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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Shri P.M. Jagtap
Date of concluding the hearing : September 15, 2015 Date of pronouncing the order : September 18, 2015 O R D E R This appeal filed by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-IV, Kolkata dated 24.07.2013 for the assessment year 2003-04 and in the solitary ground raised therein, the Revenue has challenged the action of the ld. CIT(Appeals) in deleting the disallowance of Rs.17,26,209/- made by the Assessing Officer on account of cess paid by the assessee on green leaf.
At the outset, it is observed that there is a delay of 18 days on the part of the Revenue in filing the appeal before this Tribunal. In this regard, application has been filed by the Revenue seeking condonation of the said delay and keeping in view the reasons given therein which, according to me, constitute a reasonable sufficient cause, I condone the said delay.
The assessee in the present case is a Company, which is engaged in the business of sale of black tea manufactured from leaves grown from its ./2013 Assessment year: 2003-2004 Page 2 of 4 own tea garden. The return of income for the year under consideration was filed by it on 28.11.2003 declaring total income at ‘NIL’ after adjusting the brought forward losses of the earlier years. In the said return, deduction of Rs.17,26,209/- was claimed by the assessee on account of cess paid on green leaf. During the course of assessment proceedings, it was submitted by the assessee that its claim for the said deduction is duly supported by the decision of the Hon’ble Calcutta High Court in the case of CIT –vs.- A.F.T. Industries Limited reported in 270 ITR 167. Although this position was not disputed by the Assessing Officer, he disallowed the claim of the assessee for deduction on account of cess paid on green leaf for keeping the issue alive in view the SLP filed by the Department before the Hon’ble Supreme Court against the order of the Hon’ble Calcutta High Court in the case of CIT –vs.- A.F.T. Industries Limited (supra).
On appeal, ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer on this issue by following the decision of the Hon’ble Jurisdictional High Court in the case of A.F.T. Industries Limited (supra). Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal on the following ground:- “CIT(A) erred in deleting the disallowing of cess on green leaf, ignoring the fact that cess on green leaf related to income attributable to agriculture activities does not fall in the ambit of I.T. Act and on same issue appeal is pending before Hon’ble Supreme Court in the case of AFT Industries”.
I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the solitary issue involved in this appeal of the Revenue relating to the assessee’s claim for deduction on account of cess paid on green leaf is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon’ble Calcutta High Court in the case of A.F.T. Industries Limited (supra), wherein it was held as under:- ./2013 Assessment year: 2003-2004 Page 3 of 4 “In respect of computation of income of tea grown and manufactured, a fiction has been created under which both the agricultural component and the business component of the income would be assessed together for the purpose of computing the income under the Act and only after the computation of the total income, the apportionment is to be made determining 60 per cent, as agricultural income. When by fiction the income is computed as an income under the Act, all deductions as are available both for the agricultural component and for the business component of the income are to be allowed as a natural corollary. Therefore, the entire amount paid as cess under the Agricultural Income Tax Act is eligible for deduction”.
At the time of hearing, ld. D.R. has not disputed the position that the issue involved in 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 A.F.T. Industries Limited (supra). He has contended that this issue, however, is raised in the present appeal filed before the Tribunal just to keep the same alive keeping in view the SLP filed by the Department before the Hon’ble Supreme Court against the decision of the Hon’ble Calcutta High Court and even the ground raised by the Department in the present appeal raises this limited contention. Since there is nothing brought on record before me to show that the decision of the Hon’ble Jurisdictional High Court in the case of A.F.T. Industries Limited (supra) has been reversed by the Hon’ble Supreme Court, the position as it stands now is that the issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the said decision of the Hon’ble Jurisdictional High Court and respectfully following the same, I uphold the order of the ld. CIT(Appeals) allowing the deduction claimed by the assessee on account of cess paid on green leaf.