9911796707
TMI Blog2018 (1) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... The first issue to be decided in this appeal is as to whether the ld CITA was justified in upholding the addition made towards prior period expenditure in the sum of Rs. 10,62,008/- towards interest paid to supplier, in the facts and circumstances of the case. The ld AR stated that the correct figure involved in this dispute is only Rs. 10,62,008/- as against Rs. 15,92,146/- mentioned in the grounds of appeal, for which he had sought for modification of the same. The ld AR also made an endorsement to the changed figures in the grounds of appeal filed before us. Hence we proceed to adjudicate this issue only in respect of the figure of Rs. 10,62,008/- towards interest paid to supplier M/s Suresh Brothers & Co. (P) Ltd. 2.1. The brief facts of this issue is that the assessee debited a sum of Rs. 10,62,008/- towards interest paid to supplier M/s Suresh Brothers & Co. (P) Ltd who supplied stores to the assessee's tea garden. The ld AO observed that the same was debited towards delayed payment of interest made to M/s Suresh Brothers & Co. (P) Ltd. From the perusal of the bill raised by M/s Suresh Brothers & Co. (P) Ltd dated 3.11.1992, the ld AO noticed that the supplier had raised a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral meeting and hence the same could not have been anticipated by the assessee in order to make a provision for interest on accrual basis in Asst Year 1992-93. In any case, it is not in dispute that the assessee had not claimed this interest amount of Rs. 10,62,008/- in Asst Year 1992-93. The claim of the assessee that the liability to pay the interest itself accrued only pursuant to the bill dated 3.11.1992 raised by the said supplier and the same was duly paid by the assessee before the end of the previous year ending 31.3.1993. Moreover, we are informed that the tax rates for domestic companies for both Asst Years 1992-93 and 1993-94 were one and the same ie 45% tax plus surcharge of 15%. Hence there is no loss that could be attributed to the exchequer because of this claim of expenditure by the assessee as the business expediency of the said expenditure and its genuineness had not been doubted by the revenue at any point of time. It is not in dispute that the said payment of interest on delayed payment to supplier is a legitimate business expenditure. Our finding is further sanctified by the ratio laid down by the Hon'ble Delhi High Court in the case of CIT vs Jagatjit Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. We find from the perusal of the balance sheet of the assessee company which is part of the paper book filed before us, that the assessee company is having sufficient own funds in the form of share capital and reserves and surplus to the tune of Rs. 9,02,06,003/- which is higher than the loans taken by the assesse company. Hence the presumption could be drawn in favour of the assessee that the interest free funds were given out of the own funds available with the assessee company as per the ratio laid down in the following decisions :- a) Hon'ble Jurisdictional High Court in the case of CIT vs Britannia Industries Ltd reported in 280 ITR 525 (Cal) b) Hon'ble Bombay High Court in the case of CIT vs Reliance Utilities & Power Ltd reported in 313 ITR 340 (Bom) In view of the aforesaid facts and respectfully following the ratio decidendi of the aforesaid decisions, we have no hesitation in deleting the disallowance of interest on proportionate basis in the sum of Rs. 3,09,095/- . Accordingly, the Ground No. 2 raised by the assessee is allowed for Asst Year 1993-94. 4. The last issue to be decided in this appeal for Asst Year 1993-94 is as to whether the ld CITA was justified in u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 8. Sundry Debtors included Rs. 2,92,65,884/- representing old balances out of which Rs. 16,43,829/- has been written off during the year and balance being still considered good and recoverable in the opinion of the management ha been treated accordingly in the accounts. This note clearly proves that out of the total debtors of the assessee company in the sum of Rs. 5,92,08,719/- as on 31.3.1993, a sum of Rs. 2,92,65,884/- represents old balances, out of which debts representing Rs. 16,43,829/- had been written off in the books of accounts as bad debt. Hence it clearly proves that the same represents trade debts of the assessee. Since the debt is reflected under sundry debtors, it goes without saying that the income was offered in the earlier years and unrealized portion of the debt is reflected under the head 'Sundry Debtors' in the balance sheet. The above note also impliedly proves that the assets of jute division representing sundry debtors had been merged with the sundry debtors of tea division of the assessee company. In view of these facts, we hold that the assessee company had indeed complied with the requirements of section 36(2) of the Act in the instant case