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TMI Blog2018 (3) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... posit account to the tune of Rs. 1,49,82,251/- which was not utilized before 31.3.2011 for its intended purpose. Accordingly, the AO added the same as deemed income of the assessee u/s 33AB(7) of the Act. The assessee submitted that it had withdrawn an amount of Rs. 5,32,75,100/- from NABARD during the previous year ended 31.3.2011 relevant to Asst Year 2011-12 as under:- Date of withdrawal Amount of withdrawal (Rs.) 13.05.2010 1,54,41,900 03.06.2010 20,98,100 10.09.2010 18,53,700 18.01.2011 3,38,81,400 Total: 5,32,75,100 The assessee submitted that the said amount was made use of it in the same financial year on the basis of placing the orders within the financial year and an aggregate sum of Rs. 3,82,92,849/- was also paid before 31.3.2011. The orders for procurement of various machineries such as conveyor, VFBD, Fermentor, Tea Roller, Electrification and weighier were placed before the end of the previous year and proforma invoice obtained from the concerned suppliers. The assessee also stated that advance amounts were also paid as per the terms of the orders and since there is always a time gap between placing of orders and actual delivery of the machineries and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the provision of section 33AB(7) is unambiguous. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) ought to have held that section 33AB being a provision for granting incentive to promote the growth and development of tea industry be construed liberally and the restriction on it be construed to advance the objective of the provision and not to frustrate it and accordingly he should have deleted Rs.l,49,82,251/- utilized in accordance with the Scheme as deemed income of the previous year. 3. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in law in placing literal interpretation to the expression "not utilised within that previous year" and not applying the rule of reasonable construction to give effect to the true objective of section 33AB and confirming the addition of Rs.l,49,82,251/- as deemed income. 4. That the appellant craves leave to add, alter, amend, cancel, supplement or otherwise modify the grounds stated above, before or at the hearing of the appeal as it may deem fit." 4. We have heard the rival submissions. We find that the assessee had been given deduction u/s 33AB of the Act in the earlier year at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee before the due date of filing the return of income u/s 139(1) of the Act. Though there is no relevance for the due date of filing the return of income u/s 139(1) of the Act as far as the utilization of withdrawn amounts are concerned, the same is mentioned here only to drive home the fact that the unutilized portion has been duly utilized by the assessee within a reasonable period after the end of the previous year. It is not in dispute that the entire utilization has been made in accordance with the Tea Development Scheme, 2007. Hence there is no diversion of funds for non-business purposes or for purposes other than those mentioned in the Tea Development Scheme, 2007. The revenue had taxed the unutilized portion of Rs. 1,49,82,251/- as deemed income of the assessee by strictly interpreting the provisions of section 33AB(7) of the Act. This would lead to a situation where, the assessee having been given deduction in earlier year at the time of making deposit in NABARD, and had withdrawn the amounts thereon in subsequent years from NABARD deposit and utilized the same in the manner provided in Tea Development Scheme, 2007 with some delay (i.e utilization had happened partly af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring which the withdrawal was made. There may be a situation where an assessee withdraws the amount and utilises the same in accordance with the scheme for specified purposes within the period permitted by the scheme but a part of such period may fall in the next accounting year. In such cases, the effect of the existing provisions is that though an assessee has utilised the amount in accordance with the scheme, the amount will be added to the assessee's income in the year in which the withdrawal is made. To remove this anomaly, the Amending Act, 1987 has clarified [section 32AB(6)] that in a case where the amount withdrawn has been utilised for the specified purpose within the period specified in the scheme, such amount would not form part of the income of the assessee in the previous year in which the amount has been withdrawn. (Underlining provided by us) FINANCE ACT, 1987 20.8 The utilisation of the amount withdrawn is permitted in accordance with the provisions of section 32AB and the scheme framed thereunder for the purpose of purchasing a "new ship" or "new aircraft" or "new machinery or plant". These expressions have been defined in the Explanation to section 32(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad over next accounting year, the entire spirit of the requirements of the section 33AB(7) of the Act has been fulfilled by the assessee. 4.3. It is trite law that an incentive provision should be construed liberally. Reliance in this regard is placed on the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd vs CIT reported in 196 ITR 189 (SC) wherein it was held that :- " A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not to frustrate it." 4.3.1. Similarly the Hon'ble Supreme Court in the case of CIT vs Gwalior Rayon Silk Manufacturing Co. Ltd reported in 196 ITR 149 (SC) wherein it was held :- It is equally settled law that if the language is plain and unambiguous one can only look fairly at the language used and interpret it to give effect to the legislative intention. Nevertheless tax laws have to be interpreted reasonably and in consonance with justice adopting purposive approach. The contextual meaning ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. We further take note of the fact that in case if the assessee is taxed on deemed income basis in this year for non-utilisation of withdrawals within that previous year, then the assessee would never get any deduction in subsequent years also for this utilized amount. This would in effect result in withdrawal of deduction in part earlier granted to the assessee at the time of making deposit with NABARD and frustrate the incentive scheme framed for Tea growers and manufacturers. 4.4. The provisions of section 33AB (7) of the Act uses the expression 'being utilised'. It is not in dispute that the amount withdrawn by the assessee from NABARD was for utilisation as per Tea Development Scheme of 2007 and the assessee had in fact placed orders for acquisition of various machineries that are required for setting up of new units to be engaged in growing and manufacturing of tea i.e acquisition for machineries /specified purposes as envisaged in para 9(a) to (k) of the Scheme. It is not in dispute that the assessee had paid substantial portion of the proforma invoice value as advance before 31.3.2011 and had included the same in the utilization statement before 31.3.2011 which clearly in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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