TMI Blog2013 (5) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale of tea processed out of purchased green tea leaves and on plucked tea green leaves and in view of this working the CIT(A) restricted the disallowance at Rs.4,58,302/- instead of computed by AO at Rs.10,91,762/-. As the Ld. Sr. DR could not point out any defect in computation of income, order of CIT(A) is upheld. Deletion of addition on account that sale of tea plant is not agricultural income and does not come under declared objective of the assessee company and also allowed deduction being agricultural income from Book Profit u/s. 115JB – As per AO the book profit does not indicate the total taxable income of the assessee – Held that:- Assessee before the AO as well as before CIT(A) has produced the evidences in the shape of agricultural receipts on account of sale of tea plants, which are agricultural income. We agree with the findings of CIT(A) that this sale of tea plants treated by assessee as agricultural receipts exclusively out of agricultural activity. As to composite income of sale proceeds to tea plant at 60% of book profit Rs.30,12,347/- is in the nature of agricultural income which is exempt u/s. 10(1) of the Act. Since these two items are of agricultural i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred appeal before CIT(A) who allowed the claim of assessee vide para 6 as under: "6. I have considered the submission of the appellant and perused the assessment order. I have also gone through the profit loss account, balance sheet and Tax Audit Report for the year under consideration. In the assessment order, the A.O. has disallowed depreciation to the extent of Rs.6,43,245/- merely for the reason that the appellant has not produced any proof that certain assets were installed and put to use on 31.03.2005. However, he nowhere has mentioned that which sort of evidences or proof were called for by him which was not produced by the appellant. On perusal of Tax Audit Report it is observed that the Tax Auditor has given complete details with regard to additions to the fixed assets above 180 days, additions below 180 days, date of addition, rate of depreciation and date of put to use. I find force in the submission of the appellant that in the year under consideration it has claimed total depreciation of Rs.1,39,99,944/- and there were substantial unabsorbed business losses and the depreciation and, therefore, there could not be any intention of claiming excess depreciation of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to deal in Union of India v. Warren Tea Ltd. [2004) 266 ITR 226 (Cal), A.P.O. No.792 of 1999, disposed of by us on January 15, 2004, it appears that 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 and 40 per cent. as exigible to tax under the Act. During the process of the computation, all deductions allowable at the time of computation are to be allowed and that was rightly allowed. Inasmuch as if the income for tea grown was assessed under the agricultural income-tax, in that event, the same cess paid of green leaf would have been eligible for deduction at the time of computation of the agricultural income. But when by fiction in respect of tea grown and manufactured, the agricultural component of the income out of the tea grown is also computed under the Income-tax Act along with the income out of the tea manufactured from the tea grown. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23% and income from tea business attributable to 23% of green leaf purchased by assessee. Accordingly, the AO recalculated the income, treating the income 100% as taxable at Rs.10,91,762/-. Aggrieved, assessee preferred appeal before CIT(A), who allowed the claim of assessee vide para 12 as under:- "12. I have considered the submission of the appellant and perused the assessment order. It is observed that in the assessment order the A.O. has taken income from tea business before applying Rule 8 at Rs.19,92,619/-. In this income, the A.O. has added disallowance on account of depreciation of Rs.6,43,245/- and cess on green leaf of Rs.21,10,297/- to arrive on aggregate income of Rs.47,46,791/-. The 23% of Rs.47,46,791/- which comes to Rs.10,91,762/- has been treated by the A.O. as income from the sale of tea processed out of the purchased green leaves. The AO has considered 23% of income from tea business as 100% taxable business income on the basis mentioned in the assessment order and recorded in para 10 of this order. On the other hand, the appellant has submitted a complex working to arrive on the profit earned out of the sale of tea processed out of purchased green leaves. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tea plants, which, according to AO is not agricultural income. In appeal before CIT(A), who directed the AO to treat the sum of Rs.2,50,000/- as agricultural income by observing as under: "I have considered the submission of the appellant and perused the assessment order. I have also gone through the copies of sales bills for sale of tea plants. In the profit Loss account the appellant has credited an amount of Rs.14,00,678/- under the head "other income" as per Schedule-30. This includes an amount of Rs.2,90,781/- under the head "miscellaneous income". The aforesaid miscellaneous income includes an amount of Rs.2,50,000/- on account of sale of tea plants which was treated by the appellant as agricultural receipt. However, the A.O. has treated the receipt of Rs.2,50,000/- as non- agricultural receipt. But for the same, the A.O. has not given any reason. On perusal of copies of sale bills, it is observed that the appellant has sold tea plants @ Rs.2.50 each to M/s. Karnadhar Roy, P.O. Kalchini, Dist. Jalpaiguri. On careful consideration of facts, I find force on the submission of appellant that sale proceeds of Rs.2,5,000/- is exclusively out of agricultural activity and no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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