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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
There are two appeals filed by the assessee under consideration against the common order of CIT(A)-2, Kolhapur, dated 10-02-2016 for the Assessment Years 2011-12 & 2012-13. The issues raised in the appeals are identical and the same relates to the correctness of estimation of income from sugarcane and vegetables/fruits etc., and allowability of extent of agricultural expenditure.
There is delay of one month in filing the appeals before the Tribunal. Before us, at the outset, Ld. Counsel for the assessee brought our attention to the letter dated 20-05-2016 and submitted that the assessee expired in an accident and the legal heirs of the assessee are
not aware of the legal formalities. Therefore, Ld. Counsel prayed for
condoning the delay and admit the appeals for adjudication.
After hearing both the sides and the contents of letter dated
20-05-2016, we find there is a reasonable cause in filing the appeals
before the Tribunal and therefore, the said delay of one month is
condoned and the appeals are admitted for adjudication.
Before us, Ld. Counsel for the assessee brought our attention to
the grounds and submitted that they relate to the
estimation/allowability of the Agricultural income on account
sugarcane and vegetables/fruits etc. as well as the estimation of
Agricultural expenditure. Ld. Counsel submitted that the CIT(A) held
that 54% and 50% of the gross receipts from sugarcane and
vegetables/fruits etc. respectively are allowable towards the agricultural
expenses and payments for contractual farming. Assessee is aggrieved
against the said decision of the CIT(A).
At the outset, bringing our attention to an order of the Tribunal in
the group cases of the assessee, Ld. Counsel submitted that the
Tribunal already took a view on the issue and the same needs to be
followed in this case as well.
Further, Ld. Counsel for the assessee filed the copies of the orders
of the Tribunal dated 15-02-2017 and 17-05-2017 in the cases of
related parties of the assessee, i.e. in the case of Anjum Shoukat
Bagwan, Arish Shoukat Bagwan, Shahnaz Shoukat Bagwan, Kaish
Shoukat Bagwan, Soniya Nagari Vinkar & Vinkar Vyavasaik Sah. Pat
Sanstha Ltd. and vice versa – ITA Nos. 215 to 225/PUN/2013 and
others for the A.Yrs. 1999-2000 to 2009-10 and ITA Nos.193 to
203/PUN/2013 and others. Mentioning that the issues raised by the
assessee in these appeals are identical to the cases of the related parties
where the Tribunal decided the issue partly in favour of the assessee,
Ld. Counsel for the assessee requested the Bench to decide the appeals
in the lines of the orders of the Tribunal (supra). Ld. DR for the
Revenue relied on the orders of the AO/CIT(A).
We heard both the sides on the issues raised by the assessee and
perused the orders of the Revenue. We have also perused the orders of
the Tribunal in the cases of related parties (Bagwan Group) relied on by
the Ld. Counsel for the assessee. We find the Tribunal in ITA Nos. 193
to 203/PUN/2013 and others in the case of Arish Shoukat Bagwan &
others and ITA Nos.1128 & 1129/PUN/2015 and ITA Nos.1131 &
1132/PUN/2015 in the cases of Smt. Khatunbi Badsha Bagwan and
Shri Imran Badsha Bagwan, order dated 16-02-2018 have dealt with
the issues raised by the assessee . On perusal of these orders, we find
that the Tribunal in the cases of Smt. Khatunbi Badsha Bagwan and
Shri Imran Badsha Bagwan (supra) in Para No. 6 to 8 has decided the
issues. We find it relevant to extract the said findings for the sake of
completeness of this order as under :
“6. I heard both the sides on this issue of determining the allowable agricultural income from Sugarcane, Grass, Vegetables etc. On perusal of the order of Tribunal dated 11-08-2017 in assessee’s own case for the A.Yrs. 1999-2000 to 2006-07 (supra), I find it relevant to extract the said para Nos.32 & 33 of the order and the same reads as under :
“32. The CIT(A) has estimated expenditure at 54%. The learned Authorized Representative for the assessee has agreed that in the absence of details not being maintained by it in respect of expenditure incurred, some estimation has to be made. However, he is aggrieved by estimation by the CIT(A) at 54%. The CIT(A) has analyzed the factum of expenses incurred by the assessee and various documents and we have already perused the same and we are in conformity with the order of CIT(A) in not considering the batai expenditure as part of expenditure for computing the income from sugarcane. The CIT(A) has estimated the expenses at 54% of receipts. However, we deem it fit to estimate the same at 50% i.e. 50% of gross receipts would constitute the assessee’s income from agricultural operations of growing sugarcane; which would form a part of cash flow of assessee and the Assessing Officer shall work out the impact of negative cash flow in the hands of assessee. The claim of learned Authorized Representative for the assessee before us is that the investments in assets stands covered after the order of CIT(A), wherein he had estimated the expenses at 54% except for negative cash balance
added in assessment year 2005-06 and we have reduced the same to 50% and the Assessing Officer is directed to verify and decide the cash position in assessment year 2005-06 accordingly.
