ITO, WD-4(4), KOLKATA, KOLKATA vs. M/S BHASKAR TEA & INDUSTRIES LTD., KOLKATA

On appeal by the Assessee, the CIT(A) deleted the disallowance made by the AO by following the order of the Hon'ble Calcutta High Court in the case of AFT Industries Ltd. vs CIT (270 ITR167) wherein it was held that Green Leaf Cess has to be allowed as deduction before applying Rule 8(1) of the rules and only thereafter 40% of such income has to be brought to tax.

Aggrieved by the order of the CIT(A), the revenue has raised Gr.No.1 before the Tribunal. The Learned DR appearing on behalf of the Revenue relied on the order of the AO. On the other hand, the ld.counsel for the assessee relied on the orders of the ld. CIT(A).

After hearing the rival submissions and on careful perusal of the materials available on record, keeping in view of the fact that the issue is concluded by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs AFT Industries Ltd. 270 ITR 167 (Cal) where the amount paid as cess was held as eligible for deduction in computing the composite income under Rule 8 of I.T. Rules. This issue is, therefore, decided in favour of the assessee and against the Revenue by upholding the order of the C.I.T.(A) who has allowed the deduction of payment of cess on green leaves in computing the composite income from tea business of the assessee under rule 8 of the I.T. Rules. The fact that the SLP is pending before the Hon'ble Supreme Court against the decision of the Hon'ble Calcutta High Court in respect of AFT Industries Ltd. vs CIT (270 ITR 167) will not have any effect since the Hon'ble Apex ITA No.451/Kol/2014-M/s. Bhaskar Tea & Inds. Ltd. A.Y.2009-10 3 Court has neither set aside the orders of the Calcutta High Court nor granted any stay. The learned counsel for the Assessee also brought to our notice the decision of the Hon’ble Supreme Court in the case of CIT Vs. M/S.Apeejay Tea Co. Ltd. Civil appeal No.3168 of 2006 dated 6.8.2015 wherein the Hon’ble Supreme Court has upheld view as was taken in the case of AFT Industries Ltd. (supra). In view of the above, the appeal by the revenue is dismissed.