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TMI Blog2021 (3) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals were heard together and disposed off by this consolidated order. 2. The assessee has more or less filed common grounds of appeal for both assessment years, therefore, for the sake of brevity, grounds of appeal filed in ITA No.3193/Chny/2018 for assessment year 2014-15 are reproduced as under:- "1. The order of the Commissioner of Income Tax (Appeals) - II, Chennai dated 16.10.2018 in l.T.A.No. 172/16-17 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the apportionment of the expenses relatable to the earning of exempted agricultural income for making disallowance and consequently erred in sustaining the addition of Rs. 3,95,650/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings, the Assessing Officer noticed that assessee has maintained separate books of account for agricultural activity and non-agricultural activity. The books of account of agricultural activity was separately audited by independent auditor. In the Head Office main source of income of the assessee for impugned assessment year is interest on deposits and against this assessee has claimed various expenses including audit fee, salary and wages, director's remuneration, electricity expenses etc. The Assessing Officer was of the opinion that expenses claimed at Head Office are related to main business activity of agricultural operations as well as non-agricultural operations and hence, needs to be proportionately apportioned to agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agricultural activity. He further submitted that if at all expenses incurred at Head Office is having any bearing on agricultural operations, then it is only the director remuneration because director is overseeing agricultural operations and hence, except director remuneration, no other expenses can be apportioned against agricultural operations and non-agricultural operations. 6. The learned DR on the other hand, strongly supporting the order of learned CIT(A) submitted that when main business activity of the assessee is only growing and selling coffee, then there is no reason to segregate Head Office expenses and plantation expenses and whatever expenses incurred by assessee including expenses at Head Office are related to main busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, apportionment of all other expenses in the ratio of agricultural income and non-agricultural income has been deleted. 8. In the result, appeal filed by assessee for assessment year 2014-15 is partly allowed. 9. Coming back to assessment year 2015-16. The Assessing Officer has assessed interest income under the head income from other sources and further disallowed total expenditure incurred at Head Office on the ground that said expenditure is relatable to agricultural operations of the assesse. We find that the Assessing Officer is following different method of apportionment of expenses for each year. In the earlier financial year, he has apportioned expenses in the ratio of agricultural income and non-agricultural income and for cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... director remuneration to agricultural operations. 10. As regards interest income, the Assessing Officer in the immediately preceding year has accepted interest income offered by assessee under the head income from business has suddenly changed head of income to 'income from other sources' without there being any change in facts and circumstances for impugned assessment year . Therefore, we direct the Assessing Officer to consider interest income under the head 'income from business' as claimed by assessee and further direct the Assessing Officer to allow expenditure incurred at Head Office except director salary against interest income. 11. In the result, appeal filed by the assessee for assessment year 2015-16 is partly allowed. 12. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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