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2007 Supreme(Gau) 317
IN THE HIGH COURT OF GAUHATI
T. Nandakumar Singh, J.
Warren Tea Ltd.
Vs.
State of Assam and Ors.
Decided On : 02.05.2007
Important Points
Subject
Taxation Law - Income Tax vs. Agricultural Income Tax
Headnote
Income Tax Act - Deduction of claims - Assam Agricultural Income Tax Act, 1939, Assam Agricultural Income Tax Rules, 1939, Income Tax Act, 1961, Income Tax Rules, 1962 - Sections 40A(5), 37(2A), 80W, 8(2)(f)(vii), 8, 2(a), 2(b), Rule 5, Rule 8 - The court discussed the deduction of claims disallowed by the Income Tax Officer under the Income Tax Act, 1961, and the allowance of such claims by the Agricultural Income Tax Officer under the Assam Agricultural Income Tax Act, 1939. The court emphasized that the Assam Agricultural Income Tax Act, 1939, and its rules allowed deductions for expenses not allowed under the Income Tax Act, 1961, if they were related to the cultivation, manufacture, and sale of tea. The court referred to specific provisions and previous judgments to support its decision.
Fact of the Case:
The petitioner, a company engaged in tea business, challenged the disallowance of certain expenses by the Income Tax Officer under the Income Tax Act, 1961, and the subsequent cancellation of the deductions by the Agricultural Income Tax Officer under the Assam Agricultural Income Tax Act, 1939. The court was tasked with deciding whether the disallowed deductions under the Income Tax Act, 1961, could be allowed under the Assam Agricultural Income Tax Act, 1939, for tea-related expenses.
Finding of the Court:
The court found that the disallowed expenses under the Income Tax Act, 1961, could be allowed by the Agricultural Income Tax Officer under the Assam Agricultural Income Tax Act, 1939, if they were related to the cultivation, manufacture, and sale of tea. The court upheld the judgments of the Assistant Commissioner of Taxes (Appeals) in favor of the petitioner and set aside the impugned orders of the tax authorities.
Issues: The main issue was whether the disallowed deductions under the Income Tax Act, 1961, could be allowed under the Assam Agricultural Income Tax Act, 1939, for tea-related expenses.
Ratio Decidendi: The court held that the Assam Agricultural Income Tax Act, 1939, allowed deductions for expenses not allowed under the Income Tax Act, 1961, if they were related to the cultivation, manufacture, and sale of tea. The court referred to specific provisions and previous judgments to support its decision.
Final Decision: The court allowed the writ petitions, set aside the impugned orders of the tax authorities, and upheld the judgments of the Assistant Commissioner of Taxes (Appeals) in favor of the petitioner.
T.N.K. Singh, J.
1. Civil Rule No. 6135 of 1998 and Civil Rule No. 6136 of 1998 are filed by one petitioner, Warren Tea Limited, 31, Chowringhee Road, Calcutta, which is a company incorporated under the Companies Act, 1956, assailing the order of the Deputy Commissioner of Taxes, the order of the Commissioner of Income Tax, Guwahati and the judgment and order passed by the learned Board of Revenue on the similar question of facts and law and accordingly these two writ petitions are being disposed of by this common judgment and order.
2. Heard Mr. A.K. Goswami, learned senior Counsel assisted by Mr. A. Talukdar, learned Counsel appearing for the petitioner as well as learned Government Advocate appearing for the respondents.
3. The sole question posed for decision by this Court in these two writ petitions is "whether or not the portion of the claim for deduction disallowed by the Income Tax Officer while making assessment because of limit provided in the Income Tax Act, 1961 and Income Tax Rules, 1962, could be allowed by the Agricultural Income Tax Officer under the Assam Agricultural Income Tax Act, 1939 and the Assam Agricultural Income Tax Rules, 1939, provided the said portion of the claim relates to plantation, manufacture and sale of tea".
4. For answering the question posed in the present writ petition, it would be apposite to make a short resume of the relevant provisions of (i) the Assam Agricultural Income Tax Act, 1939, (ii) the Assam Agricultural Income Tax Rules, 1939, (iii) the Income Tax Act, 1961 and (iv) the Income Tax Rules, 1962.
5. The concise facts which should be sufficient for answering the above question posed in the present writ petitions are that the assessee/writ petitioner is a company incorporated in India under the provision of the Companies Act, 1956, in compliance with the requirement under the Foreign Exchange Regulation Act, 1973, having 13 tea estates in Upper Assam engaged in the business of harvesting tea leaves, manufacture of black tea and the marketing of the produce. For the assessment year 1981-82, for which Civil Rule No. 6135 of 1998 is filed, the Income Tax Department had assessed the writ petitioner and the assessment order dated March 5, 1984, was passed by the assessing authority. The Agricultural Income Tax Officer, Assam had proceeded with the assessment of the petitioner-company under Section 20(3) of the Assam Agricultural Income Tax Act, 1939 (for short "Act, 1939"). On November 19, 1984, the Agricultural Income Tax Officer, Assam, Guwahati (for short "AITO"), had passed the assessment order dated November 19, 1984, for the assessment year 1981-82 assessing agricultural Income Tax but the Agricultural Income Tax Officer had disallowed certain expenses claimed by the writ petitioner but falling under Sections 40A(5), 37(2A), 80W of the Income Tax Act, 1961, and Rule 6D of the Income Tax Rules, 1962, purportedly on the ground that such claims/expenses were disallowed under the provisions of the Income Tax Act, 1961.
6. The petitioner being aggrieved by the said order of the Agricultural Income Tax Officer dated November 19, 1984, preferred an appeal before the Assistant Commissioner of Taxes (Appeals). The Assistant Commissioner of Taxes (Appeals), vide his order dated April 24, 1986, relying on the provisions of Section 8(2)(f)(vii) of the Act, 1939 with reference to second proviso to Section 8 and Rule 5 of the Assam Agricultural Income Tax Rules, 1939, held that expenditures which were not allowed under Section 40A(5), Section 80VV of the Income Tax Act and Rule 6D of the Income Tax Rules, 1962, are allowable expenditure and accordingly reduced the amount of taxes assessed to the extent involved in the deduction of claims, but the claim for deduction under Section 37(2A) was not allowed.
7. The Deputy Commissioner of Taxes, Guwahati, invoking the provisions of Section 27 of the Act 1939 in respect of the assessment relating to the assessment years 1978-79, 1979-80, 1980-81
