Tribunal upholds CIT-A's decision on cess & consultancy fees disallowance for assessment years 2008-09 and 2009-10.

The Tribunal upheld the CIT-A's decision to delete the disallowances related to cess on green leaf and consultancy fees. The Tribunal dismissed the Revenue's appeals for the assessment years 2008-09 and 2009-10, affirming the CIT-A's findings. Additionally, the Tribunal dismissed the assessee's cross objections due to procedural delays and the relief already granted by the CIT-A. The order was pronounced on 25-10-2017.

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Issues Involved:
1. Deletion of disallowance made on account of cess on green leaf.
2. Deletion of addition made as disallowance of consultancy fees paid to M/s. Globally Managed Services (GMS).

Detailed Analysis:

Issue 1: Deletion of Disallowance Made on Account of Cess on Green Leaf
Facts and Contentions:
- The assessee, involved in the business of manufacturing tea, claimed a deduction for cess on green leaf, asserting it as an agricultural activity.
- The Assessing Officer (AO) disallowed the deduction, citing a pending Special Leave Petition (SLP) in the Supreme Court challenging the Calcutta High Court's decision in AFT Industries Ltd, which had allowed such deductions.

CIT-A's Decision:
- The CIT-A relied on the Calcutta High Court's decision in AFT Industries Ltd, which had adjudicated the matter in favor of the assessee.
- Notwithstanding the pending SLP, the CIT-A noted that the Supreme Court had not stayed the High Court's order, thus the High Court's decision remained binding.

Tribunal's Analysis and Conclusion:
- The Tribunal noted that the Supreme Court had dismissed the SLP, thereby upholding the High Court's interpretation of Rule 8 of the Income Tax Rules, 1962.
- The Tribunal concluded that the income computed should be apportioned 60:40, with 40% being assessable under the Income Tax Act.
- Consequently, the Tribunal dismissed the Revenue's ground, affirming the CIT-A's deletion of the addition of Rs. 3,67,07,442/-.

Issue 2: Deletion of Addition Made as Disallowance of Consultancy Fees Paid to M/s. Globally Managed Services (GMS)
Facts and Contentions:
- The assessee engaged GMS for consultancy services related to raising alternate crops on tea estate land, as permitted by the Assam Government.
- The AO disallowed the consultancy fees of Rs. 47,18,760/-, treating it as a capital expense, arguing that it provided an enduring benefit.

CIT-A's Decision:
- The CIT-A observed that the alternate crop farming was part of the tea plantation business and utilized the same land and labor.
- The CIT-A noted that the consultancy did not provide enduring benefits as many identified crops were found non-viable and discontinued.
- The CIT-A held that the consultancy fees were revenue in nature and allowed the deduction.

Tribunal's Analysis and Conclusion:
- The Tribunal agreed with the CIT-A, emphasizing that the consultancy fees were incurred in the normal course of business and did not result in a new line of business.
- The Tribunal found that the expenses did not provide long-lasting benefits and were linked to the existing tea plantation business.
- The Tribunal upheld the CIT-A's order, dismissing the Revenue's ground.

Conclusion:
- The Tribunal dismissed both appeals by the Revenue for the assessment years 2008-09 and 2009-10, affirming the CIT-A's deletions of disallowances related to cess on green leaf and consultancy fees.
- The Tribunal also dismissed the cross objections filed by the assessee due to procedural delays and the substantive relief already granted by the CIT-A.

Order Pronouncement:
- The order was pronounced in the open Court on 25-10-2017.

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