TMI Blog2013 (3) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... income was to be computed as per Rule 8 of the Income Tax Rules and 40% of the income was to be treated as income from business or profession, therefore, depreciation only to the extent of 40% was to be treated as actually allowed and to the extent the income was treated as agricultural income by virtue of the same being exempt, depreciation could not be deemed to have been actually allowed to the assessee for earning the agricultural income. - held that:- The Explanation has been inserted by Finance (No.2) Act w.e.f. 2009. It creates a deeming fiction affecting substantive computation provision determining actual tax liability. Therefore, ld. CIT(Appeals) has rightly treated it to be prospective. - Decided in favor of assessee. - I.T.A Nos. 366 & 367/Kol/2011 - - - Dated:- 4-1-2012 - Sri S.V. Mehrotra Shri N. Vijaya Kumaran, JJ. For the Appellant : Shri P.P. Sarkar, D.R. For the Respondent : Shri S.K. Tulsiyan, A.R ORDER Per Shri S.V. Mehrotra, Accountant Member :- Both the appeals filed by the Revenue for assessment year 2007-08 are time barred by 138 days as per the office record. Shri P.B. Pramanik, DCIT, Circle-4, Kolkata has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal appeals (In Income-tax matters) before Appellate Tribunal, High Courts and Supreme Court were specified. 2. In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary limits and conditions specified below. 3. Henceforth appeals shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder: S. No. Appeals in Income-tax matters Monetary Limit (in Rs.) 1. Appeal before Appellate Tribunal 3,00,000 2. Appeal u/s. 260A before High Court 10,00,000 3. Appeal before Supreme Court 25,00,000 It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. 4. For this purpose, tax effect means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits. 7. In the past, a number of instances have come to the notice of the Board, whereby an assessee has claimed relief from the Tribunal or the Court only on the ground that the Department has implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any other assessment year or in the case of any other assessee for the same or any other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was not filed or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value. As the evidence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 2007-08. 8. Brief facts of the case are that the assessee-company was engaged in the business of growing, manufacturing and sale of tea and had filed its return of income at a total income of Rs.77,97,004/-. The assessment was completed at a total income of Rs.1,21,35,880/-, inter alia, after making following disallowances :- (i) Nursery expenses Rs. 2,37,926/- (ii) Additional depreciation Rs.15,12,938/- (iii) Bad debts written off Rs.21,13,824/- (iv) Disallowance under section 14A(3) Rs. 3,30,080/- The Assessing Officer had also rejected the assessee s claim of money lending business being carried on by it. Being aggrieved with the order of Assessing Officer, the assessee preferred appeal before ld. CIT(Appeals). Ld. CIT(Appeals) partly allowed the assessee s appeal in respect of above disallowances. Being aggrieved, the Department is in appeal before the Tribunal. 9. Ground No. 1 of this appeal reads as under :- That on the facts and circumstances of the case, ld. CIT(A.)-IV,Kolkata has erred in law in directing the AO to treat the income from money lending business and share trading business as business income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from money lending and shares dealing as business income. 5. Under the circumstances, I have no reason to disagree with the contention of the AR. 6. As a result, the AO is directed to treat income from money lending business and share business as business income of the assessee . 12. Learned Departmental Representative relied on the order of Assessing Officer. On the other hand, ld. counsel for the assessee referred to following items :- Paper Book Page No. (i) Assessment order dated 07.02.2006 for assessment year 2003-04 50-53 (ii) Assessment order dated 04.10.2006 for assessment year 2004-05 54-56 (iii) Intimation u/s 143(1) of the Act dated 24.03.2007 for AY 2005-06 57 (iv) Return alongwith computation for the AY 2005-06 58-60 (v) Assessment order for AY 2006-07 61-64 With reference to aforementioned assessment orders, ld. counsel submitted that Assessing Officer has consistently accepted the assessee s plea regarding carrying on money lending business. Therefore, there was no reason to deviate from the earlier position. Ld. counsel has also filed written submissions placed on record, in which it is, inter alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses for plantation had been claimed as revenue expenditure. He, therefore, disallowed Rs.2,37,926/- being capital in nature. Ld. CIT(Appeals) deleted the addition following the decision of ITAT in the case of Kanoi Industries Pvt. Ltd. in ITA No. 1340/Kol./1996 for assessment year 2001-02. 