Now, coming to the next estimation of income in the hands of assessee i.e. income from vegetables crop. The assessee claims that part of crops were grown along with sugarcane and the balances on the land available i.e. about 30-31 acreas which are under cultivation of vegetables, grass scientifically grown as cattle feed and other crops. As in the case of sugarcane, the first aspect is the percentage of expenditure incurred by the assessee for growing vegetables; the second aspect is the income from receipts from growing vegetables. Since the assessee has not maintained any details in this regard and the Assessing Officer had pointed out that there is no mention in 7/12 extracts in respect of growing of vegetables. The assessee on the other hand, points out that since vegetables were grown for duration of 3-4 months and were repeatedly being changed does not find mention in 7/12 extracts. However, the sale patties were recovered from the residence of assessee which revealed the yield of vegetables per acre in value. Both the authorities below have admitted that except for few sale patties of nominal value, majorly the sale patties of vegetables were available from the residence of assessee. In other words, there is no dispute in respect of receipts from sale of vegetables to be worked out in the hands of assessee. The only dispute remains is in respect of expenditure on growing of vegetables. The Assessing Officer in the hands of assessee had estimated the income at Rs.5,000/- per acre and after deducting on account of expenditure and batai expenses had taken the net yield at Rs.2500/- per acre. The assessee had shown the expenses at 20% and the CIT(A) had taken the expenses at 50% of the receipts and had not deducted any expenditure on account of batai. The learned Authorized Representative for the assessee fairly admitted before us that in the absence of any details being maintained, expenditure has to be estimated. The first aspect of the issue is that in the absence of any evidence found of bataia expenses for growing vegetables, there is no question of deducting 50% on account of batai expenses. We uphold the order of CIT(A) in this regard. The second aspect is the percentage of expenses to be estimated on account of cultivation of vegetables. The learned Authorized Representative for the assessee pointed out that in assessment year 1999-2000, the Assessing Officer has taken the estimated expenditure at 40% which was high and the same may be adopted at 30%. Following the principles of natural justice, we hold that in the absence of any details being maintained, it would be fair to estimate the expenditure at 35% for growing vegetables. There is no merit in the order of CIT(A) in estimating the same at 50% since the expenditure for the crop of sugarcane is higher as compared to the vegetable crops. Accordingly, we hold so.”
From the above, it is evident that, against the decision of CIT(A) allowing the expenditure at the rate of 54%, the Tribunal deemed it fit to estimate the same at 50%, i.e. 50% of the gross receipts would constitute agricultural income from the agricultural operations of growing sugarcane. To that extent, the Tribunal has favoured the assessee in terms of allowing the increased exempt agricultural income. Further, regarding the agricultural income from Vegetables, the Tribunal (at Para No.33) deemed fit to estimate the agricultural expenditure at 35% thereby quantifying the exempt agricultural income on account of vegetables at 65% of the agriculture income received by the assessee on account of vegetables. In this regard, the Tribunal disapproved the CIT(A)’s
estimation adopting 50% of the agricultural expenditure on account of vegetables. 8. Therefore, Considering the same, I am of the opinion that the grounds raised by the assessee for A.Y. 2008-09 has to be decided in the lines decided by the Tribunal for the earlier A.Yrs. 1999-2000 to 2006-07. I direct the AO accordingly. I also noticed that the said order of the Tribunal (supra) in assessee’s own case being dated 11-08-2017 did not exist at the time when the CIT(A) passed the order on 29-05-2015. Therefore, without going into the merits of the case, I am of the opinion that the issue stands covered in favour of the assessee. Thus, the grounds raised by the assessee are partly allowed.”
From the above extract, we find the grounds raised by the
assessee in these appeals are identical. Therefore, following the same
reasoning, the appeals of the assessee for both the assessment years
are partly allowed. AO is directed to apply the ratios laid down by the
Tribunal in the orders dated 16-2-2018, 17-05-2017 and 15-02-2017
(supra). Accordingly, the grounds raised in both the appeals are partly
allowed.
In the result, both the appeals of the assessee are partly allowed.
Order pronounced in the open court on this 09th day of March, 2018.
Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER लेखा सद�य लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य
पुणे Pune; �दनांक Dated : 09th March, 2018 सतीश आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत
अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. The CIT(A)-2, Kolhapur 4. CIT-2, Kolhapur िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B Bench” Pune; 5. गाड� फाईल / Guard file. 6.
आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune