Case Law Details
Travancore Textiles P. Ltd. Vs ITO (ITAT Chennai)
The Assessing Officer has assessed interest income under the head income from other sources and further disallowed total expenditure incurred at Head Office on the ground that said expenditure is relatable to agricultural operations of the assesse. We find that the Assessing Officer is following different method of apportionment of expenses for each year. In the earlier financial year, he has apportioned expenses in the ratio of agricultural income and non-agricultural income and for current financial year, he has disallowed total expenses incurred at Head Office level on the ground that they are related to agricultural operations. It is well settled principle of law that although res judicata is not applicable to Income-tax proceedings but principle of consistency needs to be followed. The Assessing Officer having accepted fact that Head Office expenses needs to be apportioned between agricultural income and non-agricultural income, has erred in disallowing total expenses for impugned assessment year without there being any change in facts. Therefore, we are of the considered view that Assessing Officer has erred in disallowing total expenditure incurred at Head Office and considered as expenditure incurred for agricultural operations. Further, for impugned assessment year also, if we consider nature of expenditure incurred at Head Office, director remuneration and other expenditure are similar to expenditure incurred for previous financial year. Further, for immediately preceding financial year, we have considered identical issue and held that except director remuneration no other expenses can be apportioned to agricultural income and non-agricultural income. Therefore, consistent with view taken by us for immediately preceding year, we are of the considered view that only director remuneration can be apportioned to agricultural operations because director is personally taking care of estate activity. Hence, we direct the Assessing Officer to consider director remuneration to agricultural operations.
As regards interest income, the Assessing Officer in the immediately preceding year has accepted interest income offered by assessee under the head income from business has suddenly changed head of income to ‘income from other sources’ without there being any change in facts and circumstances for impugned assessment year . Therefore, we direct the Assessing Officer to consider interest income under the head ‘income from business’ as claimed by assessee and further direct the Assessing Officer to allow expenditure incurred at Head Office except director salary against interest income.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
These two appeals filed by assessee are directed against separate, but identical orders of learned CIT(A)-11, Chennai dated 16.10.2018 and 31.10.2018 and pertain to assessment years 2014-15 and 2015-16. Since, facts are identical and issues are common, for the sake of convenience, these appeals were heard together and disposed off by this consolidated order.
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