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2018 (3) TMI 885

011 for its intended purpose - Held that:- The provisions of section 33AB (7) of the Act uses the expression ‘being utilised’. It is not in dispute that the amount withdrawn by the assessee from NABARD was for utilisation as per Tea Development Scheme of 2007 and the assessee had in fact placed orders for acquisition of various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 /specified purposes as envisaged in para 9(a) to (k) of the Scheme. - It is not in dispute that the assessee had paid substantial portion of the proforma invoice value as advance before 31.3.2011 and had included the same in the utilization statement before 31.3.2011 which clearly indicates its intention of utilizing the withdrawals from NABARD deposit accounts. Hence the purpose for which the provision has been made by the legislature has been satisfied by the assessee in this case before us. - Thus we hold that the action of the revenue in bringing to tax the deemed income in terms of section 33AB(7) of the Act deserves to be deleted. - Decided in favour of assessee - I.T.A. No. 979/Kol/2015 - Dated:- 7-3-2018 .....

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ling the return of income u/s 139(1) of the Act. It was further submitted that the utilization has been made in accordance with the Tea Development Scheme 2007. Accordingly pleaded that the provisions of section 33AB(7) of the Act uses the expression being utilized and since the utilization process had started well before 31.3.2011 by the assessee by way of placing orders to the suppliers and making substantial payments towards advances, the said provisions mandating the utilization of the withdrawal amounts need to be interpreted liberally and not strictly. It is also the case of the assessee that in case if the provisions of section 33AB(7) of the Act are viewed strictly, then the deduction originally granted at the time of making deposit in NABARD in earlier years would get withdrawn partially even though the assessee had utilized the withdrawn amount from NABARD deposit in accordance with the Tea Development Scheme 2007. Hence, the Ld. AR argued that it cannot be the intention of the legislature to deny the benefit of deduction and as per him, the action of the AO in treating the unutilized portion as deemed income of the assessee u/s 33AB(7) of the Act should not be sustained. .....

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07. 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, standing to the credit of the assessee in the special account 37[or in the 38[***] Deposit Account], which is released during any previous year by the National Bank 37[or which is withdrawn by the assessee from the 38[***] Deposit Account] for being utilised by the assessee for the purposes of such business in accordance with the scheme 37[or the deposit scheme] is not so utilised, either wholly or in part, within that previous year, the whole of such amount or, as the case may be, part thereof which is not so utilised shall be deemed to be profits and gains of business and accordingly chargeable to income-tax as the income of that previous year : Provided that this sub-section shall not apply in a case where such amount is released during any .....

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s 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 statute u/s 32AB of the Act which was not applicable from Asst Year 1991-92 onwards. Sub-section (6) of section 32AB of the Act contained a similar provision to section 33AB(7) of the Act. For the sake of convenience, the erstwhile provisions of section 32AB(6) of the Act are reproduced below:- Investment deposit account Section 32AB. ……………………. (6) Where any amount, standing to the credit of the assessee in the deposit account, released during any previous year by the Development Bank for being utilized by the assessee for the purposes specified in the scheme or at the closure of the account [[in circumstances other than the circumstances specified in clauses (b), (c ) and (e) of sub-section (5A)]], .....

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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 that the provisions of section 32AB (6) and section 33AB(7) are similarly worded in both letter as well as in spirit. It is not in dispute that the assessee in this case before us had utilized the withdrawals from deposit account within the specified time prescribed under the scheme. Though the abovementioned circular was issued for section 32AB(6) of the Act, the analogy given thereon could be used for section 33AB(7) of the Act also in view of similar words used in the statute and since the purpose behind both the sections remain the same. We also find that the legislature had provided for adequate precautions in the section 33AB of the Act itself that in case if the amounts lying in deposit account remains unutilized by the assessee for specified purpos .....

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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 discernible from the whole of the scheme of the Act which in this case, is to counteract the effect of transfer of assets so far as computation of income of the assessee is concerned, then bearing that purpose in mind, we should find out the intention from the language used by the legislature and if strict literal construction leads to an absurd result, i.e., result not intended to be subserved by the object of the legislation found in the manner indicated before, then another construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction. 4.3.3. We hold that a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally and since a provision for pr .....

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