GOODRICKE GROUP LIMITED,KOLKATA vs. DCIT, CIR-4, KOLKATA, KOLKATA

The assessee in the present case is a Company, which is engaged in the business of growing, manufacturing and selling of tea. The return of income for the year under consideration was originally filed by it on 30.09.2009 declaring total income of Rs.11,07,27,313/-. Thereafter a revised return was filed by the assessee on 17.12.2009 declaring total income of Rs.13,17,48,375/-. In the assessment completed under section 143(3) vide an order dated 26.12.2011, the total income of the assessee was determined by the Assessing Officer at Rs.18,79,66,750/- after making certain additions. The record of the said assessment came to be ./2014 Assessment year: 2009-2010 Page 2 of 3 examined by the ld. CIT and on such examination, he found that the assessee has added Rs.81,54,987/- as expenditure on agricultural income, Rs.5,00,000/- as wealth tax, Rs.19,39,000/- as loss on trade investment written off and Rs.60,572/- under the head “provision for diminution in value of investment” while computing the composite income before making apportionment under Rule 8 of the Income Tax Rules. According to him, the corresponding receipts under the respective heads relating to the said expenditure, however, were not deducted by the assessee while computing the composite income. According to him, the said receipts not being directly derived from the business of cultivation and manufacturing of tea were not eligible for inclusion in the composite income and Rule 8, therefore, was not applicable in respect of the said receipts. He accordingly treated the assessment order passed by the Assessing Officer under section 143(3) on this issue to be erroneous as well as prejudicial to the interest of the revenue and setting aside the same, the Assessing Officer was directed by him (1) to examine and nature the source of receipts under the relevant heads, (2) to examine immediate source of such receipts, whether they are directly derived from core activities of cultivation and manufacturing of tea or not and (3) to examine the applicability of Rule 8D in respect of the aforesaid receipts. Aggrieved by the order of the ld. CIT under section 263, the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. As pointed out by the ld. counsel for the assessee from the computation of total income of the assessee filed along with the return of income (copy placed at page no. 45 & 46 of the paper book), the assessee after having added the amount of expenditure on agricultural income, wealth tax, loss on trade investment written off and provision for diminution in value of investment, had deducted the corresponding income in the form of sundry receipts including agricultural income amounting to Rs.1,70,72,888/- and provision for diminution in value of investment offered for taxation in ./2014 Assessment year: 2009-2010 Page 3 of 3 earlier years amounting to Rs.20,00,000/- while computing the composite business income eligible for 40% deduction as per Rule 8 of the Income Tax Rules and this position clearly evident from the relevant computation of income has not been disputed even by the ld. D.R. It is thus clear that the composite income was computed by the assessee in accordance with Rule 8 of the Income Tax Rules after duly deducting the corresponding receipts relating to the other expenditure such as agriculture, wealth tax, loss on trade investment written off, provision for diminution in value of investment, etc., which were not eligible to be part of composite income and there was no error in the order of the Assessing Officer accepting the same while completing the assessment under section 143(3) calling for revision under section 263 by the ld. CIT. We, therefore, set aside the impugned order passed by the ld. CIT under section 263 on this issue and restore that of the Assessing Officer passed under section 143(3).