TaxTMI 
TaxTMI 
2016 (4) TMI 1118
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....udit report. The method AO adopted for computation of income was within the provisions of Income Tax Act, 1961. Rule 8 of Income Tax Rules 1962 outlines the method by which income from sale of tea grown and manufactured could be computed. The Rule provides that income derived from the sale of tea grown and manufactured by the seller shall be computed as if it were income derived from business but only 40% of such income shall be deemed to be the income liable to tax. The rule is not applicable in case of income derived from manufacture of tea from the tea leaves purchased from outside. Hence, such income is subject to tax in full. Further, in the instant case the assessee had not maintained separate accounts in respect of tea manufactured from green leaves grown by the assessee and out of green leaves purchased from outside. Without pointing out any defect specifically in the said computation, the Ld. CIT(A) 's computation was an erroneous. Therefore, there was no reason to treat the method adopted by the AO as erroneous and not acceptable. 2. Whether the facts and circumstances of the case the Ld. CIT(A) was justified in granting disallowance u/s. 80IB of the Act ignoring th....
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.... incurred. In the present case the profits arising out of tea leaves purchased from outside and manufactured in assessee's estate, are subject to tax in full. But at the same time the rate of tax for growing and manufacturing of tea business is different. As per rule 8 of Income Tax Rules 1962 40% income from such activity is chargeable to tax. The assessee has also not maintained separate accounts in respect of tea manufactured from green leaves grown by the assessee, and out of green leaves purchased from outside. Accordingly the AO has apportioned the 100% employment, administrative expenses and depreciation to the source of growing and tea manufacturing of the business of the assessee and framed the assessment. 3. Aggrieved, assessee preferred an appeal before Ld. CIT(A) where the assessee submitted that all the above cost were incurred in connection with both sources of income. The assessee also submitted the details in support of his claim which are duly recorded in the order of ld. CIT(A). In such circumstances, it can be said that the above expenses stand incidental to both as required for manufacturing activity per se irrespective of the source of leaf. The assessee speci....
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....tea leaves bought from outside cannot be carried on. Therefore, it is clear that employment cost amounting to Rs. 97,37,480/- was incurred by the assessee not only for manufacturing and sale of tea from tea leaves grow in own garden but also from tea leaves bought from outside. As far as administrative expenses are concerned it is true that these expenses are incurred by an organization indirectly tied to a specific function such as manufacturing/production or sales. Such expenses are required to ensure smooth business operations and expeditious delivery mechanism in the organization. As explained by the Ld. AR such expenditure is required for smooth functioning of Corporate Office to promote efficiency, growth and productivity. Therefore, it is clear that administrative expenses of Rs. 37,16,426/- were incurred by the assessee for earning composite income as well as 100% taxable income. Such expenditure was incurred by the assessee not only for manufacturing and sale of tea from tea leaves grown in own garden but also from tea leaves bought from outside. With regard to depreciation I hold that the Ld AR is correct in stating that only a few assets are directly incidental for....
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....relied on the order of Ld. CIT(A). From the facts of the case we understand that the assessee is engaged in the two similar business activities as discussed above. There were certain common expenditures such as employment cost, administrative cost and depreciation cost which the AO apportioned 100% to the activity i.e. growing and manufacturing of tea leaves of the assessee on the ground that these cost have to be necessarily incurred by the assessee irrespective of any other the business activity. Therefore the allocation of these expenses is not required between the above sources is not required. However the ld. CIT(A) deleted the addition made by the AO. We understand that for any activity of the business several expenses are required to be incurred. The addition has been made by the AO on the surmise that these expenses are fixed in nature. The ld. DR also failed to bring anything on record contrary to the finding of the ld. CIT(A). Hence, we have no hesitation in upholding the order of Ld. CIT(A) and this ground of Revenue's appeal is dismissed. 5. Next issue raised by Revenue is that Ld. CIT(A) erred in giving relief u/s. 80IB of the Act. 5.1 The AO during the course of ass....
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....AO in the assessment order has not specified the documents which the assessee had not submitted. In case the Ld AO was referring to Form No. 10CCB as the documentary evidence in support of the claim of deduction us. 80IIB of the Act the assessee could not have attached it with return of income or produced it in course of assessment proceedings as the assessee was showing total loss of Rs. 89,53,392/-. In spite of having eligibility for deduction u/s 80IB of the Act the assessee could not claim it considering the returned loss of Rs. 80,53,392/-. Further, the Ld AO has not brought out any material on record to show that the assessee did not fulfill the eligibility criteria for claiming deduction u/s. 80IB of the Act. the Ld. AR has given in detail the fulfillment of the eligibility criteria for claiming deduction u/s. 80IB of the Act in his written submission dated 13.03.2012. the Ld AO has not furnished any adverse comment regarding the fulfillment of the eligibility criteria for claiming deduction u/s. 80IB of the Act in his remand reports. Keeping in view the above facts I hold that the assessee is eligible for deduction u/s 80IB of the Act depending upon the final computation of....