TMI Blog2018 (2) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... y on deemed income basis, merely because it had not utilized the entire amounts withdrawn before 31.3.2012 (i.e within that previous year). In case if the assessee is taxed on deemed income basis in this year for non-utilisation of withdrawals within that previous year, then the assessee would never get any deduction in subsequent years also for this utilization. This would in effect result in withdrawal of deduction in part earlier granted to the assessee at the time of making deposit with NABARD. The provisions of section 33AB (7) of the Act uses the expression ‘being utilised’. It is not in dispute that the assessee had placed orders for acquisition of various machineries that are required for setting up of new units to be engaged in growing and manufacturing of tea i.e acquisition for machineries for specified purposes. It is not in dispute that the assessee had paid substantial portion of the proforma invoice value as advance before 31.3.2012 and had included the same in the utilization statement before 31.3.2012 which clearly indicates its intention of utilizing the withdrawals from NABARD deposit accounts. Hence the spirit of the section had been satisfied by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59,47,074 7.2.2012 30,19,400 2,78,73,174 The assessee submitted that the said amount was made use of it in the same financial year on the basis of placing the orders within the financial year and an aggregate sum of ₹ 2,63,01,843/- was also paid before 31.3.2012. The orders for procurement of various machineries such as conveyor, boiler, dryer mouth electronic batch weigher, tea color sorter and blower were placed before the end of the previous year and proforma invoice obtained from the concerned suppliers. The assessee also stated that advance amounts were also paid as per the terms of the orders and since there is always a time gap between the placing of orders and actual delivery of the machineries and its installation, it had spread over the next year. The assessee further submitted that the deficit figure of ₹ 15,71,331/- ( 27873174-26301843) had been duly spent by the assessee on or before the due date of filing the return of income u/s 139(1) of the Act. It further submitted that the utilization has been made in accordance with the Tea Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 33AB is a beneficial section, the disallowance u/s 33AB(7) should be restricted to ₹ 6,318/- as the disallowance of ₹ 15,71,331/- was made by an erroneous interpretation of section 33AB by the auditors. 2. That the appellant craves leave to add, alter, amend, cancel, supplement or otherwise modify the grounds stated above, before or at the hearing of the appeal as it may deem fit. 4. We have heard the rival submissions. We find that the assessee had been given deduction u/s 33AB of the Act in the earlier year at the time of making deposit in NABARD. The assessee is mandated to withdraw the amounts lying in NABARD deposit and utilize the same for further manufacturing and growing of tea in accordance with the manner provided in Tea Development Scheme, 2007. Such utilization is mandated to be done within the end of the previous year in which withdrawal was made from NABARD deposit in terms of section 33AB(7) of the Act. For the sake of convenience, the provisions of section 33AB(7) of the Act are reproduced :- Tea development account 22[,coffee development account and rubber deve-lopment account]. 23 33AB. (7) Where any amount, stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned in the Tea Development Scheme, 2007. The revenue had taxed the unuitlised portion of ₹ 15,71,331/- as deemed income of the assessee by strictly interpreting the provisions of section 33AB(7) of the Act. This would lead to a situation where, the assessee having been given deduction in earlier year at the time of making deposit in NABARD, and had withdrawn the amounts thereon in subsequent years from NABARD deposit and utilized the same in the manner provided in Tea Development Scheme, 2007 with some delay (i.e utilization had happened partly after the end of the previous year in which withdrawal was made) , but still would be fastened with tax liability by way of deeming fiction provided in section 33AB(7) of the Act, then , it tantamounts effectively to withdrawal of the deduction granted in earlier years to the assessee , inspite of proper utilization of the funds by the assessee. We find that the provisions of section 33AB of the Act was introduced with a view to encouraging persons engaged in the business of growing and manufacturing tea in india to mobilize resources internally for specified purposes. 4.2. We also find that similar provisions were made in the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been utilised for the specified purpose within the period specified in the scheme, such amount would not form part of the income of the assessee in the previous year in which the amount has been withdrawn. (Underlining provided by us) FINANCE ACT, 1987 20.8 The utilisation of the amount withdrawn is permitted in accordance with the provisions of section 32AB and the scheme framed thereunder for the purpose of purchasing a new ship or new aircraft or new machinery or plant . These expressions have been defined in the Explanation to section 32(1)(vi) of the Income-tax Act which has been deleted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from 1-4-1988. As a consequence, the Amending Act has amended section 32AB by including the definition of the expressions new ship , new aircraft and new machinery or plant in the section itself. FINANCE ACT, 1987 20.9 These amendments will come into force with effect from 1st April, 1987, and will, accordingly, apply to the assessment year 1987-88 and subsequent years. Para 20.7 of the aforesaid circular clearly addresses the issue under dispute before us. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be construed so as to advance the objective of the provision and not to frustrate it. 4.3.1. Similarly the Hon ble Supreme Court in the case of CIT vs Gwalior Rayon Silk Manufacturing Co. Ltd reported in 196 ITR 149 (SC) wherein it was held :- It is equally settled law that if the language is plain and unambiguous one can only look fairly at the language used and interpret it to give effect to the legislative intention. Nevertheless tax laws have to be interpreted reasonably and in consonance with justice adopting purposive approach. The contextual meaning has to be ascertained and given effect to. A provision for deduction, exemption or relief should be construed reasonably and in favour of the assessee. The object being that in computation of the net income, the statute provides deductions, exemptions or depreciation of the value of the capital assets from taxable income. Therefore, building which have not been specifically defined to include road in the Act must be taken in the legal sense. 4.3.2. The Hon ble Supreme Court in the case of CIT v. J.H. Gotla reported in 156 ITR 323 (SC) had held :- If the purpose of a particular provision is easily discernibl ..... 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