Case Law Details
Amount Paid as Cess on Green Leaf is Deductible from Composite Income and not from mere agricultural income
The brief facts of this issue is that the ld AO observed that the assessee had debited a sum of Rs. 369.88 lakhs under the head ‘Cess on green leaf’ which were paid to Governments of Assam and West Bengal.
The ld AO placed reliance on the decision of the Hon’ble Gauhati High Court in the case of Jorhat Group Ltd vs Agricultural ITO reported in 226 ITR 622 (Gau) wherein it was held that the cess on green leaf is deductible from the agricultural income only and not from the composite income.
The assessee placed reliance on the decision of the Hon’ble Calcutta High Court in the case of CIT vs A.F.T. Industries Ltd reported in (2004) 270 ITR 167 (Cal) wherein it was held that the same was to be fully allowed from the composite income. As the appeal against the order of the Hon’ble Calcutta High Court was preferred before the Hon’ble Apex Court by the revenue, the ld AO in order to keep the matter alive thought it fit to make the disallowance and accordingly made the same. The ld CITA however followed the decision of the Hon’ble Jurisdictional High Court relied upon by the assessee supra and deleted the disallowance. Aggrieved, the revenue is in appeal before us on the following ground :-
“1. That on the facts and circumstances of the case, Ld. CIT(A), Kolkata has erred in law in deleting the addition of Rs.3,69,88,000/- on account of cess on green leaf without considering the fact that expenses on account of cess on green leaf is related to 100% agricultural operation 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.”
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