AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 1020
X X X X Extracts X X X X
X X X X Extracts X X X X
....peration and SLP is pending before the Hon'ble Supreme Court against the decision of Calcutta High Court in the case of AFT Industries Ltd. -vs- CIT (270 ITR 167) in the light of which Ld. CIT (A) decided the issue in favour of the assessee. 2. Whether on the facts and circumstances of the case the Ld. CIT (A) has justified in law in deleting the disallowance of Rs. 71.09 lakh/- on account of notional interest on loan advanced to HPL not accounted for though the A.O. has added it back. 3. That on the facts and circumstances of the case the Hon'ble ITAT has erred in law in directing the A.O. to allow the claim of the assessee of Rs. 8.09 crore on account of depreciation since the amendment to section 43(6) was introduced in Parliament to show intention of legislature as clearly mentioned in Hon'ble finance Minister's speech in Parliament and accepting the decision will defeat the purpose of legislature. 3. Ground no.1 is relating to deletion of addition of Rs. 50,01,369/- made on account of cess of green leaf. The AO found that the assessee has debited a sum of Rs. 367.76 lakhs under the head 'Cess on green leaf' and such payment was made to the Government of As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he entire income out of the tea grown and manufactured as income assessable under the Income Tax Act, 1961. In view of Rule 8, the income so computed is to be apportioned 60: 40 of which 40 is assessable to tax under the Act . It does not provide that after apportionment of the 60 % of the income so computed shall again be required to be computed under the Agricultural Income Tax Act. On the other hand, this 60% is exposed and becomes exigible to tax under the Agricultural Income Tax Act. without being required to be assessed under the said Act by reason of the fiction so created. Therefore, the cess paid has rightly been excluded while computing the income under Rule 8 of the tea grown and manufactured." In arriving at the aforesaid conclusion, the High Court has referred to the various judgments of this' Court. We are of the opinion that the High Court has rightly interpreted the scope of Rule 8 of the Income Tax Rules 1962. We, thus, find no merit in this appeal which is, accordingly, dismissed. " 5. WE find that the CIT-A had followed the decision of Hon'ble Jurisdictional High Court in the case of supra which has been further strengthened by dismissal of SLP by revenu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owance of interest can be made. Reliance is placed on the following judgments wherein the concurrent view is that where the amount of any interest-free loan is sufficiently covered by the non-interest -bearing funds available with the assessee/ then the question of disallowance of interest on borrowed funds does not arise: * Woolcombers of India Limited - vs. - CIT 134 ITR 219 (Cal) * CIT Vs. 8ritannia Industries Ltd [2006} 280 ITR 525 (Cal) * CIT Vs. ITC Ltd [2008} 299 ITR (AT) 341 (Kolkata) (SB) * CIT Vs. Rockman Cycle Industries Ltd [2009} 176 Taxman 21(P & H) * CIT Vs. Prem Heavy Engineering Works Pvt.Ltd [2006} 285 ITR 554 (All) 2) Without prejudice to the above, it is humbly submitted that the loans as existed in FY 1989-90 to FY 1993-94 being the FYs in which such advances were made were squared up and were no more existing in FY 2005-06 relevant to AY 2006- 07 being the year in which the disallowance has been inflicted by the Assessing Officer. The interest claimed by the appellant during the relevant year was in respect of fresh loans and thus since the loan which could have gone to fund the interest free advance were not existing, question of disallowance of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubsidiary of the assessee) should be allowed as a deduction under section 36(l)(iii) of the Income Tax Act, 1961 one has to enquire whether the loan was given by the assessee as a measure of commercial expediency. The expression 'commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. " Reliance is also placed on the decision of the Hon'ble Calcutta High Court in the decision of Britannia Industries Limited reported in 280 ITR 525 (Cal). In view of the above submission, it is humbly prayed that the addition made by the AO of Rs. 71,09,000/- may please be deleted." 9. The CIT-A deleted the addition made account of disallowance towards notional interest on his satisfaction that the assessee furnished the complete details of surplus fund available with the assessee for advancing the loan to HPL and such examination the CIT found that the Assessee discharged its onus of explaining the source of funding of the lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issue afresh in the light of the peculiar facts narrated by the Id. Counsel for the assessee after giving due opportunity to the assessee of being heard as per law. 12. In view of the above, we remand the issue to the file AO to dispose of the same in the facts and circumstances of the case. Accordingly ground no- 2 is allowed for statistical purposes 13. Ground no-3 is relating to direction to the AO to allow the claim of Rs. 8.09 crore on account of additional depreciation by the ITAT. The assessee company claimed depreciation on the WDV of depreciable assets used in its business of growing and manufacturing tea on the basis of the principle laid down by the Hon'ble Calcutta High Court in the case of CIT vs Suman Tea & Plywood Industries Pvt. Ltd in reported in 204 ITR 719. The assessee claimed the deduction through the revised return filed together with the supporting statement of depreciation schedule duly certified in support of its claim. The AO found that similar claim of the assessee for the assessment year 2003-04 to assessment year 2005-06 was not allowed and the above claim of the assessee was rejected and disallowed Rs. 8.09 crores and added to the income for A.Y 2006....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ars (A.Y. 2002-03 & A.Y. 2003-04) the additional claim of depreciation for Rs. 8.09 crores is allowed. 15. The CIT-A by relying on the Hon'ble Supreme Court in the case of CIT vs. Doom Dooma India Ltd., (2009) 310 ITR 392 wherein the Hon'ble Supreme Court confirmed the decision of Hon'ble Jurisdictional High Court of Calcutta in the case of CIT vs. Suman Tea & Plywood India Pvt. Ltd. The CIT- A also found that appellant allowed such depreciation to the Assessee in earlier years and deleted the addition. 16. Before us, At the time of hearing the Ld. AR submitted that the present issue is covered by the decision of Hon'ble Jurisdictional High Court of Calcutta in the case of CIT vs. Suman Tea & Plywood India Pvt. Ltd reported in 204 ITR 719 and which was confirmed by the the Hon'ble Supreme Court in the case of CIT vs. Doom Dooma India Ltd., (2009) 310 ITR 392 and Coordinate Bench allowed such depreciation for assessment years 1997-98. The Ld. DR conceded to the fact of submissions as made by the Ld.AR. 17. Heard both and perused the material on record. We find that the order dt:14-07-2011 passed by the Coordinate Bench of Kolkata in ITA 366 & 367/Kol/2011 for A.Y 2007-08 dated 4-....