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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
Date of concluding the hearing : September 14, 2016 Date of pronouncing the order : September 16, 2016 O R D E R Per Shri P.M. Jagtap, A.M.: This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-XII, Kolkata dated 08.10.2013 for the assessment year 2003-04 on the following grounds:- (1) That on the facts and circumstances of the case the ld. CIT(A) has erred in law in deleting the addition of Rs.59,80,000/- on account of cess on green leaf without considering the fact that expenses on account of cess on green leaf is related to 100% agricultural operation and that an SLP is pending before the Hon’ble Supreme Court against the decision of the Calcutta High Court in the case of AFT Industries Limited –vs.- CIT (270 ITR 167) in the light of which ld. CIT(A) decided the issue in favour of the assessee.
(2) That on the facts and circumstances of the case, the ld. CIT(A) has erred in law in allowing the claim of the appellant u/s. 80HHC without considering the fact that an appeal filed by the revenue against treatment of interest income as part of the composite income in the case of various assesses are pending before the Hon’ble High Court, while passing the judgment.
./2014 Assessment year: 2003-2004 Page 2 of 3 2. At the time of hearing before us, the ld. representatives of both the sides have agreed that the issue involved in Ground No. 1 of this appeal of the Revenue is squarely covered in favour of the assessee by the decision of the Hon’ble Calcutta High Court in the case of CIT –vs.- AFT Industries Limited [270 ITR 167], wherein it was held that in respect of computation of income of tea grown and manufactured, the fiction has been created under which both the agricultural component and the business component of the assessee would be assessed together for the purpose of computing the income under the Act and only after the computation of total income, the apportionment is to be made determining 60% as agricultural income. It was further held that when by fiction the income is computed as an income under the Act, all deductions as are available both for agricultural component and for the business component of the income are to be allowed as a natural corollary and, therefore, the entire amount paid as cess under the Agricultural Income Tax Act is eligible for deduction. As submitted by the ld. counsel for the assessee, even the SLP filed by the Department against the decision of the Hon’ble Calcutta High Court in the case of AFT Industries Limited (supra) has been dismissed by the Hon’ble Supreme Court. We, therefore, respectfully follow the said decision of the Hon’ble Jurisdictional High Court and uphold the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue. Ground No. 1 of the Revenue’s appeal is accordingly dismissed.
As regards the issue involved in Ground No. 2, the ld. representatives of both the sides have agreed that the same is also squarely covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Limited –vs.- CIT [343 ITR 89], wherein it was held that 90% of not the gross interest but only the net interest, which had been included in the profits of business of the assessee as computed under the head “profits and gains of business or profession” was deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business. Respectfully following the said decision of the Hon’ble Apex Court, we ./2014 Assessment year: 2003-2004 Page 3 of 3 uphold the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue. Ground No. 2 of the Revenue’s appeal is accordingly dismissed.
In the appeal, the appeal of the Revenue is dismissed. Order pronounced in the open Court on September 16, 2016.