Income Tax Appellate Tribunal - Cuttack
Orissa Forest Development Corporation ... vs Joint Commissioner Of Income Tax on 30 April, 2001
Equivalent citations: [2002]80ITD300(CTK)
ORDER
The Bench
1. These are the appeals filed by the assessee which happens to be an undertaking of the Orissa Government, for thirteen consecutive years. Since some common points are involved herein, the appeals have been consolidated ' and a common order is being passed for the sake of convenience.
2. The major issue involved in all these appeals is the question of allowability of plantation expenses. The issue is relevant to all the years under consideration excepting asst. yr. 1979-1980.
3. The assessee-Corporation is engaged in the exploitation of forest products like timber, bamboo, Sal seeds and also other minor products in areas allotted to it by the Government of Orissa. During the course of the hearing of the appeals before us, however, it was gathered that the assessee-Corporation is not the sole and exclusive organ of the Government of Orissa engaged in the exploitation activities but that there are other similar organisations under the State Government like Similipahar Forest Development Corporation etc. also, engaged in the same operations. The assessee incurred huge amounts of expenditure towards plantation over the different years like asst. yr. 1980-81 onward. In its accounts, such expenditure is categorised under various subheads like nursery (involving raising young plants for which expenses are required to be incurred towards seeds, manure, insecticides, etc.), pre-planting expenses (relating to clearing, demarking and preparing land for plantation), post-planting expenses (covering expenses for maintenance of various plantations like Fucaliptus, Cashew-nuts, Casurina, etc. and also involving operations like weeding, manuring, watering, application of fertilizers and insecticides, etc.) and finally expenses under the head 'field' (which include establishment expenses for salaries of watchman, field assistant and supervisors, etc.).
It was the contention of the assessee before the IT Department that as per the policies of the Central as well as the State Government under the 9-Point Programme (ultimately merged in 20-Point Programme), it is required to plant trees in areas from which mature trees have been felled and exploited and sometimes in new areas also under social forestry, tribal forestry, etc. Schemes. The assessee claimed before the AO that since these expenses had necessarily to be incurred during the course of its business, the expenses should be allowed as revenue expenses in all the years under consideration. The AO, however, did not allow the claims of the assessee in this regard. He considered the expenses to be unconnected with the actual businesses of exploitation of forest product and in any case to be of the nature of agricultural and capital expenses. Thus, the claims of expenses towards plantation were disallowed in all the assessments from asst. yrs. 1980-81 upto 1991-92.
The matter was taken up by the assessee to appeal in each of the years. The first appellate authority upheld the disallowances in his appellate orders for asst. yrs. 1980-81 to 1984-85 and then again from asst. yrs. 1987-88 to 1991-92. For asst. yrs. 1985-86 and 1986-87, however, the issue was decided in favour of the assessee and the plantation expenses were directed by the CIT(A) to be allowed as revenue expenses.
The appeals were taken by both the sides for all the years under consideration from 1980-81 to 1991-92. A common order was passed by the Tribunal, 'D' Bench, Calcutta on this issue on 14th March, 1995 in which the matter, for all the years, was sent back to the file of the AO for reexamination and fresh order. In this connection, the Tribunal made certain specific comments as below :
"In our opinion the issue at controversy has to be restored back to the file of the AO to decide the same afresh in the correct perspective. In our opinion, it is to be examined as to whether there was a binding obligation on the next of the assessees to implement the Government policy in respect of plantation to enable it to have right to exploitation of forest. If it is a binding obligation, then the expenditure in question has to be considered as of revenue nature that is to say whether it is capital or agriculture for instance, if any, supplier directs its purchaser to donate some of the price to be paid by the purchaser to the seller in a charitable institution, then the payment cannot be considered as payment to charity. On the other hand, it has to be considered as payment for business consideration and to be allowed as such. If, there is no such obligation, then the expenditure has to be considered by its nature i.e. whether agriculture or capital or both."
4. Accordingly, fresh assessments were made by the AO during the course of which the AO asked the assessee to produce relevant materials and copies of circulars/directives, etc. along with those of correspondences with the Government to prove that there was a binding obligation on the part of the assessee to implement the Government policy in respect of the plantation to enable it to have right of exploitation of forest. After consideration of the voluminous papers submitted by the assessee on the record of the AO the learned AO came to the conclusion, for reasons to which we shall refer to later on, that there was no such binding obligation on the part of the assessee. The AO made further discussions to the effect that the expenditure under consideration could not be considered to have been laid out wholly and exclusively for the business purpose of the assessee being exploitation of forest products. It was furthermore discussed by the AO that in any case, the expenditure was also of agricultural and/or capital nature.
