JAY SHREE TEA & INDUSTRIES LTD.,KOLKATA vs. DCIT, CIRCLE - 4(1), KOLKATA, KOLKATA

आदेश /O R D E R PER S.S.Godara, Judicial Member:- This assessee’s appeal for assessment year 2013-14 arises against the Principal Commissioner of Income Tax-2,Kolkata’s order dated 22.03.2018 passed in case F.No.Pr.CIT-2/Kol/Revision/17-18/263/Jay Shree/13- 14/11392-94, involving proceedings u/s 263 of the Income Tax Act, 1961;in short ‘the Act’. Heard both the parties reiterating their respective stands against and in support of the Principal CIT’s action assuming u/s 263 revision jurisdiction qua the assessee’s regular assessment framed on 09.03.2016 determining income of ₹22,26,27,270/- under normal and ₹33,65,83,660/- under MAT provision. Case file perused.

‘The perusal of the assessment records reveals that as per Profit & Loss Account for the year ended 31st March, 2013, you credited an amount of Rs.27,92,53,000/- under the head “Other Income” (Schedule 2.19 to the P&L A/c) which included Rs.13,11,47,476/- as “Interest Income” which was allocated to three heads namely ‘100% Taxable by Central’ ‘40% Taxable by central’ and ‘Head Office’ ((which later proportionately allocated between previous two) amounting to Rs.14,43,568/-, Rs.9,88,847/- and Rs.12,87,15,061/-. For the purpose of Rule 8 of Income Tax Rules. “Interest Income” should not be included in composite income rather it should be taxable on full (100%) without availing any apportionment.’

3. A show cause notice, dated 27.02.2018 was issued to the assessee- company requiring it to submit clarification or explanation to the above issue & also to show cause why remedial action u/s.263 of the Act would not be taken against the assessment order made u/s.143(3) dated 09.03.2016. In its response, Shri B.K. Chadurvedi, Vice President (Taxation) appeared on behalf of the assessee company and furnished a written submission to the show cause notice, which is placed on record. The matter was discussed and heard. The relevant portion of the written submission mad therein is reproduced below:- ‘The assessee is mainly engaged in the business of growing and manufacturing of tea, apart from other activities and the income from tea grown and manufactured is required to be computed as if business income and 40% thereof is taxable under the income tax act, as per rule 8 of the Income Tax Rules, 1962. For the purpose of computation of income of each tea estate, all the revenue income and expenditure of tea estates are considered and three after the total expenditure of the Head Office is being allocated to all the gardens and units on the basis of sales percentage. All the income and expenditure so allocated includes payment of interest and receipt of interest both. In the year under review the total interest earned by the assessee is Rs.13,11,47,476/- which includes Rs.9,88,847/- being the interest received by the tea estates on security deposits made with the electricity board and the total expenditure on account of interest is Rs.37,38,37,446/-. Therefore, the net amount is Rs.24,26,89,970/- which has been proportionately charged in the profit and loss account in all the units and gardens. The Hon'ble High Court in the case of AFT Industries Ltd. [270 ITR 167] has held that cess on green leaf will be deductible from the Jay Shree Tea & Inds. Ltd. Vs. DCIT, Cir-4(1), Kol. Page 3 composite income and thereafter rule 8 will be applicable. The said principle laid down by the Hon'ble Calcutta High Court has been approved by the Apex Court in the case of Commissioner of Income Tax vs. Appejay Tea Co. Ltd. [Civil Appeal no. 1105 of 2006]. A copy of the said judgment of the Hon'ble Supreme Court is annexed hereto. Reliance is further placed on the judgment of the Hon'ble Calcutta High Court in the case of Warren Tea Ltd. vs. Commissioner of Income Tax & Others. [374 ITR 0006] and Commissioner of Income Tax vs. J.J. Exporters Ltd. [324 ITR 329]. Although both the judgments are principally in favour of the assessee but the judgment in respect of Warren Tea which is a tea company and whose income is assessable under rule 8, the Hon'ble Court has held that the interest earned by the Company is a business income and accordingly eligible for the purpose of computation of deduction u/s 33AB of the Income Tax Act, 1961 which is applicable to the assessee deriving income from growing and manufacturing tea which is assessable in accordance with rule 8 of the Income Tax Rules, 1962. A copy of the judgment of Warren Tea Ltd. is annexed. From the above judgments, it is crystal clear that the interest income earned by the assessee has righty been apportioned amongst its units and gardens and the assessment order passed u/s.143(3) on 09-03- 2016 is neither erroneous nor prejudice to the interest of revenue. The assessee is filing its return of income and is being assessed regularly year after year. From the date of incorporating of the company, the assessee is filing its return and showing its income and expenditure by allocating the interest income and expenditure to all of its units and gardens and the said computation are being accepted by the revenue. In none of the past years, the question of taxing interest income as income from other sources has been raised. This is a settled law that although the res judicata does not apply to the tax preceding but the consistency should be maintained. Reliance is placed on the following judgments: � ARONI COMMERCIALS LTD. vs. DEPUTY COMMISSIONER OF INCOME TADX AND ANOTHER [362 ITR 403] � GALILEO NEDERLAND BY vs. ASSISTANT DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATIN) [367 ITR 319] � Nuclear Power corporation of India Ltd. vs. Dy. Director of Income tax (intl. Taxation) [ITAT-Mum; ITA 733-35/Mum/11] From the above judgments, it is crystal clear that the consistency should be maintained to maintain the uniformity, of the facts and circumstances of the assessee are identical. Since in the instant cases, the assessee was apportioning its interest income to all of its units and gardens year after year and department has accepted the same and made assessments accordingly, the order passed by the Ld. Assessing Officer cannot said to be erroneous. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. Commissioner of Income Tax [243 ITR 83] has held that if two view are possible and the Income Tax Office has taken one view with which Jay Shree Tea & Inds. Ltd. Vs. DCIT, Cir-4(1), Kol. Page 4 the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue. Since the Learned. Assessing Officer has taken a possible view which is being constantly followed year after year, order cannot be said to be erroneous and prejudicial to the interest of the revenue. Under the above circumstances, we therefore pray before your goodself to please drop the proceeding initiated u/s 263 of the Income Tax Act, 1961.