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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
आयकर अपील�य अ�धकरण, कोलकाता पीठ “सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA �ी राजेश कुमार, लेखा सद�य एवं �ी संजय शमा� �या�यक सद�य के सम� [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 27/Kol/2023 Assessment Year: 2020-21 Jayshree Tea & Industries Ltd. Vs. ACIT, Circle-4(1), Kolkata (PAN: AAACK 7788 D)
Appellant / (अपीलाथ�) Respondent / ( !यथ�)
Date of Hearing / सुनवाई 27.12.2023
क$ �त&थ Date of Pronouncement/ 05.01.2024 आदेश उ)घोषणा क$ �त&थ For the Appellant/ Shri S. M. Surana, A.R �नधा�/रती क$ ओर से For the Respondent/ Shri P. P. Barman, Addl. CIT राज�व क$ ओर से
ORDER / आदेश Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 14.11.2022 for the AY 2020-21.
The sole issue raised by the assessee at the time of hearing was that the Ld. CIT(A) erred in law and on facts by not directing the AO to assess the income of the assessee by applying Rule 8 of Income Tax Rules, 1962 after allowing the deduction in respect of PF & ESI which was paid within 30 days from its collection by the employer under the relevant statute.
2 I.T.A. No. 27/Kol/2023 Assessment Year: 2020-21 Jay Shree Tea & Industries Ltd. 3. Facts in brief are that the assessee is a tea manufacturing company. During the year in the intimation issued u/s 143(1) of the Act by CPC, Bengaluru, certain addition for making payment of PF/ESI beyond the prescribed date of 15 days was made which is enhanced by the Ld. CIT(A) .
After hearing the rival contentions and perusing the material on record, we find that the assessee is engaged in growing and manufacturing of tea and therefore the income has to be assessed in accordance with Rule 8D of the I.T. Rules by bifurcating the income into the ratio 60:40 and only computing the income by taking 40%. We also note that the assessee is covered under Provident Fund Scheme Act (Assam Act, X of 1955) The Assam Tea Plantations Provident Fund (1) (and Pension Fund)(and Deposit Linked Insurance Fund) Scheme Act, 1955 which is being followed by the assessee in the matter of deduction of PF /ESI from the employees and for depositing as Govt. Taxpayer. We note that Section 11A of the said Act provides that said contribution has to be deposited within 30 days of its collection under the relevant Act which provides that for 30 days for depositing the same as PF/ESI. In other words, if PF/ESI is not deposited within 30 days of collection from the employees then there is default in the payment of PF/ESI in terms of Section 11(7) of the of the Act. The counsel of the assessee claimed that the substantial part was paid within 30 days of its deduction and therefore the disallowance as made by the AO and as enhanced by the Ld. CIT(A) needs to be recomputed in the light of the provisions of Section 11(A) of the Provident Fund Act. Accordingly we restore the issue back to the file of AO with the direction to first compute the disallowance on account of provident fund/ESI by applying Rule 11A of the impugned Act . In other words, the contribution paid within 30 days of deduction are to be allowed and income to be computed accordingly. Whatever income is computed has to be subjected to Rule 8 of Income Tax Rules, 1962 and then 40% has to be taken as income of the assessee. The case of the assessee finds support from the decision of Co-ordinate Bench of Kolkata in the case of M/s Stewart Holl (India) Ltd. vs. ACIT in ITA No. 362/KOl/2021 for AY 2019-20. The operative part is reproduced as under:
3 I.T.A. No. 27/Kol/2023 Assessment Year: 2020-21 Jay Shree Tea & Industries Ltd. “6. After hearing the rival contentions, perused the relevant material available on record and the issue raised by the assessee by way of an additional ground, we observe that no further verification of facts is required on this issue as all the facts are available on record, and, therefore, we are inclined to admit the additional ground, which is in accordance with the ratio laid down by the Hon’ble Apex Court in the case of Jute Corporation of India Limited –vs.- CIT reported in (1991) 187 ITR 668 (SC) and National Thermal Power Company Limited –vs.- CIT reported in (1998) 229 ITR 383 (SC). We have perused the Rule 8(1) of the Income Tax Rules, 1962, which deals with the manner of computing the income from cultivation and manufacturing of tea. Sub-Rule (1) provides that “where the income derived from the sale of tea grown and manufactured by the seller in India shall be computed as if it were income derived from business, and forty per cent of such income shall be deemed to be income liable to tax”. Having considered the above Rule, we find merit in the contention of the assessee that the income of the assessee should be computed first after making the disallowance of Rs.2,51,10,171/- and whatever is the resultant income only 40% of that income has to be treated as taxable income in terms of Rule 8(1) of the Income Tax Rules, 1962. Since the issue requires no examination and verification of records, we are, therefore, restoring the issue to the file of ld. Assessing Officer to examine the same to compute the income in terms of our observations as stated above by following the Rule 8(1) of the Income Tax Rules. In other words, the ld. Assessing Officer is directed to compute the income after making disallowance in respect of EPF late deposit by the assessee and then recompute the taxable income by applying Rule 8(1) of the Income Tax Rules, 1962.” Accordingly we restore the issue back to the file of AO with the above direction.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order is pronounced in the open court on 5th January, 2024
Sd/- Sd/-
(Sonjoy Sarma /संजय शमा�) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य
Dated: 5th January, 2024
SM, Sr. PS
Copy of the order forwarded to: 1. Appellant- Jayshree Tea & Industries Ltd., 15th Floor, 10, Camac Street, Kolkata-700017. 2. Respondent – ACIT, Circle-4(1), Kolkata 3. Ld. CIT(A)-NFAC, Delhi
4 I.T.A. No. 27/Kol/2023 Assessment Year: 2020-21 Jay Shree Tea & Industries Ltd.
Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)