TMI Blog2012 (3) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, I.T.A Nos. 931/Kol/2009 - - - Dated:- 5-1-2012 - Sri S.V. Mehrotra, Shri N. Vijaya Kumaran, JJ. For the Appellant : Shri R.K. Saha, D.R. For the Respondent : S/Shri P.J. Bhide B.B. Payra, A.R ORDER Per Shri S.V. Mehrotra, J. These appeals filed by the Revenue are against the order of ld. Commissioner of Income-tax (Appeals)-IV, Kolkata both dated 21.01.2009 for the assessment years 2002-03 and 2005-06. 2. Brief facts of the case are that the assessee-company in the relevant assessment year carried on the business as cultivator and manufacturer of tea. The assessee had filed its return of loss at Rs.5,01,024/- for assessment year 2002-03 and for Rs.52,37,486/- for assessment year 2005-06. The Assessing Officer completed the assessment for assessment year 2002-03 at Rs.8,63,388/- and for assessment year 2005-06 at loss of Rs.37,19,690/-, inter alia, after making following additions/ disallowances:- Assessment Year : 2002-2003 Amount Depreciation under section. 32AB(6) Rs. 1,27,044/- Cess on green leaves Rs.18,58,537/- Dividend expenses under section 14A Rs. 22,404/- Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 43AB, it is clear that the income of the assessee under the provisions of gains and business has to be computed in accordance with the provisions of sec. 29, which in turn provides that such income will be determined in accordance with the provisions of sec. 30 43D. These sections speak of deductions in respect of expenditure incurred by an assessee according to its regularly followed method of accounting. These sections provide for expenditure of revenue nature incurred by an assessee on payment of rent, rates, tax, repairs, insurance, repairs insurance on plant and machinery, expenditure by interest, and above all expenditure incurred by an assessee wholly and exclusiviely for its purpose of business where such expenditure is also not of capital nature or personal. The other sections i.e., 32, 33. 34 and 35 allow deduction in respect of payments which are termed as capital payments. One such sec. is sec. 32, which allows deduction for depreciation determined at percentage of cost of an asset specified therein. Sec. 33A, 33AB allow deduction by way of deposits which are again of capital nature. These deductions are allowed to promote business and industry especially, paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Coordinate Bench of the Tribunal, we uphold the order of the ld. CIT(A.) by dismissing the ground taken by the Revenue on this issue . Respectfully following the decision of Coordinate Bench of Tribunal (supra), we find that ld. CIT(Appeals) was justified in deleting the disallowance. Hence, Ground No. 1 taken by the Revenue is dismissed. 6. Ground No. 2 of the appeal reads as under :- On the facts and law the ld. CIT(A.) has erred in deleting the addition made by disallowance of Cess on green leaves amounting to Rs.18,58,537/- when the cess was paid only for agricultural operation and agricultural income arriving from such operation is not taxable . 7. Brief facts apropos this issue are that the Assessing Officer noticed that the assessee had debited a sum of Rs.18,58,537/- on account of Cess on Green Leaves. The Assessing Officer referred to the decision of the Hon ble Guwahati High Court in the case of Jorehaut Group of Cases reported in 226 ITR 622, wherein it was held that expenditure on sales was totally agricultural in nature and that it should be allowed as a deduction @ 100% under the Agricultural Income Tax Act. The Assessing Officer observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r after considering the assessee s expenses made a proportionate disallowance of Rs.22,404/- under section 14A of the Act. Ld. CIT(Appeals) restricted the disallowance to Rs.5,000/-, inter alia, observing that the disallowance made by the Assessing Officer was excessive. 12. We have considered the submissions of both the parties and have perused the records of the case. The present appeal is for assessment year 2002-03 and, therefore, in view of the decision of Hon ble Bombay High Court in the case of Godrej Boycee Mfg. Co. Ltd. vs.- DCIT [2010] 328 ITR 81 (Bom.), Rule 8D is not applicable. In such circumstances, normally the disallowance is to be restricted to 1% of the dividend income as is consistently been held by Tribunal in various decisions including the decision in the case of Universal Cables Limited vs.- DCIT in ITA No. 954/Kol./2010, wherein it has been held that disallowance under such circumstances is to be restricted to 1% of the dividend income. The relevant part of the decision reads as under :- 7. After hearing rival contentions and going through facts and circumstances of the case, we find that the assessee earned a sum of Rs.5,31,095/- as dividend income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculate the expenditure on that basis. This ground of assessee s appeal is partly allowed . Similar view had also taken on the decision dated 19.08.2010 of this Tribunal in ITA No. 859/Kol/2010 in the case of M/s. Civil Engineers Enterprises (P) Ltd. vs.- DCIT. The relevant portion of the order reads as under :- 3. At the time of hearing before us, the Ld. Counsel for the assessee while reiterating his same submissions as submitted before the lower authorities further submitted that the assessee had received dividend income of Rs.18,00,000/- from a single company and for earning this dividend the assessee company had not invested or expended any amount during the year. The investment amount on which dividend was received is coming from earlier years. The AO without considering the assesee s submission estimated management expenses of Rs.2,46,937/- u/s. 14A of the I. T. Act,1961. The Ld. CIT(A) also not justified in confirming this action of the AO in this regard without considering the assessee s submission that the assessee received the dividend income from a single company only and for earning this amount it had not expended any amount towards management expenses. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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