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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: Shri Sanjay Garg & Shri Girish Agrawal
order : October 31, 2023 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 30.01.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. That under the facts and circumstances of the case and in law the order passed by CIT(A) is bad-in-law, arbitrary, perverse, unsustainable and against the principles of natural justice.
2. That under the facts and circumstances of the case the Learned CIT (Appeals) has grievously erred in sustaining the addition/disallowances of Rs. 34,66,287 being Replantation subsidy received from Tea Board which is exempt under Section 10(30) of the Income Tax Act, 1961.
Assessment Year: 2014-15 The Oodlabari Company Ltd 3. That under the facts and circumstances of the case the Learned CIT (A) has erred in sustaining the addition/disallowances of Rs. 5,29,625 being 30% of sale proceeds of shade trees which had been disallowed by the Assessing Officer by invoking the provision of Section 14A read with Rule 8D even though the sale proceeds of shade trees has not been claimed by the assessee as exempt income.
That under the facts and circumstances of the case and in law the Ld. CIT (A) has erred in not visualising the grave arithmetical mistakes committed by the Assessing Officer in the computation of income which is as glaring as broad daylight and even though the same was pointed out.
5. That the learned CIT(A) grossly erred in not considering the written submissions and evidences furnished during the course of appellate proceedings.
The appellant craves leave to make any addition, alteration or modification etc., of the grounds either before the appellate proceedings, or in the course of appellate proceedings.”
Ground No.1 is general in nature. Ground No.2 – Vide Ground No.2 the assessee has agitated the 4. confirmation of addition of Rs.34,66,287/- on account of disallowance made by the Assessing Officer relating to exemption claimed u/s 10(30) of the Act in respect of Replantation subsidy received from Tea Board of India.
A perusal of the assessment order would reveal that the Assessing Officer has disallowed the exemption from taxation claimed by the assessee on the ground that for the year under consideration, the assessee could not establish nexus between income earned from its tea production activity and the Replantation subsidy received from the Board. There is no allegation of the Assessing Officer that the assessee has not received the Replantation subsidy from the Board. The ld. counsel for the assessee, in this respect, has placed reliance to pages 39 to 59 of the paper-book.
Assessment Year: 2014-15 The Oodlabari Company Ltd 6. The only reason pointed out by the Assessing Officer is that the nexus of income with the subsidy has not been established, which, in our view, cannot be a valid reason to deny exemption to the assessee in respect of Replantation subsidy. The Replantation subsidy, in our view, is given for Replantation of tea plants, which may yield income in subsequent years. Therefore, the above disallowance made by the Assessing Officer cannot be held to be justified. The addition made by the Assessing Officer, in this respect, is ordered to be deleted. Ground No.3 – Vide Ground No.3, the assessee has agitated the 7. confirmation of addition of Rs.5,29,625/- on account of disallowance made u/s 14A of the Act r.w.r 8D of the Income Tax Rules in respect of exemption claimed on sale of shade trees as agricultural income.
The Assessing Officer held that the shade trees do not grow naturally but they have to be planted, irrigated and nourished which require considerable expenditure in terms of manure, irrigation and engagement of labour. Keeping in view this aspect, the Assessing Officer disallowed 30% of the sale proceeds of shade trees as expenditure incurred for earning of exempt agricultural income.
At the outset, the ld. counsel for the assessee has submitted that out of total receipts, the assessee has already added back 30% and submitted that no further disallowance was warranted. Considering the above plea, the disallowance made by the Assessing Officer in respect of Ground No.3 is ordered to be deleted. This ground stands allowed.
Ground No.4 – Vide Ground No.4, the assessee has pleaded that there is some computation error made by the Assessing Officer while computing taxable income of the assessee.