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2015 (9) TMI 492 - ITAT CHENNAI

2015 (9) TMI 492 - ITAT CHENNAI - TMI - Disallowance of expenses in agricultural activity - CIT (Appeals) ought to have seen that assessee is running farm tourism - Held that:- No good reason to interfere with the findings of the Commissioner of Income Tax (Appeals) in sustaining the disallowance of agricultural expenses . Thus, we affirm the order of the Commissioner of Income Tax (Appeals) on this issue and reject the grounds raised by the assessee for both the assessment years. - Decided agai .....

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f depreciation to 5%.- Decided against assessee.

Dispute relating to grant of interest under section 244A - whether is to be decided by jurisdictional Commissioner or the Chief Commissioner? - Held that:- In view of the decision of Tata Communications Ltd. Vs. ACIT [2014 (1) TMI 1277 - ITAT MUMBAI ] the grounds of appeal raised by the assessee is a valid one warranting adjudication by the Commissioner of Income Tax (Appeals). Since the Commissioner of Income Tax (Appeals) has not gone .....

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e Tax (Appeals) however partly allowed such expenses holding that certain payments were made for publicity and such expenses are to the extent of ₹ 1,55,000/- and confirmed expenses of ₹ 55,000/-. We do not see any infirmity in the order of the Commissioner of Income Tax (Appeals) in partly allowing the expenses incurred for publicity. Thus, we affirm the order of the Commissioner of Income Tax (Appeals) - Decided against assessee. - I.T.A.Nos.1701 & 1719/Mds/2012 - Dated:- 26-8-2015 .....

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rder for the sake of convenience. 2. The common issue in both these appeals is that Commissioner of Income Tax (Appeals) ought to have seen that assessee is running farm tourism and erred in summarily confirming the disallowance of expenses in agricultural activity. 3. Brief facts are that assessee company is engaged in the business of flight catering and allied professional services filed its return of income on 28.11.2003 and 01.11.2004 declaring income of ₹ 18,63,160/- and ₹ 26,20 .....

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further observed that assessee was cultivating vegetables and such vegetables are utilized in the restaurants maintained by the assessee and therefore assessee cannot make income out of itself. Alternatively, the Assessing Officer held that loss from agricultural activity cannot be allowed as deduction in view of the provisions of section 14A of the Act. The Assessing Officer observed that loss from agriculture being expenditure over income is nothing but an expenditure incurred which is earning .....

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ral income and agricultural expenses so as to disallow the same under section 14A of the Act. He further submits that agricultural income was considered for tax purposes and therefore it cannot be held that such income is exempt so as to attract provisions of section 14A of the Act. 5. Departmental Representative vehemently submits that what was shown by the assessee is agricultural income only and therefore agricultural expenses debited to profit and loss account over and above the income canno .....

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385/-. The AO afforded opportunity .to the appellant as per the direction of Hon ble ITAT to substantiate the claim of ₹ 8,67,880/- agricultural income and the corresponding debit of expenditure relating to agriculture of ₹ 13,66,265/-. After evaluating the details filed the Assessing Officer observed the following discrepancies with regard to the claims: i) As against the claim that vegetables are cultivated in 1 acre out of 11 acre of land in Vagaman Hideout during the hearing, the .....

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ndent on rain water, no major maintenance is required and tea plantation yields for a period of 10 to 15 years. iii. The appellant has not maintained or produced books of account for the income/expenditure. Though huge sums ought to have gone through bank transactions, the appellant failed to show by way of bank transactions. iv. The appellant s claim of expenditure for cultivation of vegetables in 2 acres ₹ 13,66,265/- is too far high and even if expenditure on tea plantation is taken int .....

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ut and submitted that the consolidated form of vegetable, honey, dairy, farm and poultry is given and all income are from the guests who came to the resort. He argued that the statement of account so submitted are attested by the auditor. On careful consideration I find that the appellant has not countered the points made by the AO in the assessment order for drawing adverse inference. It is a settled law that the onus is on the appellant to furnish verifiable evidence to prove that income earne .....

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rm the addition on this ground. However, the appellant has submitted that the addition of agricultural income of ₹ 8,67,880/- made by the AO amounted to duplication of income as the total income as per return ₹ 18,63,160/- includes ₹ 8,67,880/-. The Assessing Officer is directed to verify the contention of the appellant and if found to be true reduce the amount of ₹ 8,67,880/-while giving effect to this order. These grounds of appeal are partly allowed. 7. On going throug .....

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ome Tax (Appeals) erred in confirming the disallowance of depreciation claimed on temporary structures. The Assessing Officer while completing the assessment restricted depreciation on temporary structures to 5% considering the structure as permanent one. The Assessing Officer further observed that assessee has not established whether temporary construction has been taken place and if taken place under in which month and when it was demolished as it was the contention of the assessee that tempor .....

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e assessee could not substantiate as to whether the structures are temporary and what kind of construction was erected and when it was demolished, therefore in the absence of any such details the Assessing Officer appears to be justified in restricting the claim of depreciation to 5%.Thus, the grounds raised by the assessee on this issue are dismissed. 10. The last issue in the grounds of appeal of the assessee for the assessment year 2003-04 is that Commissioner of Income Tax (Appeals) erred in .....

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mmissioner. 11. On hearing both the parties, we find that Mumbai Bench of the Tribunal in the case of Tata Communications Ltd. Vs. ACIT in ITA No.8592/Mum/2010 dated 24.07.2013 considering a similar issue held that assessee had preferred a valid appeal warranting adjudication. While holding so, the Tribunal observed as under:- We have heard the parties, and perused the material on record. The issue arising for determination in the instant case is a pure legal issue, i.e., whether the assessee co .....

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ns Limited vs. Asst. CIT Provinces Manganese Ore Co. Ltd. vs. CIT[1986] 160 ITR 961 (SC), wherein the issue involved was the denial to liability and/or charge of interest u/s.215 at a lesser amount, stands duly considered and distinguished by the hon ble high court. It is in this context that its stands explained that clause (c) of section 246 is in two parts, so that the assessee s appeal would fall in the second part, i.e., disputing the tax as determined vide the assessment order. In view of .....

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e assessing authority who has to grant the said interest, and whose order contains no reference to any reason for the non-grant of the mandatory interest u/s.244A; the law clearly prescribing the same for being granted along with the refund. Under the circumstances, we only consider it fit and proper to, setting aside the impugned order, restore the matter back to the file of the A.O. to allow the assessee an opportunity to plead its case with reference to grant of interest u/s.244A; we having n .....

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e Assessing Officer to decide the issue in accordance with law, after providing adequate opportunity to the assessee. 13. The second issue in the appeal of the assessee for the assessment year 2004-05 is that Commissioner of Income Tax (Appeals) erred in confirming the disallowance of advertisement & publicity expenses and office expenses. The Assessing Officer while completing the assessment disallowed ₹ 2,14,700/- under the head advertisement & publicity and also office expenses .....

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