TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 60
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....owed these three payments in respect of all assessment years which have been wrongly deleted in lower appellate proceedings. We find that the instant issue is already covered as per the tribunal's different orders right from assessment year(s) 1988-89 to 1992-93 onwards regarding the very payee. The Assessing Officer's sole reason for invoking the impugned disallowance is that Revenue's appeals against the said tribunal's decision(s) are pending before hon'ble jurisdictional high court. He further made it clear that the impugned disallowance is meant to protect Revenue's interest only. The CIT(A)'s findings in para-3 page 4 make it clear that assessee has already succeeded on the very issue in case of M/s Koomber Properties & Leasing Co. Pvt. Ltd. He has therefore adopted judicial consistency in the impugned assessment year as well. We therefore find no merit in Revenue's instant common substantive ground for lack of distinction on facts or law in these three assessment year(s). The Revenue's first substantive grievance is therefore rejected in all three cases. 3. The Revenue's second substantive grievance for assessment years 2009-10 and 2010-11 seeks to restore the Assessing....
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....e Court in the case of GE India Technology Centre Pvt. Ltd. Vs. CIT and Another, (327 ITR 456). In GE India Technology Centre's case the Hon'ble Court explained the decision in 239 ITR 587 (supra) and observed that in that case the non-residents had entered into a composite contract which consists supply of plant and machinery and Equipments in India and also its installation and commission in India and admitted that the erection and commissioning of plant and machinery and Equipments gave rise to income liable to tax in India. In view thereof it was held that the payment required to be made to the non-residents included an element of income and accordingly section 195( 1) is attracted and it is necessary for the tax payer to make an application u/s 195(2) of the Act to the Income Tax Officer and obtain his permission for deducting tax at source at lower amount. The Hon'ble Supreme Court in this case also observed that the decision in Transmission Corporation case was misunderstood by the Hon'ble Kamataka High Court to mean that it is not open for the payer to content that if the amount paid by him to a non-resident is not at all chargeable to tax in India, then no ....
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....) of section 40 of the Act. The A. Rs of the appellant also referred to a case which inter alia deals with the issue of deduction of tax at source on commission paid to non-resident agents in the case of Director of Income Tax (International Taxation) Vs. Wizcraft International Entertainment Pvt. Ltd. (364 ITR 227 - Bombay High Court). The fact involved in this case as far as it relates to payment of commission to non-resident agents was that a non- resident agent of artists in foreign countries was engaged by the resident assessee to bring foreign artists to perform in India, but the agent has no participation in the event organized in India. The agent was paid commission for his services rendered outside India. On the fact the question arose as to whether tax is required to be deducted at source from the commission paid to non-resident agent even though tax was deducted at source on the payment made to artists for performance in India. The Hon'ble Tribunal after considering the factual position of the rival contentions concluded that the non-resident agent never took part in the event organized and did not exercise any personal activities in India. All, that, the agent was....
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....ed as under: "I have considered the views expressed by the AO and the submissions of the company and I am of the view that the decisions in Transmissions Corporation's case and Samsung Electronics' case relied by the AO has no application to the facts of the present case. In the case of assessee company services had been rendered outside India and the remittance for such services was also made outside India. It is also found from the agreement that the non-resident export agents is not required to be rendered any services in India nor they have any Permanent Establishment in India. Therefore, the remittances made for the services rendered outside India do not partake the Income payments and accordingly it is not taxable in India. It is well settled that if the payments made to non-resident export agents are chargeable to tax in India only then such payments are liable to be taxed in India. Considering the case laws and circular of CBDT cited by the AIR, I am inclined to hold that the commission paid to non-resident agents is not chargeable to tax in India and the operation of section 195 does not arise. I am, therefore, of the view that the provisions of section 40(a)(i)....
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....oned appeals. 5. The Revenue's third substantive ground identical in assessment year 2009-10 and 2010-11 seeks to revive the Assessing Officer's action disallowing assessee's stores and spares consumption claims of Rs.31, 53, 42, 998/- and Rs.58, , 51, 350/-; respectively as deleted in the course of lower appellate proceedings. Learned Departmental Representative takes us to CIT(A)'s detailed discussion in the above former assessment year 2009-10 discussing the entire issue as follows:- "I have considered the views expressed by the AO and the submissions of the ARs along with the remand report and comment thereon by the ARs. It is a fact that the appellant has 17 tea gardens - 2 in Upper Assam, 3 in the hilly regions of Darjeeling and 12 in the terians of Dooars in Jalpaiguri and Alipurduar District of West Bengal. During the appellate proceedings the ARs of the appellant have urged that bringing documentary evidence of Consumption of stores and spare parts are voluminous and the transportation thereof would involve considerable time and cumbersome as the gardens are located far fledged remote areas of upper Assam, hilly regions of Darjeeling and the terrians of Dooars in Jal....
