TaxTMI 
TaxTMI 
2008 (8) TMI 434
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....he business of manufacture of switch boards, agency of Lloyds Insurance, export of fabrics and tea cultivation. 3. The assessee company filed its return of income for the impugned asst. yr. 2002-03 for Rs. 8,470. In the course of assessment proceedings, the AO found that an amount of Rs. 5,41,058 claimed by the assessee by way of deduction towards ESI and provident fund was not paid within the due dates allowed under the provident fund and ESI Acts. Therefore, the AO held that s. 43B would apply. Accordingly, this amount was disallowed and added back to the income of the assessee company. The assessee had taken a tea estate measuring 49.5 acres on lease from its holding company. The leased land consisted of tea plants, nurseries and trees ....
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....he addition under s. 43B amounting to Rs. 5,41,058. Regarding liabilities reflected in the balance sheet, the CIT(A) deleted the addition of Rs. 37,07,123 made against foreign liability. But, he has confirmed the addition of Rs. 22,36,853 regarding other liabilities. He has also confirmed the levy of penalty under s. 234D. 6. The assessee as well as Revenue are aggrieved by the orders of the CIT(A) and therefore, these cross-appeals. 7. We heard Shri Sriram Seshadri, the learned counsel appearing for the assessee and Smt. P.N. Kamala Devi, the learned Departmental Representative appearing for Revenue. 8. First, we are considering the appeal filed by the assessee in ITA No. 2275/Mad/2006. The first three grounds raised in assessee's a....
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....eralised these expenses as expenses incurred for secondary operations. In one way, harvest expenses could be treated as secondary expenses. But, regarding cultivation expenses, the contention of the Revenue is not justified. The assessee is earning income from tea plantation taken on lease. Obviously, the tea plants are of much age. Tea plants usually survive even beyond 100 years. It does not mean that once a tea plantation has become yielding, there is no need of any basic operations thereafter. Apart from planting the necessary bushes, weeding it and yielding these bushes, there are certain necessary expenses which are in the character of basic operations. Tea plantation requires utmost care and management. Tea bushes have to be replaced....
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....ove decision that the basic operations must be carried out by the assessee himself. What the Supreme Court has considered was the nature of expression "agricultural income". The Court held that the agricultural income should be generated from basic and secondary agricultural operations carried out on the land. In the present case, the assessee's holding company has carried out the basic operations. The land was leased out to assessee company. The assessee company has also carried out certain activities in the nature of basic operations plus secondary operations including maintaining and harvesting of the crops. The holding company has not claimed any agricultural income from the said property leased out to the assessee company. 14. It ....
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....ing. It has applied manure; it has applied pesticides; it has taken all measures to protect the crop. It is after these processes, it becomes ripe for harvesting. Therefore it is crystal clear that income earned by the assessee is agricultural income. The decision of Supreme Court in the case of CIT vs. Raja Benoy Kumar Sahas Roy, has no application in this case. 15. Therefore, in the facts and circumstances of the case, we hold that the amount of Rs. 10,76,155 declared by the assessee company as agricultural income has to be accepted. The consequential disallowance and addition are deleted. This issue is decided in favour of the assessee. 16. The 7th ground is that the CIT(A) has erred in confirming the disallowance of provident fund and....
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....ngly remanded. 18. The last ground raised by the assessee is that the CIT(A) has erred in confirming the levy of interest under ss. 234B and 234D. 19. Regarding levy of interest under s. 234B, it is only a consequential and applicable to the residual quantum of income which has to be considered by the AO while giving effect to the order of the Tribunal. Therefore, it does not call for any adjudication. 20. Regarding levy of interest under s. 234D, the levy is applicable only from asst. yr. 2004-05 onwards as held by Special Bench of Delhi Bench of Tribunal in the case of ITO vs. Ekta Promoters (P) Ltd. (2008) 117 TTJ (Del)(SB) 289 : (2008) 113 ITD 719 (Del)(SB). In the present case. the asst. yr. is 2002-03. Therefore, s. 234D will not a....