TaxTMI 
TaxTMI 
2016 (10) TMI 196
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the Assessing Officer U/s 143(3) of the Income Tax Act, 1961. Since these three appeals and two Cross Objections relate to the same assessee and involve common issues, therefore, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. None appeared on behalf of the Revenue, even though notice of hearing was sent to it on more than one occasion. Hence, we proceed to dispose of the appeal ex-parte, without presence of the Departmental Representative. 2. Ground No.1 taken by the Revenue, which is common in all three appeals, relate to cess on green leaf - whether it is allowable expenditure or not. The facts of this issue are stated in brief. The assessee is a private limited company incorporated under the Companies Act, 1956 and inter alia, engaged in manufacturing and production of green leaf tea. Green leaf is attributable to agricultural activities which is taxable under the State Agriculture Income Tax.As per Rule 8 only 40% of the composite income is taxable under Central Income Tax. The AO observed that the assessee debited expenditure in the Profit & Loss a/c. under the head "Green Leaf Cess" and c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to agricultural activities which is taxable under the state agricultural income tax beyond the purview of Central Income tax. Even if an assessee who has the activity of cultivation alone but no tea factory, has to pay cess on green leaf, though the income is not chargeable to tax. Therefore, it is 100% agricultural expenses. Hence, the contention of the assessee is not accepted. The ld. AOmentioned in his order that a Special Leave Petition on this account has been filed by the department and it is pending before the Hon'ble Supreme Court against the above decision on this issue. Therefore, in order to maintain judicial consistency, the claim of the assessee is disallowed and expenses on green leaf cess is added back. 2.3. The Ld. AR for the assessee vehemently submitted that this ground has already been decided in favour of the assessee and following the decision of the Hon'ble Calcutta High Court in the case of CIT-vs- AFT Industries Ltd. 270 ITR 167 and also the decision of the ITAT in assessee's own case vide its order dated 31st April, 2010 in Appeal Nos.532 & 533, the assessee should have been allowed cess on green leaf by the AO. He submitted that the Hon'ble Jurisdict....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of tea instead of income from other sources as shown by the assessee in its return of income, ignoring the fact that since assessee did not file revised return, income shown in the original return could not be revised as decided by the Hon'ble Supreme Court in the case of 'Goetze India'. 3.1. Facts of this issue are stated in brief. We noticed that the assessment order under section 143(3) made by the AO does not speak anythingon this particular ground. This fresh issue has been raised by the assessee first time before the ld. CIT(A). The Revenue contested that the subsidy of Rs. 28,24,072/- is taxable as income from other sources instead as a part of business income. But the ld. CIT(A) held that the said subsidy is linked with cultivation and manufacturing of tea therefore it should be as income from cultivation and manufacturing of tea and not from income from other sources. The relevant para 6.1 and 6.2 at page 5 of the order of the CIT(A) read as follows: "6.1 The A.R. of the appellant stated that the Appellant, during the year relevant to previous year, received Subsidy of Rs. 28,24,072/- from the Government. The Appellant had paid Bank interest on the moneys bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore, such subsidy should have also been considered by the AO for the assessee's income of tea business. The ld. AR also submitted that the subsidy under consideration is a operative expenses/ direct expense of the business, therefore, it should be shown under the head 'income from business or profession' only. The ld. AR for the assessee has also submitted that it is always open for the assessee to raise new ground which was not raised by the assessee before the AO. The ld. AR for the assessee has also placed reliance of the judgement in CIT-vs- Sam Global Securities Ltd. delivered by the Hon'ble High Court at Delhi in Income Tax Appeal 214/2013, the relevant para of the said judgment are reproduced below: "7. Reference was also made to an earlier decision of the Supreme Court in Jute Corporation of India Ltd. Vs. ClT, [1991] 187 ITR 688 (SC), wherein it has been held as under:- "An appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le Delhi High Court in the case of CIT-vs- Sam Global Securities Ltd. (supra) and the facts narrated by him. The power of the Tribunal in dealing with appeals is expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assesses as well as the department have a right to file an appeal/ cross objection before the Tribunal. Therefore, based on the above cited reasoning, we do not intend to interfere in the findings of the ld. CIT(A) on this issue. 3.5 In the result, the appeal filed by the Revenue on this ground is dismissed. 4. In ITA No.171/Kol/2014 for the assessment year 2008-09, the ground No.2 reads as under: "That on the facts and circumstances of the case the Ld. CIT(A) erred in holding that the disallowances u/s 14A of Rs. 58,15,187/- was not warranted as the nexus between expenses and except income was not established, ignoring the fact that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the appellant company had sufficient own funds in its Share Capital and Reserve and Surplus to finance its investments. In fact from the Balance Sheet it is clear that most of the investment has come to the ownership of the appellant as a result of merger/amalgamation scheme. The A.O. has also not brought on record any diversion of Interest bearing Capital towards investment in shares. Under these circumstances, I am of the opinion that disallowance of Rs. 58,15,187/- by invoking Rule 8D is not legally tenable and should be deleted." Aggrieved, from the order of the Ld.CIT (A), the Revenue is in appeal before us. 4.3 We have gone through the assessment order and noticed the stand taken by the Assessing officer, which we have already noted in earlier para and the same is not being repeated for the sake of brevity. 4.4 First of all, as we noticed that the calculation of average value of the assets is wrong.It should be Rs. 65,54,78,545 { ½ of [988792720 + 322164371]} instead of Rs. 1,81,09,57,091/-. This mistake has impact on the entire calculation of disallowance under Rule 8D.The ld. AR for the assessee has submitted that while making disallowance under rule 8D, on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unting to Rs. 44,85,098/- is deleted. 4.6. In the result, the appeal filed by the Revenue on this issue is partly allowed. 5. In C.O. No.20/Kol/2014 arising out of ITA No.170/Kol/2014 and C.O. No.21/Kol/2014 arising out of ITA No.171/Kol/2014, the ground raised by the assessee reads as under: "That on the facts and circumstances of the case, the ld. CIT(A) erred in rejecting the Appellant's claim for deduction u/s 80IC of the Act." 5.1. Facts of this issue are stated in brief. First of all, as we have noticed that this issue has not been discussed by the AO in the assessment order, for A.Y.2007-08. But for A.Y.2008-09 the Assessing Officer has discussed this issue in his assessment order, in last para, observing the followings: "The assessee`s claim for deduction U/s 80-IC of the Act is rejected following the decision of the Income Tax Appellate Tribunal in assessee`s case for the assessment years 2004-2005 and 2005-2006 under ITA No.110 & 401/Kol/2010." Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before the Ld.CIT(A) IV, Kolkata. The ld. CIT(A) vide para 7 of his order has rejected the assessee's claim, observing th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessed in seeking modification of the order of assessment passed by the Income Tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also." 8. Decision in the case of Goetze (India) Ltd. (supra) was distinguished in Jai Parabolic Springs Ltd. (supra) in the following words:- "In Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC) wherein deduction claimed by way of a letter before the Assessing Officer, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return. Appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed ma....