and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f packaging division of the assessee with the business income of the assessee in the facts and circumstances of the case. 6.1. The brief facts of this issue is that the assessee claimed loss of Rs. 20,78,182/- in respect of its packaging division which is merged in the overall profit and loss account of the assessee company comprising of various divisions. The ld AO observed that since the assessee could not justify the claim of loss of packaging division by producing books of accounts with evidences in this regard, the same is liable to be disallowed. Accordingly, he disallowed the claim of Rs. 20,78,182/- in the assessment. The ld AO also made independent disallowance packaging division towards statutory dues such as provident fund, pension fund etc u/s 43B of the Act based on the reporting made in the Tax Audit Report of the assessee company. This addition independently made was to the tune of Rs. 13,73,901/- which is included in the total disallowance towards statutory dues of Rs. 86,34,152/-. 6.2. Before the ld CITA, the assessee submitted the unaudited profit and loss account of packaging division furnishing the details of purchases, sales, statutory dues of packaging divis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ld AO with a direction to examine the profit and loss account of packaging division of the assessee company and decide the allowability of loss of packaging division afresh, in accordance with law. The aspect of double addition would have to be addressed by the ld AO while disposing of this set aside assessment. Accordingly, the Ground No. 2 raised by the assessee for Asst Year 2001-02 is allowed for statistical purposes. 7. The Ground No. 3 raised by the assessee was stated to be not pressed by the ld AR at the time of hearing. Accordingly the same is dismissed as not pressed. ITA No. 304&305/Kol/2016 for Asst Years 2011-12 & 2012-13 respectively 8. The only common issue involved in these two appeals of the assessee for the Asst Years 2011-12 and 2012-13 is as to whether the ld CITA was justified in upholding the action of the ld AO by not treating the receipt of other income as composite income of the assessee, in the facts and circumstances of the case. 8.1. The brief facts of this issue is that the assessee is engaged in the business of cultivation, manufacturing and marketing of tea. The ld AO observed that the assessee company had earned the following other incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(A) erred in upholding the action of the Ld. AO by not treating the receipt of Rs. 1,11,79,331/- as composite income of the assessee. The receipt from sale of tea waste, rent realized, other sundry receipts are liable to be treated as composite income. Therefore, the action of the ld. AO in making the addition and Ld. CIT(A) in confirming the addition is unjustified. Hence, the receipt from sale of shade trees should be treated as composite income. (b) That the Ld. CIT(A) erred in upholding the impugned addition. He failed to take cognizance of the fact that an assessment has to be made in accordance with law after allowing necessary deductions/exemptions even if the same was not claimed by the assessee. Therefore, the action of the ld. AO and Ld. CIT(A) is not justified under the facts and circumstances of the case. Hence, the addition needs to be deleted. 2. That the petitioner craves leave to add, alter, amend or withdraw any ground/s of appeal before or at the time of hearing. 8.2. We have heard the rival submissions. The ld AR argued that there is no estoppel against the statute and hence merely because a particular receipt was agreed to be treated in a mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statute and reliance in this regard has been rightly placed by the ld AR on the decision of the Hon'ble Jurisdictional High Court in the case of SAIL DSP VR Employees Association 1998 vs Union of India & Ors reported in (2003) 262 ITR 638 (Cal), wherein it was held that :- The question of estoppel because of option exercised with eyes open to the subsequent modification cannot be sustained. What is not otherwise taxable cannot become taxable because of admission of the assessee. Nor there can be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on the admission of or waiver by the assessee. Chargeability is dependent on the charging section, which needs to be strictly construed. Respectfully following the aforesaid ratio, we hold that the ld AO ought not to have treated the aforesaid receipts as other income and hence not part of composite income of the assessee merely based on admission of the assessee. Now getting into the merits of each item of receipt, we find that the receipt towards sale of tea waste, rent realized and tea claim realized, would be eligible to be forming part of composite income of the assessee based ..... X X X X Extracts X X X X X X X X Extracts X X X X
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