16. We have considered the submissions of both the parties and have perused the records of the case. Ld. counsel for the assessee stated that this issue is covered by the following decisions :- (i) CIT vs.- Tasati Tea Ltd. (2003) 262 ITR 388 (Calcutta High Court); (ii) Travancore Rubber Tea Co. Ltd. vs.- Commissioner of Agricultural Income Tax (1961) 41 ITR 751 (SC); (iii) Assam Bengal Cement Co. Ltd. vs.- CIT (1955) 27 ITR 34 (SC); (iv) H.H. Maharaja Vibhuti Narain Singh vs.- State of U.P. (1967) 65 ITR 364 (All.); (v) CIT vs.- Soundarya Nursery (2000) 241 ITR 530 (Madras High Court). Ld. counsel for the assessee in his written submissions has submitted that expenses relating to maintenance of nursery were incurred for the purpose of raising bushes to be utilized for replacement of dead and useless bushes within the plantation area. It is further submitted that Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation allowed in earlier year with the opening WDV of block of assets. The contention of the assessee was that WDV of the assessee should be the cost of the asset as reduced by depreciation calculated under Income Tax Act that has been actually allowed. The assessee s claim was that 40% of income from the profit/loss from growing and manufacturing of tea was considered under Rule 8 for the purpose of Income Tax and balance 60% of income was agriculture income which was exempt from tax. Therefore, the assessee was allowed only 40% of depreciation actually in each year. Hence, WDV should be increased by 60% of depreciation calculated under section 32 for each year so as to increase the WDV for determination of actual amount of depreciation. Assessee had relied on the decision of the Hon ble Kolkata High Court in the case of Suman Tea Plywood Industries Ltd. (204 ITR 719). The Assessing Officer observed that this decision was in relation to assessment year 1983-84 in respect of interpretation of the meaning actual cost mentioned in section 43(6), wherein it was held that actual cost of the asset was to be ascertained after considering the amount of depreciation actually allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n part from business chargeable to income-tax under the head profits and gains of business or profession , from computing the written down value of assets acquired before the previous year, the total amount of depreciation shall be computed as if the entire income is derived from the business of the assessee under the head profits and gains of business or profession and the depreciation so computed shall be deemed to be the depreciation actually allowed under this Act . This Explanation has been inserted by Finance (No.2) Act w.e.f. 2009. It creates a deeming fiction affecting substantive computation provision determining actual tax liability. Therefore, ld. CIT(Appeals) has rightly treated it to be prospective. We, accordingly, uphold the order of ld. CIT(Appeals) and reject this ground of appeal taken by the Revenue. 21. Ground No. 4 of this appeal reads as under :- That on the facts and circumstances of the case, ld. CIT(A.)-IV, Kolkata has erred in law in restricting the disallowance of Rs.21,13,824/- to Rs.12,000/- on account of bad debt without considering the questions raised by the AO in the assessment order mainly the amount which is written off forever how it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra), we uphold the order of ld. CIT(Appeals). 25. Ground No. 5 of this appeal reads as under :- That on the facts and circumstances of the case, ld. CIT(A.)-IV, Kolkata has erred in law in directing the AO to separate of Rs.10,67,500/- from composite income and consider as part of money lending business without considering the fact that the AO did not consider it as money lending business . 26. Before ld. CIT(Appeals), it was pointed out that Assessing Officer considered the bad debts recovered as income from the business of cultivation, manufacturing and sale of tea and, accordingly, had considered the said sum as part of composite income, when it should have been reduced from the composite income and added back as 100% taxable income. Ld. CIT(Appeals) accepted the contention of assessee, inter alia, observing that the issue was entirely factual and against the interest of revenue. 27. We have considered the submissions of both the parties and perused the records of the case. It is not disputed that the amount recovered related to bad debts with reference to money lending business and, therefore, the same was totally unrelated to the business of cultivation, manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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