RYDAK SYNDICATE LTD.,KOLKATA vs. ACIT, CIRCLE 4(1),, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. No.356/KOL/2026 (Assessment Year: 2021-22) Rydak Syndicate Ltd., ACIT, 4, Jardines, G.P.O, Kolkata – Vs. Circle – 4(1), 700001, West Bengal Kolkata [PAN:AABCR2656P] (Appellant) .. (Respondent) Appellant by : Shri Anil Kochar & Vasudha Kochar, AR Respondent by: Shri Praveen Das Chowdhury, Sr. DR Date of Hearing 01.07.2026 Date of Pronouncement 14.07.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

This appeal preferred by the assessee is against the order of the Learned Addl./Jt. Commissioner of Income Tax (Appeals),National Faceless Appeal Centre, Delhi, (hereinafter referred to as the “Ld. JCIT(A)”], dated 28.11.2025 for the Assessment Year (AY) 2021-22.

”4. For that the Ld. CIT(A) ought to have adhered to the provisions as enumerated under Rule 8 of the Income Tax Rules which pertains to taxation in respect of income from manufacture of Tea. 5. For that the Ld. CIT(A) ought to have dwelled upon Rule-8 of the Income Tax Rules which enumerates that only 40% of the income shall be deemed

ITA No.356/Kol/2026/AY 2021-22 Rydak Syndicate Ltd. vs. ACIT to be liable for tax and ought to have limited the disallowance made u/s 36(1)(v)(a) of the Income Tax Act, 1961 to 40%.” 3. The facts of the case in brief are that the assessee is engaged in the business of growing and manufacturing of tea and during the year filed the return of income on 14.03.2022, which was processed u/s 143(1) of the Income-tax Act, 1961 (In short, ‘the Act’). The Assessing Officer, Central Processing Centre (In short, ‘the AO, CPC’) disallowed the employes PF and ESI by making addition of Rs.80,17,726/- u/s 36(1)(va) of the Act.

ITA No.356/Kol/2026/AY 2021-22 Rydak Syndicate Ltd. vs. ACIT 6. We have heard rival submissions and perused the materials available on record. Undisputed facts are that , the assessee is a tea growing and manufacturing company and the income is assessable according to Rule 8 of Income Tax Rules pursuant to which 40% of the income was treated as taxable and 60% as agricultural income. However, the AO has added the entire amount of disallowance on account of PF and ESI, whereas the same should be assessed in the proportion of 40:60 ratio. The case of the assessee is squarely covered by the following decisions namely CIT vs. Doom Dooma India Ltd. (2009) 310 ITR 392 (SC), CIT vs. Tata Tea Ltd. (2011) 338 ITR 285 (Cal.) and Godricke Group Ltd. vs. CIT (1993) 201 ITR 261 (Cal.).We note that Co-ordinate Bench of ITAT, Kolkata has decided the similar issue by holding that the disallowance has to be made in the ratio 40:60 i.e taxable and agricultural income in the case of Western Conglomerate Ltd. Vs ITO (supra). The relevant part of this order is reproduced below:

“4.1. After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the company is a tea growing and manufacturing company and therefore, the income has to be assessed as per Rule 8 of the IT Rules, which provides that 60% of the income has to be treated as agricultural income which is exempt and only taxable income would be only to the extent of 40% of the total income under the Act. Thus, we find merit in the contention of the assessee that disallowance is to be made in the similar ratio and the income has to be computed as per Rule 8 as held in the above decisions. Consequently, we set aside the order passed by the ld. CIT (A) and restore the issue to the file of the ld. JAO to assessee the income in terms of Rule 8 of the IT Rules. Needless to state that only 40% of the amount of delayed PF would be added to the taxable part of income. The appeals of the assessee are allowed for statistical purposes.” 8. Considering the facts of the instant case in the light various decisions as cited above, we are inclined to hold that disallowance has to be restricted to 40 % of the total amount in accordance with Rule 8 of Income-tax Rules. Needless to say, that only 40% of total amount of unpaid PF and ESI is to be

ITA No.356/Kol/2026/AY 2021-22 Rydak Syndicate Ltd. vs. ACIT added to the income of assessee and remaining has to be deleted. Consequently, the order of ld. CIT(A) is set aside and AO is directed to add only 40% of the total disallowance to the income of the assessee.

The order is pronounced in the open Court on 14/07/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated: 14/07/2026 SAMANTA ] �ȯ��ȧĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to: 1. \ �Ȣ�ȡ�ȸ/ The Appellant 2. Ĥ×��ȸ/ The Respondent. 3. Ȳ�Ȳͬ��] ���] �ǕÈ�/ Concerned CIT 4. ] ���] �ǕÈ�(अपील) / The CIT(A) 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, ] ���\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[�ȡ_�/ Guard file.

BY ORDER, // TRUE COPY // Asstt.Registrar, ITAT, Kolkata