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TMI Blog2017 (10) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... and fund. We further find that the expenses in paying the consultancy fees is not for the new line of business and it was incurred for raising alternate crop under the permission of Assam Government to utilize the same land which is under tea plantation. Therefore, in our opinion, the assessee is entitled to claim such expenditure as revenue expenditure. In view of above, we find no infirmity in the impugned order of the CIT-A in deleting the same - I.T.A Nos. 1358 & 1359/Kol/2014 AND C.O Nos. 95 & 96/Kol/2014 - - - Dated:- 25-10-2017 - Shri J. Sudhakar Reddy, Accountant Member and Shri S.S. Viswanethra Ravi, Judicial Member For The Appearances : Shri Sallong Yaden, Addl.CIT, ld. Sr.DR And Shri Kaushik Mukherjee Shashank Kasat, ld.ARs Shri. S.S.VISWANETHRA RAVI, JM: These two appeals by the Revenue and corresponding cross objection are directed against the separate orders both dated 12/03/2014 passed by the Commissioner of Income Tax(Appeals)-IV, Kolkata for the assessment years 2008-09 and 2009-10. 2. We shal l take up the appeal in ITA No. 1358/K/2014 for A.Y 2008-09 by the revenue. 3. The appellant Revenue has raised following grounds:- i). That o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamined the Assessment Order as well as the contention of the appellant. It is fact that the matter has now been comprehensively adjudicated by the Hon ble Jurisdictional High Court of Kolkata in the case of CIT vs.- AFT industries Ltd (2004) 270 ITR 167 and the issue stands decided in favour of the appellant. Although against this judgement, a SLP has been admitted in the Supreme Court, nevertheless, the Supreme Court has not stayed the order of the High Court of Kolkata. Pendiing adjudication of the Supreme Court, the decision of the Jurisdictional High Court in the case of AFT Industries Ltd, will hold. Addition of ₹ 3,67,07,442/- made on this account is deleted. 8. We find that, as matter stood thus, the Honourable Supreme Court dismissed the SLP filed by the appellant revenue and agreed with the interpretation of scope of Rule 8 of Income Tax Rules 1962 rendered by the Honourable High Court of Calcutta. The Learned AR placed copy of such order before us and submitted that the present appeal may be disposed of in pursuance of the decision of Honourable Supreme Court and learned DR submits that the appellant revenue did not succeed in SLP and the decision of Honoura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tancy fees paid to M/s. Globally Managed Services (GMS). 11. The AO asked the details in respect of the consultancy fee. The assessee vide its letter dt: 15-12-2010 21-12-2010 stated that the Assam Government had granted approval of utilization of 5% of grant area of each tea estate for land utilization for the use of any agricultural activity other than tea. In this regard, the assessee availed the services of M/s. Globally Managed Services [M/s.GMS] for assisting in raising such alternative crops by providing expertise, knowhow and process of identification of suitable agricultural crop for trials, assess potential for scalability and also identifying marketing channel options. The AO found the submissions of the assessee not acceptable and proposed disallowance. However, the assessee contended that the said disallowance should be made on composite business income by application of Rule 8 IT Rules inspite of which the AO disallowed an amount of ₹ 47,18,760/- and added the same to the total income of the assessee. 12. Aggrieved, the assessee challenged the same before the CIT-A. Before him the assessee contended that the said consultancy was taken by the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has incurred losses on various alternate crops and has discontinued development of the same, thus no enduring benefit accrued to the appellant from the services provided by GMS. The appellant vide additional submission has placed reliance on various judicial pronouncements and has submitted that the alternate crop business formed part of its existing line of business and was intrinsically linked to the tea business o the appellant having common management and fund. The said consultancy was thus not in respect of any new line of business and hence cannot be considered as capital in nature. The appellant has further submitted that even if it is considered as new line of business since the business was carried on with common management and fund, the expenditure in account of consultancy cannot be disallowed as capital expenditure. 10.4 It has thus been submitted relying on various judicial pronouncements that the said expenditure was made in the normal course of carrying on the alternate crop business and hence should be allowed as a deduction under section 37(1). It is a common affair for business enterprises to take advices from subject experts on various issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tea plantation and the alternative crop farming resulted into the losses and the assessee terminated raising of such alternate crop in subsequent years and as such the expenditure incurred did not give a long lasting benefit to the assessee. We find there is continuity of business with common management and fund. We further find that the expenses in paying the consultancy fees is not for the new line of business and it was incurred for raising alternate crop under the permission of Assam Government to utilize the same land which is under tea plantation. Therefore, in our opinion, the assessee is entitled to claim such expenditure as revenue expenditure. In view of above, we find no infirmity in the impugned order of the CIT-A in deleting the same and uphold the same. Ground no.2 raised by the revenue is dismissed. 15. The appeal in ITA No. 1358/Kol/2014 for A.Y 2008-09 of the Revenue is dismissed. 16. Now, we shall take up the appeal in ITA No. 1359/Kol/2014 A.Y 2009-10 by the revenue. 17. The appellant Revenue has raised following grounds:- i). That on the facts and in circumstances of the case, the ld. CIT(A) has erred in deleting the disallowance made on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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