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CIT Versus Derby Tea Industries Pvt Ltd (Renamed As Tongani Tea Co. Ltd.)

2016 (1) TMI 127 - ITAT KOLKATA

Delayed payment of PF contribution - CIT(A) deleted the addition - Held that:- The deduction for the PF/EPF was disallowed by the AO on account of late deposit as specified under the respective Act. The same disallowance was deleted by the Ld. CIT(A) relying in the decision of Hon'ble Apex Court in the case of Alom Extrusions Ltd.(2009 (11) TMI 27 - SUPREME COURT ). In view above we allow the claim of the assessee and uphold the order of the CIT(A) deleting the disallowance made on account of de .....

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mount of ₹ 1,85,62,489/- was duly shown which is placed at page 28 of the paper book. We find that AO has disallowed the interest amount of ₹ 83,83,743/- on the misunderstanding of the facts given by assessee. In the books of accounts of the assessee there were admittedly interest expenses of ₹ 1,85,62,489.00. The chart filed by the Assessee before the AO showed only the unpaid interest of ₹ 1,01,78,746.00 as on 31.3.1998. Thus there was no discrepancy whatsoever as presu .....

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by assessee on account of some other loan of UCO bank only and this account was maintained by assessee at Guwahati branch of UCO bank and same amount was also settled by assessee with UCO bank. However, as regards interest charged by assessee of ₹ 17,31,894/- on account of AY 1994-95, AO observed that it has been debited in the books of account of assessee and therefore disallowed. However, Ld. AR has submitted before us that this interest has been reversed in the books of account of that .....

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n earlier year and interest paid in relevant year. On this basis, we are inclined not to interfere in the order of Ld. CIT(A) .- Decided against revenue

Addition on account of profit earned from sale of assets - CIT(A) deleted the addition - AR submitted that as per the accounting method, a company is to declare the profit arising on account of sale-purchase of its assets by crediting the profit and loss account - Held that:- While determining the profit chargeable the tax under Incom .....

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ded against revenue

Addition on account of hire charges - AO made the addition for want of supporting evidence - CIT(A) deleted the addition - Held that:- As observed from the assessment order that disallowance was made for non-production of details of the parties to whom the payment was made. The Ld. AR drew our attention on page 18 of the paper book, wherein the party, Aparna Sales Pvt. Ltd. has confirmed the expenses of ₹ 2.40 lakh. Since the sufficient details have been furn .....

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e inclined not to interfere in the order of Ld. CIT(A).- Decided against revenue

Interest income treated as business income by CIT(A) - AO treated the same as income from other source and applied Rule-8 of IT Rules, 1962 - Held that:- Since this issue has already been covered by the judgment of Hon'ble jurisdictional High Court in the case of Eveready Industries (India) Ltd. (2009 (12) TMI 226 - CALCUTTA HIGH COURT) in favour of assessee and treating the interest income as "business i .....

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t was framed by DCIT, Circle-7(2) Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide his order dated 31.01.2001 for assessment year 1998-99. Shri D.S. Damle, Ld. Authorized Representative appearing on behalf of assessee and Shri Pinkai Mukherjee, Ld. Departmental Representative appearing on behalf of Revenue. 2 At the outset, it is observed that there is a delay of 44 days in filing the appeal before this Tribunal. In this regard, application has b .....

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dealing with the delay on behalf of the Government and observed as enumerated below: "When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non deliberate delay." "It must be grasped that judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of .....

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individuals. 4. In the instant case as the Government is Appellant has submitted that before finalization of appeal, the case has to cross many channel and even there was non-communication qua filing of SLP in Supreme Court of India is related matter of ISG Traders Ltd. -vs. - CIT, Hence on the aforesaid analyzation while following a justice-oriented approach from this perspective, we feel that there is sufficient cause for condoning the delay in the institution of the appeal, hence we are incli .....

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the A.O to delete the addition of ₹ 35,57,392/- in the case of Nagrijuli Tea Estates and ₹ 5,38,548/- in the case of Tongani Tea Estates without appreciating the fact that Section 36(1)(va) deals with contribution to P.F that deductions u/s43B is allowed only in that previous year in which the sum is actually paid within date." 6. Briefly stated facts are that assessee is a limited company and is engaged in the business of growing and manufacturing of tea leaf in India. The asse .....

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CIT Vs. Alom Extrusions Ltd. 313 ITR 306 (SC) where it was held that amendment to section 43B of the Income tax Act was carried out by the finance Act 2003 is retrospective in operation. In his said decision the Ld. CIT(A) after considering the provisions of sections 2(24)(x) and 36(1)(va) of the Act held in para 3.2 of his order, which is reproduced below:- "3.2 I have carefully considered the submissions of appellant. The issue of allowability of contributions to Provident Fund is no lon .....

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n the present case the appellant in compliance to the manner prescribed on the relevant P.F Scheme paid Employer and Employee's contributions to Provident Fund on or before the due date for filing of the tax return for the AY 98- 99. In the light of the decision of the Supreme Court and the fact that the assessee discharged its liability to pay P.F contributions with due date u/s. 139(1). I hold that the appellant is entitled to the relief of ₹ 31,09,164/-. The AO is accordingly direct .....

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) relying in the decision of Hon'ble Apex Court in the case of Alom Extrusions Ltd.(supra). In view above we allow the claim of the assessee and uphold the order of the CIT(A) deleting the disallowance made on account of delayed payment of PF contribution. This issue of Revenue's appeal is dismissed. Second issue 8. Second issue is regarding the action of the Ld. CIT(A) in directing the AO to delete interest of ₹ 83,83,743 as unexplained expenditure though according to the Revenue .....

