9911796707
TMI Blog2018 (3) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... vision has been made by the legislature has been satisfied by the assessee in this case before us. Thus we hold that the action of the revenue in bringing to tax the deemed income in terms of section 33AB(7) of the Act deserves to be deleted. - Decided in favour of assessee - I.T.A. No. 979/Kol/2015 - - - Dated:- 7-3-2018 - Shri P. M. Jagtap, AM And Shri A. T. Varkey, JM For The Appellant : Shri P. N. Rajendran, AR For The Respondent : Shri Pinaki Mukherjee, Addl. CIT ORDER Per Shri A.T.Varkey, JM This is an appeal preferred by the assessee against the order of Ld. CIT(A)-2, Kolkata dated 23.02.2015 for AY 2011-12. 2. The only issue to be decided in this appeal of assessee is as to whether the ld CITA was justified in upholding the applicability of section 33AB(7) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) against the assessee in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee s main business activity is cultivation of tea, manufacturing of tea from leaves procured from own garden as well as from bought leaves and also trading of tea. The AO observed from the Tax Aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of the assessee that in case if the provisions of section 33AB(7) of the Act are viewed strictly, then the deduction originally granted at the time of making deposit in NABARD in earlier years would get withdrawn partially even though the assessee had utilized the withdrawn amount from NABARD deposit in accordance with the Tea Development Scheme 2007. Hence, the Ld. AR argued that it cannot be the intention of the legislature to deny the benefit of deduction and as per him, the action of the AO in treating the unutilized portion as deemed income of the assessee u/s 33AB(7) of the Act should not be sustained. According to Ld. AR, the ld CITA however did not heed to these contentions of the assessee and upheld the action of the ld AO. Aggrieved, the assessee is in appeal before us on the following grounds:- 1. That on the facts and in the circumstances of the case the Ld. CIT(A)erred in law in rejecting the claim of deduction of Rs.l,49,82,251/- utilized in accordance with the Tea Board Scheme (the Scheme) out of ₹ 3,38,81,400/- withdrawn from NABARD on 18/01/2011 in the immediately following accounting year before the due date for filing the return u/s 139(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during any previous year by the National Bank 37[or which is withdrawn by the assessee from the 38[***] Deposit Account] for being utilised by the assessee for the purposes of such business in accordance with the scheme 37[or the deposit scheme] is not so utilised, either wholly or in part, within that previous year, the whole of such amount or, as the case may be, part thereof which is not so utilised shall be deemed to be profits and gains of business and accordingly chargeable to income-tax as the income of that previous year : Provided that this sub-section shall not apply in a case where such amount is released during any previous year at the closure of the account in circumstances specified in clauses (b), (c) and (e) of sub-section (3). 4.1. The assessee in the instant case had withdrawn ₹ 5,32,75,100/- from NABARD deposit during the previous year ended 31.3.2011. It had utilized a sum of ₹ 3,82,92,849/- before 31.3.2011 in accordance with Tea Development Scheme, 2007. It is not in dispute that it had placed orders for procurement of various machineries and assets such as conveyor, VFBD, Fermentor, Tea Roller, weigher and for electrification etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 32AB of the Act contained a similar provision to section 33AB(7) of the Act. For the sake of convenience, the erstwhile provisions of section 32AB(6) of the Act are reproduced below:- Investment deposit account Section 32AB. . ( 6) Where any amount, standing to the credit of the assessee in the deposit account, released during any previous year by the Development Bank for being utilized by the assessee for the purposes specified in the scheme or at the closure of the account [[in circumstances other than the circumstances specified in clauses (b), (c ) and (e) of sub-section (5A)]], is not utilized in accordance with [and within the time specified in,] the scheme, either wholly or in part, [***] the whole of such amount or, as the case may be, part thereof which is not so utilized shall be deemed to be the profits and gains of business or profession of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year. 4.2.1. The scope and effect of the amendments made in section 32AB of the Act by the Finance Act, 1987 (11 of 1987) , have been elaborated in the following portion of the departmental circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 32AB (6) and section 33AB(7) are similarly worded in both letter as well as in spirit. It is not in dispute that the assessee in this case before us had utilized the withdrawals from deposit account within the specified time prescribed under the scheme. Though the abovementioned circular was issued for section 32AB(6) of the Act, the analogy given thereon could be used for section 33AB(7) of the Act also in view of similar words used in the statute and since the purpose behind both the sections remain the same. We also find that the legislature had provided for adequate precautions in the section 33AB of the Act itself that in case if the amounts lying in deposit account remains unutilized by the assessee for specified purposes as provided in the Tea Development Scheme, 2007, then the outstanding amounts would be brought to tax as deemed income of the assessee on closure of the business. No assessee would keep its funds blocked in a specified deposit account yielding lesser interest rates as compared to market rates, without using the same for specified purposes. The amounts lying in deposit would remain unutilized only in the event of assessee deciding to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is easily discernible from the whole of the scheme of the Act which in this case, is to counteract the effect of transfer of assets so far as computation of income of the assessee is concerned, then bearing that purpose in mind, we should find out the intention from the language used by the legislature and if strict literal construction leads to an absurd result, i.e., result not intended to be subserved by the object of the legislation found in the manner indicated before, then another construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction. 4.3.3. We hold 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 as held by the Hon ble Supreme Court in Bajaj Tempo Ltd. (supra). We also hold that though equity and taxation though are strangers , attempts should be made that these do not remain always so and if a construction r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
