AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 1617
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....rdens in respect of which deduction u/s 80IE was claimed for the first time because the substantial expansion of the nine tea gardens attained completion during the relevant previous year. In the impugned order the AO admitted that the assessee had produced books of accounts and other details including fixed assets registers of these nine tea gardens in support of its contention that substantial expansion of these gardens was completed during the relevant financial year. On examination of these documents the AO however noted that out of nine tea gardens, in respect of four tea gardens the process of substantial expansion was started in FY 2007-08 and the deduction was first claimed in AY 2010-11 on the premise that the programme for substantial expansion attained completion in the relevant previous year. According to AO since the substantial expansion was spread over more than one financial year, the criteria laid down in Section 80IE(7) for claiming the deduction was not satisfied and since the substantial expansion was conducted in more than one financial year, it could not be held that the condition of Section 80IE(7)(i) & (iii) were satisfied in FY 2009-10 relevant to AY 2010-1....
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....the four gardens actually recorded increase. Had it been a case that the assessee made additions to plant & machineries in the ordinary course of its business and without there being any systematic plan for undertaking expansion of the tea undertaking then there would not have been substantial increase in the production of tea between the period 2008-09 & 2010-11. On the contrary the documents placed on record proved that the management of the appellant had specially undertaken technical studies at the respective factories to identify the bottlenecks which were causing non-optimal utilization of the production capacities. After conducting detailed work studies, the sections causing bottlenecks were identified. To overcome the bottlenecks a systematic plan was devised on the basis of which the assessee systematically at each of the four gardens with an objective of achieving overall increase in the production. On the facts as are available it cannot therefore be said that the additions made between AYs 2008-09 to 2010-11 at four gardens did not form integral part of the program for expanding the existing undertakings. From the facts & materials on record, it appeared that the assess....
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....the assessee. If the expansion is commenced in the year 1 and the same gets completed in the year 3 then it has to be demonstrated that the additions made as a part of the expansion program exceeded 25oio of the cost of plant & machinery of that undertaking on the first date of the first financial year The language of Section 80lE does not preclude the assessee to claim depreciation at any time during the period when the expansion is ongoing. The language employed by the Legislature nowhere provides that it is only on completion of the entire expansion project that the assessee should pass entries in its books recording the capitalization of actual costs and only thereafter the assessee should claim depreciation allowance in respect of these machineries. The language employed in Section 80IE does not prohibit the assessee from capitalizing the cost of plant & machinery forming part of the substantial expansion in its books from time to time and claim depreciation if the conditions of section 32 are fulfilled section 80IE also does not require the assessee from making the expanded undertaking operational only in one go. There is no prohibition in section 80IE of the Act if the expan....
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....installed machineries were put to use and thereby increase in production was achieved in gradual and phased manner. On the conclusion of the expansion program the overall production actually recorded substantial increase. On these facts therefore I am satisfied that merely because the substantial expansion was carried out in phased manner and the assets comprised in the expansion were put to use in the earlier financial year could not negate the appellant's claim for deduction u/s 80IE of the Act, particularly when the factual matrix of the case established that the aggregate cost of acquisition of various plant & machineries in the four tea gardens exceeded threshold limit of 25% considered cumulatively over a period AYs 2008-09 to AYTs 2010-11. From the details furnished I find that the conditions specified in section 80IE of the Act were fulfilled by the assessee. On the contrary I find that the AO has read into section 80IE such conditions which were not expressly enacted by the Legislature and therefore the AO was not justified in rejecting the claim u/s 80IE." Against the order of the Ld. CIT(A), the Revenue is in appeal before us. 3. We have heard the rival submissions of ....
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....t case also the AO had disallowed the assessee's claim for deduction u/s 80IE in respect of tea garden on the ground that increase in the investment in the plant & machinery by more than 25% of the book value was carried out in more than one financial year. This Tribunal after examining the provisions of Section 80IE recorded a categorical finding that nowhere the said Section mandated that the substantial expansion once commenced should be completed within the same financial year. The coordinate Bench of this Tribunal therefore did not find merit in the Revenue's objection that for claiming deduction u/s 80IE it was necessary for the assessee to achieve the substantial expansion within one financial year. Respectfully following the aforesaid decision in the case of Jayshree Industries Ltd Vs Jt. CIT (supra), we reject Ground No. 1 of the Revenue. 6. Ground No. 2 raised by the Revenue is against the Ld. CIT(A)'s order directing the AO to consider interest income under the head 'Business' without appreciating the fact that interest income earned by the assessee from FDs and financial institutions had no nexus with the assessee's business of growing & manufacturing tea. At the outs....
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....hich Rule - 8 was applicable whereas gross interest received represented non agricultural income to which Rule - 8 was not applicable. Having regard to the nature of business and composite nature of funds deployed, the only correct method was to set off interest received against interest paid. This proposition is accepted by the Jurisdictional Calcutta High Court in the case of Eveready Industries (I) Ltd in 1TA Nos 123 of 2000 dated 22.12.2009. In that case also the assessee engaged in business of growing and manufacture of tea had derived interest income which was assessed subject to application of Rule-8. In the regular income tax assessments, the AO did not assess interest income separately but considered the interest to be part of the composite business of growing and manufacture of tea & thereby assessed only 40% of such income under central income tax assessment. The C I T in his order u/s 263 directed to AO to assess gross interest received as fully chargeable to tax under Central Income Tax. The Order of the CIT u/s 263 was upheld by the Tribunal. On further appeal, the Calcutta High Court however held that the interest income was rightly treated by the AO to be part of....
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.... computing the composite income of growing & manufacture of tea. Against this order of the Tribunal, an appeal u/s 260A was filed by the Revenue before the Hon'ble Calcutta High Court raising the following question of law : (iv) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in holding interest of Rs. 22, 07, 47, 000/- received as "Profits and Gains of Business" instead of "Income from other Sources", contrary to law, on the basis of its order for earlier years against which appeals under Section 260A of the Income Tax Act, 1961 have been admitted by the Hon'ble Court ? 9. In its judgment dated 09.08.2018 in ITA No. 789 of 2004, the Hon'ble Calcutta High Court dismissed the appeal of the Revenue inter alia including the question raised above. The Ld. DR was unable to controvert the submissions of the Ld. AR as also the findings of the Ld. CIT(A) which are in consonance with the view taken by the Hon'ble Calcutta High Court in assessee's own case for AY 2007-08. Respectfully following the judgement of the Hon'ble Calcutta High Court rendered in assessee's own case, we therefore see no reason to take any contrary v....