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....umption of stores & spares per kg of saleable production 31. 03. 06 06-07 18, 228, 797 235. 000. 615 12. 89 31. 03. 07 07-08 19, 575. 505 237, 161, 851 12. 12 31. 03. 08 08-09 20, 949. 531 257, 191, 786 12. 28 31. 03. 09 09-10 21, 504, 140 273, 125, 105 12. 70 Workmen & Staff welfare expenses of 3 preceding years Year ended Assmt. Year Saleable production Consumption of stores & spares Consumption of stores & spares per kg of saleable production 31. 03. 06 06-07 18, 228, 797 112, 541, 059 6. 18 31. 03. 07 07-08 19, 575. 505 126, 487, 325 6. 46 31. 03. 08 08-09 20, 949. 531 143, 186, 899 6. 83 31. 03. 09 09-10 21, 504, 140 134, 385, 070 6. 25 Miscellaneous expenses of 3 preceding years Year ended Assmt. Year Saleable production Consumption of stores & spares Consumption of stores & spares per kg of saleable production 31. 03. 06 06-07 2, 098, 933. 736 86, 658, 434 4. 13 31. 03. 07 07-08 2, 210, 328, 576 91, 411, 580 4. 14 31. 03. 08 08-09 2, 352, 889, 724 94, 235, 066 4. 01 31. 03. 09 09-10 3, 076, 851, 031 119, 176, 327 3. 87 I have perused the comparative analysis as shown in the above tables....
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....he assessment is hereby deleted. The assessee company gets relief of Rs. 3, 5342, 998/-. 6. We have heard the Revenue seeking to revive the impugned disallowance. Both case files perused. Suffice to say, the CIT(A) has followed his above extracted detailed findings mutatis mutandis in latter assessment year (2010-11) as well. It emerges that the assessee has been consistently succeeding on the very issue since preceding assessment years regarding its claim of consumption of stores and spares comprising of various facilities offered to workmen in all of its tea estates. There is no rebuttal forthcoming to the clinching figures of comparison qua the impugned expenditure vis-a-vis the three preceding assessment years hereinabove. The Assessing Officer appears to have conducted remand proceedings wherein he could not find out even a single irregularity in assessee's books of account as well as all other details produced. We therefore uphold the CIT(A)'s finding under the challenge in this instant common issue in these two assessment years. The Revenue's appeal ITA No. 2087/Kol/2016 raising the above three substantive grounds fails therefore. 7. We now advert to Revenue's fourth and ....
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....ing on the ratio of thee Hon'ble Calcutta High Court in 262 ITR 388 (supra) and it was due to an erroneous appreciation of the facts and explanation furnished to him in support of the said claim as a deduction. The nursery expenses of Rs. 1, 13, 48, 486/- debited to the Profit and Loss A/c was an yearly recurring revenue expenditure and the method of accounting regularly followed by the appellant in respect thereof was also explained to the Assessing Officer at the hearing as follows: Opening stock of plant in the nursery as on 01. 04. 2008 Add: Cost of plants debited to Profit and Loss A/c 1, 63, 97, 003 1, 07, 31, 904 Total cost of nursery plants excluding the cost of plants used for extension planting Less: Cost of plants utilized during the year for replanting of tea bushes in a planted area not for expansion and planting in a previously abandoned area 2, 71, 28, 907 1, 13, 48, 486 Stock of plants as at 31. 03. 2009 1, 57, 80, 421 The cost of tea plants in the nursery utilized for extension planting during the year and debited under the head ' Estates and Development' and the movement of cost of nursery plants during the year was as ....
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....planted would be an expansion of the area under cultivation for the previous year concerned. The maintenance of an area already under cultivation cannot be treated to be an expansion of the plantation nor can it be treated to be an investment or expansion adding to the capital already invested. On the other hand, it would be maintenance of plantation itself and, therefore, revenue expenditure. " From the above quote it is clear that if the plants raised and maintained in a nursery are to be utilized for replantation of dead or useless bushes within the plantation area, it would not come under rule 8(2) of the Rules. However, if the plants raised and maintained in a nursery are utilized during the year for the purpose of replantation without expansion of the plantation area such expenditure is revenue expenditure. It is to be noted from the order of the Assessing Officer that in disallowing the said expenditure he has not given any reason for holding this expenditure as capital expenditure except saying that it is "initial budding of tea which gives advantage to the assessee for number of years. ". The Assessing Officer's such assertion was not supported by any materials on re....
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....king to revive the Assessing Officer's action treating the impugned nursery expenditure as capital in nature. Relevant findings perused. The Revenue's only argument is that such nursery expenditure as the one in hand before us ought not to have been treated as a revenue item of claim in the lower appellate proceedings. Coming to enduring advantage spread over number of years hon'ble apex court's decision in Taparia Tools Ltd. Vs. JCIT (2015) 372 ITR 605 (SC) rejects Revenue's similar reasoning in concluding that such an approach does not form a justifiable ground to reject a claim of revenue expenditure. We further reiterate that hon'ble jurisdictional high court's decision in CIT vs. Tasati Tea Ltd (2003) 263 ITR 388 (Cal) also holds similar expenditure to be revenue Page 12 in nature as discussed in the CIT(A)s adjudication hereinabove. We thus decline Revenue's instant substantive ground as well as main appeal ITA 2086/Kol/2016 for assessment year 2009-10. 8. This leaves us with this Revenue's appeal 2088/Kol/2016 for AY 2011- 12 raising the latter ground in seeking to revive sales promotion expenditure disallowance of Rs.9, 48, 411/- made by the assessing officer and d....