D.C.I.T CIR - 4,KOLKATA, KOLKATA vs. M/S ASSAMBROOK LTD., KOLKATA

The appellant Revenue challenging the impugned order, has raised the following grounds:- “

Brief facts of the case are that the assessee is a company and is engaged in the business of cultivation, manufacture, processing and sale of tea products. The assessee filed its return of income electronically declaring a total income of Rs.3,15,000/- on 30.3.2010 and the same was processed under section 143(1) of the Act. Notices under section 143(2) and 142(1) were issued selecting the case for scrutiny and details called thereon.

During such proceedings, the assessee claimed expenses of Rs.89,11,475/- towards payment of cess on green leaf for financial year 2008-09 which is relevant to the assessment year under consideration. The AO disallowed the same on the ground that such expenses does not form part of composite income which can be allowed as deduction before applying Rule 8 of Income Tax Rules 1962.

Aggrieved by such disallowance, the assessee challenged the same before the CIT(A). The ld. CIT(A) taking into consideration of the order of ITAT, Kolkata in assessee’s own case for assessment year 2006-07, deleted the addition of Rs.89,11,475/-.

Before us, the appellant Revenue relied on the order of the AO. The ld. A/R for the assessee submitted that a similar case on identical issue in the case of ACIT-vs- AFT Industries was pending before the Hon’ble Supreme Court for consideration. The A/R submitted further, that Hon’ble Supreme Court did not grant stay of order passed by the Hon’ble Jurisdictional High Court of Calcutta reported in 270 ITR 167 (Cal).

Heard both sides and perused the material on record. The facts relating to the aforementioned case are that, the ITAT, Kolkata benches allowed the deduction claiming expenses paid towards cess on green leaf, against which, the Revenue filed a writ petition before the Hon’ble High Court which, in turn, passed order in favour of the assessee. Aggrieved by such order, the Revenue filed a SLP before the Hon’ble Supreme Court which is pending adjudication. As submitted by the AR that the Hon’ble Supreme Court did not grant stay in the said SLP. Baring such submission and considering the order passed by the ITAT, Kolkata benches, Kolkata in assessee’s own case, we are of the view that as on this day, there is nothing against the assessee, more so, a favourable order by the Hon’ble Jurisdictional High Court of Calcutta on identical issues, as it is in force and binding on the appellant Revenue to follow the same. For the convenience, the order passed by the ITAT, Kolkata benches is reproduced hereinbelow for better appreciation. “In this connection, we refer to the order of the Income Tax Appellate Tribunal Bench, Kolkata in the matter of assessee wherein the above referred matter was decided in favour of the assessee. The observations of the tribunal are reproduced herein below: ''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 computing the composite income from tea business of the assessee under the rule 8 of the I. T. Rules. We may further mention that identical issue was the subject matter of appeal before the Tribunal in the case of M/s. Empire Plantations (India) Ltd. and the Tribunal vide order dated 28.02.2005 in 1. T.A. No.1600 (Ko/)/2004 for A. Y. 2000-01 has allowed the claim of the assessee. 13.1. 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

Respectfully following the order passed by the ITAT, Kolkata, we confirm the order of CIT(A) in deleting the disallowance of Rs.89,11,475/- made by the AO. Accordingly, the grounds raised by the Revenue is dismissed.