TMI Blog2018 (2) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactures tea from such produce. The case of the assessee is that this deduction is available in case a assessee manufacturing of tea and hence only plant and machinery of manufacturing is to be considered. Whether the opening valuations of plant and machineries of water supply system and irrigation system as shown under farm account is to be considered the part and parcel of the value of plant and machinery as on 01.04.2009 for calculating the percentage of addition to plant and machinery for claiming deduction u/s 80IE or not is the issue before us. We find that the water supply system and irrigation system admittedly are not part of tea manufacturing processes. Therefore, the said opening valuation of said machineries should not be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaf cess is non-deductible expenditure from the composite income and disallowed the amount of ₹ 36,40,244/- stating that appellant Revenue has filed SLP against the decision of Hon ble High Court of Calcutta in the case of AFT Industries Ltd. Aggrieved the assessee filed an appeal before the CIT(A) contending the assessee is entitled to claim deduction in pursuance of the decision of Hon ble High Court of Calcutta in the case of AFT Industries Ltd supra as the Hon ble Supreme Court did not grant any stay of operation of decision of Hon ble High Court of Calcutta in the case of AFT Industries Ltd supra. The CIT-A by following the decision of Hon ble High Court of Calcutta supra, deleted the addition made by the AO by observing as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the such decision by the Honourable Supreme Court. The relevant portion of which is reproduced herein below: The respondent-assessee had paid cess on green leaf to the Government of Assam which was levied under Assam Taxation (On Specified Land) Act, 1990. In its income tax return, it had claimed the same as deduction which has been allowed by the High Court. The relevant discussion in this behalf is as under:- However, the learned Tribunal had held that the deduction is eligible after computing the income under Rule 8 and the apportionment is to be made only after the income is so computed. Such apportionment cannot be made before the deduction. Rule 8 of the Income Tax: Rules, 1962 requires that the computation is to be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 80IE (2)(ii) of the Act. 8. The assessee claimed deduction of ₹ 26,10,851/- u/s 80IE(6) of the Act. The AO sought the details of the claim. The assessee filed a reply vide letter dated 09.01.2013 stating that the assessee obtained certificate dated 12.10.2010 from Chartered Accountant as required u/s 80IE(7) of the Act for the purpose of claiming the aforesaid deduction. The assessee also filed the details of additions made to plant and machinery on Bormahajan Tea Garden and claimed substantial expansions were made in the previous year. The AO found the submission of the assessee not acceptable as the assessee had not considered the value of plant machinery of water supply system and irrigation which is in farm accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as well as remand report of the AO deleted the addition made by the AO by observing as under: 9.6. The deduction u/s. 80lE is in relation to produce or manufacture a thing or article. In the case of the appellant there were two stages, the first being the growing of the Green Tea Leaves for which the machineries shown under the head Farm Account were relevant and the second stage was the manufacturing of Tea from the Grown Green Tea Leaves where the machineries other than those shown under the head Farm Account had been utilized. The AR's submission, that if one assessee manufactures Tea from Green Tea Leaves purchased from the market and another assessee manufactures Tea from its own Green Tea Leaves, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Irrigation (Rs. 14,35,499), should not be considered and consequently, the appellant should be treated as eligible for deduction u/s. 80lE. Hence, the Assessing Officer is directed to consider that the appellant had duly complied with the requirement of substantial expansion as specified in Section 80lE (2)(ii)/(7)(ii) and therefore the appellant should be allowed deduction of ₹ 26,10,851 u/s. 80lE. Ground No. 8 of the appeal, in view of the discussion at Para 9.4, 9.5 9.6 is allowed. 10. Before us, the Ld. DR submits that the water supply system and irrigation system is the prime requirement without there being any such system the assessee cannot grow tea in its gardens. The said irrigation and water supply system also fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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