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n amount of interest claimed as deduction in the profit and loss a/c and details of interest submitted by the assessee during the assessment proceedings. On question by AO to the assessee about the difference of interest as stated above, the assessee could not file any details. Therefore, the AO added the sum to the total income of assessee. 10. Aggrieved, assessee preferred appeal before Ld. CIT(A). Before the Ld. AR of assessee demonstrated that the interest was claimed for an amount of ₹ .....

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d to the loan parties for an amount of ₹ 1,85,62,489/- was duly shown which is placed at page 28 of the paper book. We find that AO has disallowed the interest amount of ₹ 83,83,743/- on the misunderstanding of the facts given by assessee. In the books of accounts of the assessee there were admittedly interest expenses of ₹ 1,85,62,489.00. The chart filed by the Assessee before the AO showed only the unpaid interest of ₹ 1,01,78,746.00 as on 31.3.1998. Thus there was no d .....

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nterest paid to UCO Bank. This interest was shown as prior year's adjustment in the books of account of assessee. This interest was explained by the assessee as one time settlement (OTS for short) of dues of the bank for an amount of ₹ 5,72,68,000/-. The breakup of the loan and the interest is as under :- i) Opening balance as on 1.4.97 Rs.3,54,22,906/- Less: Paid by installment of ₹ 15 ₹ 45,00,00/- lakhs from April to June Rs.3,09,22,906/- Less: Settled by bank Rs.5,72,68, .....

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entire amount of interest has been claimed as interest expense in this year only. However, the AO found from the previous AYs record that assessee-company has debited a sum of ₹ 6,68,422/- and ₹ 1731894.00 as interest payment to UCO bank in the AY 1993-94 and 1994-95 respectively which is included in the total interest debited in profit and loss account in the relevant A.Y 1998-99. Accordingly, the A.O disallowed the interest for an amount of ₹ 24,00,316/- (Rs.6,68,422/- + 17, .....

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claim of the assessee to be true and deleted the addition made by the AO. As regards the interest of ₹ 17,31,894/- pertaining to AY 1994-95. Ld. CIT(A) has deleted the addition by observing that dispute arose with UCO bank for which said UCO bank had taken legal action for recovery of outstanding loan amount and interest. Since the matter was pending before court of law the assessee has not charged this amount of interest in its profit and loss account. During the FY 1997-98 a settlement .....

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k in the books of account of assessee for the AYs 1993- 94 to 1997-98 which are placed at pages 14 to 17 of assessee's paper book. It was submitted by the Ld AR that loan interest has been debited in its books of account and the liability for interest has been ascertained during the relevant previous year and same has been claimed in the relevant assessment year also. We find from the observation of AO that interest was debited in earlier years for the same loan for AY 1993-94 for a sum of & .....

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efore us that this interest has been reversed in the books of account of that relevant year and in support of its claim a ledger copy of UCO bank in the books of account of assessee is submitted which is placed at page 14 of assessee's paper book, where said interest charged by assessee has been reversed in its books of account in the assessment year 1994-95 only. So it can be inferred that this amount has never been charged in the profit and loss account in its books. From the aforesaid dis .....

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ts on which assessee-company has earned profit of ₹ 2,36,515/- and same profit was credited in its books of account. However, in the computation of income of assessee, same amount was deducted from taxable profit of assessee's business. So, the AO opined that assessee has not paid tax on this amount of profit and not offered the same to tax and added it to assessee's income. 16. Aggrieved, assessee preferred appeal before Ld. CIT(A). Before CIT(A) the assessee submitted that as per .....

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see has correctly deduced the written down value as per the provisions of income tax Act as specified under section 32 of the Act r.w.s 43(6) of the Act. Therefore, Ld. CIT(A) deleted the addition made by AO by observing that profit of sale of asset was not chargeable as income. Aggrieved, Revenue is in appeal before us. 17. Before us Ld. DR supported the order of AO whereas Ld. AR supported the order of Ld. CIT(A). Ld. AR submitted that as per the accounting method, a company is to declare the .....

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rrect effect of profit arising from sale-purchase of its fixed assets in books of account and adjusting the written down value of its relevant block as per the income tax Act. We find no infirmity in the order of Ld. CIT(A) and we uphold the order of Ld. CIT(A) and this ground of Revenue's appeal is dismissed. Fifth issue:- 18. This ground of Revenue's appeal is that Ld. CIT(A) has erred in deleting the addition made by AO for a sum of ₹ 2.40 lakh on account of hire charges. In thi .....

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tion. Therefore the Ld. CIT(A) has deleted the same 20. Aggrieved, now Revenue is in appeal before us. 21. We have heard rival parties and perused the materials available on record and it is observed from the assessment order that disallowance was made for non-production of details of the parties to whom the payment was made. The Ld. AR drew our attention on page 18 of the paper book, wherein the party, Aparna Sales Pvt. Ltd. has confirmed the expenses of ₹ 2.40 lakh. Since the sufficient .....

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cultivation expenses have increased substantially in comparison to the last year. Last year expenses are ₹ 39,77,730/- and the year under consideration the cultivation expenses were ₹ 56,66,235/-. On question by the AO about the increase of the expenses, the assessee submitted that the increase in expenses are attributable mainly due to (1) spraying medicines, chemicals on tea bushes to avoid infection and pests, (2) skiffing operations were carried out on the tea bushes, (3) irriga .....

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oint out any specific instance where cultivation expenses were not supported by any evidence. Therefore the Ld. CIT(A) has deleted the addition made by the AO. Now, aggrieved revenue is in appeal before us. 23. We have heard rival parties and perused the materials available on record. The AO has just disallowed the expenses of ₹ 2 lacs on estimated basis which is not justifiable as per the law. The AO failed to provide the specific reason for the disallowance. Therefore we are inclined not .....

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