal in ITA No.1093/Kol/2010 for the assessment year 2006-07, the department has raised the following grounds:- 1. That, the learned CIT(Appeals) has erred in deleting the disallowance of ₹ 82,107/- for belated deposit of employees' contribution to P.F. 2. In the facts and circumstances of the case, the learned CIT (Appeals) has erred in law in deleting the disallowance of ₹ 98,30,272/- towards Cess payable by the assessee company on cultivation of green tea leaves. 36. In the C.O No.80/Kol/2010 arising out of ITA No.1093/Kol/2010 for the A.Y 2006-07 the assessee has raised the following grounds: 1. That on the facts and in the circumstances of the case, ld.CIT(A) has erred in holding that liability in respect of foreign loan due to exchange fluctuation has not accrued and thereby confirming the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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