Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (1) TMI 788 - AT - Income TaxRejection of claim for deduction under section 80IA - Held that:- This issue in question is squarely covered by the judgment of the Hon’ble Jurisdictional High Court in assessee’s own case for the assessment year 2008-09 (2017 (11) TMI 1227 - KERALA HIGH COURT). Since the facts in the current assessment year are identical to the facts considered by the Hon’ble High Court, respectfully following the judgment of the Hon’ble High Court, we allow ground no. 1 raised in assessee’s appeal Disallowance of expenditure relating to cost of cattle keepers - Held that:- Allowing the employees to rear their cattle in assessee’s estate in order to attract them to work in its estate, is purely a labour welfare measure and the same is in tune with the accepted plantation practice. On a perusal of the resolution of the Plantation Labour Committee, it is very discernable that the scheme of cattle grazing in various estates is an accepted norm in the plantation industry and it is nothing but a labour welfare measure in order to attract labourers which is otherwise scarce. Since the expenditure incurred on cattle keepers is purely a labour welfare measure which is approved by the Plantation Labour Committee, we are of the view that the expenditure incurred is directly relatable to the tea business of the assessee. Therefore, the same shall be treated as expenditure under Rule 8 of the I.T. Rules. Disallowance of the claim under section 10(30) - subsidy received from Tea Board of India taxed 100% under the IT Act - Held that:- If the provisions of sec. 10(30) of the I.T. Act is not applicable, since the subsidy is given for replantation, replacement planting and rejunevation planting of the tea bushes, it can only be termed as a capital receipt and not as a revenue receipt. For the aforesaid reasons, we confirm the order of the CIT(A) and reject the ground No. 1 raised by the Revenue. Disallowance of expenditure incurred in relation to exempt income u/s 14A read with Rule 8D - Held that:- We find merits in the contention of the assessee for the reason that the assessee has demonstrated with evidences that no part of interest bearing funds has been used to make investment in shares which yield exempt income. The A.O. has not brought on record any reasons for disallowing expenditure incurred by the assessee on term loan and working capital u/s 14A by invoking Rule 8D(2)(ii). On the other hand, the assessee has categorically proved that its interest expenditure is not relatable to exempt income. Therefore, we are of the view that the A.O. was incorrect in disallowing interest u/s 14A by invoking Rule 8D(2)(ii) of the Income-tax Rules, 1962. The CIT(A), after considering the relevant submission, has rightly deleted the additions made by the A.O. towards disallowance of interest. Insofar as the disallowance of administrative and general expenses under Rule 8D(2)(iii) we are of the view that the disallowance worked out by the A.O. under Rule 8D(2)(iii) is less than the exempt income earned by the assessee for the relevant period and hence we are of the view that the A.O. was right in disallowing expenditure at the rate of 0.5% of the average value of investment. In any case, if the disallowance worked out by the A.O. is in excess of exempt income earned by the assessee, such disallowance should be restricted to exempt income earned for the relevant financial year. The CIT(A) without appreciating the fact has simply deleted the addition made by the A.O. towards disallowance of expenditure under Rule 8D(2)(iii) of the Income-tax Rules, 1962. Therefore, we reverse the finding of the CIT(A) and uphold the additions made by the A.O. towards disallowance of expenditure at the rate of 0.5% of average value of investment under Rule 8D(2)(iii) subject to our observations that such disallowance shall not exceed exempt income earned by the assessee for the relevant financial years. Profit on sale of green leaves - whether is not taxable under the Income Tax Act, 1961 and is taxable only under Kerala Agricultural Income Tax Act - Held that:- Following the above order of the ITAT in assessee’s own case for the assessment year 2009-10 [2017 (11) TMI 1227 - KERALA HIGH COURT] the CIT(A) had deleted the addition. Therefore, we see no reason to interfere with the order of the CIT(A) and we confirm the same Taxation of income from sale of import license - Held that:- The import licenses were obtained by the assessee company on account of a scheme for promoting tea exports. The income from sale of import licenses received on account of export of tea, is an integral part of the plantation operations of the company. The assessee company undertakes exports taking into consideration the import license benefits. Therefore the import license benefits are clearly part of the tea income. The assessee company has not claimed the income as exempt income (agricultural income), but as a part of the combined operation and hence the CIT(A) was correct in treating the said income as tea income as per Rule 8. Taxability of miscellaneous income - Held that:- CIT(A), after considering each of the incomes received by the assessee had held that these are incidental and directly connected with the operation of tea business and the same is to be treated as income under Rule 8 of the I.T. Rules. The finding of the CIT(A) which are from pgs. 51 to 54 for the assessment year 2010-11 are very categoric and no interference is called for and we confirm the same. TDS u/s 195 - Disallowance of foreign agents commission and reimbursement of expenses for non deduction of tax at source - Held that:- A perusal of the expenditure incurred by the assessee, we notice that these are payments made as reimbursement of expenditure incurred by the foreign agents plus their commission. The foreign agent commission and reimbursement of expenditure are not taxable in India and hence, the provisions of section 195 of the I.T. Act have no application Taxability of income from electricity operations - Held that:- We have held that electricity distribution is a separate undertaking and therefore the claim of the assessee u/s. 80IA is to be allowed. This finding is based on the judgment of the Hon’ble Jurisdictional High Court (supra). Thus Ground no. 7 raised by the Revenue has been rendered infructuous and same is dismissed as infructuous.
|