D.C.I.T., CIRCLE-8, KOLKATA, KOLKATA vs. M/S APEEJAY TEA LTD., KOLKATA

SHRI S.S. VISWANETHRA RAVI, JM This appeal of the Revenue arises out of the order of the CIT(A)-Central-I, Kolkata in Appeal No. 233/CC-III/CIT(A)/C-I/10-11 dated 07-08-2013 for the assessment year 2008-09

3. The only ground in this appeal is as to whether CIT-A justified in deleting the disallowance of Rs.1,67,80,109/- U/R 8 of the Income tax Rules in the circumstances of the case.

4. The brief facts of the case are that the assessee was previously conducted its business in the name and style as AFT industries Limited and thereafter changed its name as M/s Apeejay Tea Ltd and it has eight tea estates. During the assessment proceedings the AO found that a total sum of Rs.1,67,80,109/- was debited to the profit and loss account and claim to have entire expenditure as exempt income before applying the provisions of Rule 8. The assessee submitted before the AO that the said issue was covered directly by a decision of Honourable High Court of Calcutta in the assessee’s own case reported in 270 ITR 169 (Cal) and also submitted that the CIT-A allowed such exemption for the assessment year 2007 – 2008. The AO did not accept the contention of the assessee for the reason that the appellant revenue preferred SLP before the Honourable Supreme Court against the decision of Honourable High Court of Calcutta supra. The CIT-A allowed the claim of the assessee by relying on the decision of Honourable High Court of Calcutta supra for the year under consideration and as aggrieved by such order the revenue before us challenging the same.

5. As matter stood thus, the Honourable Supreme Court dismissed the SLP filed by the appellant revenue and agreed with the interpretation of scope of Rule 8 of Income Tax Rules 1962 rendered by the Honourable High Court of Calcutta. The Learned AR placed copy of such order before us and submitted that the present appeal may be disposed of in pursuance of the decision of Honourable Supreme Court and learned DR submits that the appellant revenue did not succeed in SLP and the decision of Honourable High Court of Calcutta has become final and binding on the appellant 2 M/s. Apeejay Tea Ltd revenue in view of the confirmation of the such decision by the Honourable Supreme Court. The relevant portion of which is reproduced herein below: “The respondent-assessee had paid cess on green leaf to the Government of Assam which was levied under Assam Taxation ( On Specified Land) Act, 1990. In its income tax return, it had claimed the same as deduction which has been allowed by the High Court. The relevant discussion in this behalf is as under:- "However, the learned Tribunal had held that the deduction is eligible after computing the income under Rule 8 and the apportionment is to be made only after the income is so computed. Such apportionment cannot be made before the deduction. Rule 8 of the Income Tax: Rules, 1962 requires that the computation is to be made as if by fiction the entire income out of the tea grown and manufactured as income assessable under the Income Tax Act, 1961. In view of Rule 8, the income so computed is to be apportioned 60: 40 of which 40 is assessable to tax under the Act . It does not provide that after apportionment of the 60 % of the income so computed shall again be required to be computed under the Agricultural Income Tax Act. On the other hand, this 60% is exposed and becomes exigible to tax under the Agricultural Income Tax Act. without being required to be assessed under the said Act by reason of the fiction so created. Therefore, the cess paid has rightly been excluded while computing the income under Rule 8 of the tea grown and manufactured."

In arriving at the aforesaid conclusion, the High Court has referred to the various judgments of this' Court.

We are of the opinion that the High Court has rightly interpreted the scope of Rule 8 of the Income Tax Rules 1962. We, thus, find no merit in this appeal which is, accordingly, dismissed. “