TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 1262
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....IT(A) while deliberating the issue in appellant's favour. ii). That on the facts and circumstances of the case and also in law in ignoring the fact that the said consultancy fees were paid to seek expertise in starting a alternate crop in the tea garden which the appellant intends to crry on for a number of years. Hence, the fees thus paid gives a benefit of enduring nature over a number of years and thus cannot be termed as a capital expense. iii) That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing. 4. Ground no.1 relates to deletion of disal lowance made on account of green leaf. 5. Brief facts of the case are that the assessee is a company and involved in the business of manufacturing of Tea and filed return of income on 30-09-08 showing 'nil' income. Notices u/s. 143(2) and 142(1) were issued and, in response to the said notices, the assessee appeared. 6. The contention of the Assessee is that it has tea gardens in Assam and the production of the green leaf is purely an agricultural activity and as such, the cess levied on the production of the green leaf does not come under the purview of composit....
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.... Taxation ( On Specified Land) Act, 1990. In its income tax return, it had claimed the same as deduction which has been allowed by the High Court. The relevant discussion in this behalf is as under:- "However, the learned Tribunal had held that the deduction is eligible after computing the income under Rule 8 and the apportionment is to be made only after the income is so computed. Such apportionment cannot be made before the deduction. Rule 8 of the Income Tax: Rules, 1962 requires that the computation is to be made as if by fiction the 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 th....
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....on and experimentation process. The assessee submitted that it did not receive any enduring benefit out of such consultancy as many of the alternative crops, which were identified as feasible by the consultant has subsequently been found to be not viable and terminated and the assessee incurred continued losses on account of raising of such alternative crops in the subsequent years. 13. Considering the submissions the CIT-A held that alternate cop farming has been done by the assessee as part of and in the course of tea plantation business within existing area of plantation land and with the existing labour deployed for tea plantation business with common management and fund. He deleted the impugned addition/disallowance by stating as under:- 10.3 I have considered the assessment order as well as the submission of the appellant. It is seen that the A.O. disallowed this expenditure by holding that the same is capital in nature on the contention that benefit of the services provided by GMS will be endured by the appellant over many years. The appellant has submitted that out of the total amount of Rs. 47,18,760/-, Rs. 6,74,160/- has been incurred on account of advice for future....
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....to whether the said consultancy has provided any enduring benefit to the appellant, it is observed that the appellant had obtained consultancy of Rs. 40,44,600/- to expand the alternate crop business acquired on a going concern basis from Tata Tea Limited. It is common in tea plantation business to identify and raise suitable alternate crops from time to time to accommodate the off seasons in the cyclic business of tea growing. The Assam Government had granted approval of utilization of 5% of the grant area of each tea estate for land utilization for use of any agricultural activity other than tea. Thus it is observed that the alternate crop farming has been done by the appellant as part of and in the course of tea plantation business within existing area of plantation land and with the existing labours deployed for tea plantation business with common management and fund. The said business is intrinsically linked to appellant's plantation business and hence does not strictly constitute a new line of business. Further, the enduring test has also otherwise not been satisfied in the instant case since various alternate crops which were actually implemented based on advice, were no....
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....crop in the tea garden which the appellant intends to crry on for a number of years. Hence, the fees thus paid gives a benefit of enduring nature over a number of years and thus cannot be termed as a capital expense. iii) That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing. 18. Ground no.1 relates to deletion of disal lowance made on account of green leaf. 19. This ground no-1 is simi lar to that of ground no.1 raised in ITA No. 1358/kol/2014 for the A.Y 2008-09 of the revenue, which we have already discussed and disposed of the same in paras herein above vide para's 4 to 9 of this order. Fol lowing the same, this ground no-1 of the revenue is l iable to be dismissed and accordingly, it is dismi ised. 20. Ground no. 2 is relating to deletion of addition made as disallowance of Rs. 27,13,834/- towards consultancy fees paid to M/s. Globally Managed Services (GMS). 21. This ground no-2 is simi lar to that of ground no.2 raised in ITA No. 1358/kol/2014 for the A.Y 2008-09 of the revenue, which we have already discussed and disposed of the same paras herein above vide para's 11 to 14 of this order. Fol lowing....