5. The assessee filed appeals before the CIT(A) for each of the years under consideration. The CIT(A) harped on the finding of the AO that the assessee had not been able to produce any document to show that there was a binding obligation on the part of it to implement the Government policy in respect of plantation so as to enable it to right of exploitation of forest. The CIT(A), however, admitted that the assessee had undertaken plantation schemes under the afforestation programme by way of implementation of the policy of the Central Government as well as the State Government. The CIT(A) found out that the areas of plantation were absolutely different from the areas given to the assessee for exploitation and that there was nothing to suggest that the plantations made by the assessee were to be exploited by it for obtaining timber. He also found out that the afforestation scheme had been undertaken for the welfare of the society in general and for future exploitation by the industries in the country and in that way, the expenditure did not have any nexus with the business of the assessee nor could it be said that the plantation expenditure had been laid out or expended wholly and exclusively for the purpose of business of the assessee.
The CIT(A) also concurred with the findings of the AO that the expenditure incurred in connection with plantation and post-plantation is of the nature of agricultural expenditure having no connection with the business of the assessee. He was furthermore of the opinion that the expenditure incurred should also be considered to be of capital nature. In this connection, he referred to the comments made by the A. G. with reference to the accounts for the year 1980-81 relevant to the asst. yr. 1981-82, to the effect that as per the normal accepted principle of commercial accounting, expenditure on plantation can be capitalised till the plantation becomes revenue-earning and that the said expenditure so capitalised can be written off over a period of years. The CIT(A) noted that the A.G. had taken similar views for accounting years 1981-82 and 1982-83 also. The CIT(A) furthermore noted that the assessee itself had treated the cashew plantation in the coastal Districts of Puri and Ganjam under capital head to be set off in a phased manner over a period of ten years against the Revenue yield starting from, 1983-84 onward.
Accordingly, the CIT(A) agreed with the findings of the AO that the plantation expenditure being not linked up with the actual business operations of the assessee and at the same time being both of agricultural as well as capital nature, cannot be allowed as revenue expense. He thus upheld the disallowances of the claims of the assessee for each of the years under consideration.
6. In the present appeals before us, the assessee challenges the above findings of the lower authorities. At the stage of the hearing of the appeals before us, S.N. Rotho, the learned counsel for the assesses strongly argues that the assesses being a wholly-owned undertaking of the Government of Orissa is required to follow the directions of the Orissa Government under pressure from the Government of India to implement the 20-Point Programme regarding Social Forestry, etc. Rotho argues that since there are other agencies also like Similipahar Development Corporation Ltd. in the same field of exploitation of forest products, if the assessee does not comply with the directives of the Government, it runs the risk of losing its business by not being awarded contracts for exploitation of the forest products in future. Rotho furthermore argues that the assessee being a commercial entity, cannot have any motive other than protecting its business interest. He furthermore argues that the assessee is not actually an agency of the Government, but an independent legal entity and that the expenses incurred by it are inextricably linked up with the main business activities of the assessee. Rotho contends in this connection that it is immaterial if the expenses incurred by the assessee might have benefited some other parties.
Shri Rotho points out that a similar issue came up before the Tribunal in respect of the assessee's appeals for asst. yrs. 1985-86 and 1986-87. In those years, the issue related to the allowability of expenditure incurred in the construction of certain houses built to help the people affected by the flood under Government directives. Rotho points out that the Tribunal, by its order dt. 11th Oct., 1991 in ITA Nos. 127 & 128/Ctk/1990, after careful considerations, held that the assessee was a concern owned by the Government and as such, bound to implement the policies of the Government and, therefore, the expense incurred by the assessee in that regard was allowable as deduction in computation of business income of the assessee. Rotho points out that the Tribunal went on to say in those cases "if the assessee does not participate or contribute in welfare of the Government, the business of the assessee might suffer".
As regards the other Departmental contentions that the expense incurred by the assessee was of agricultural nature, Rotho submits that since the assessee does not have any agricultural income, the expenses incurred by it have got to be treated as non-agricultural expenses only. Regarding the question of treatment of the expenses as capital expenses, Rotho argues that neither the land on which plantation activities were undertaken by the assessee nor even the trees planted belonged to the assessee. He thus argues that by incurring the expenses, the assessee has not at all acquired any asset or benefit of enduring nature as such. It is thus contended by Rotho that the expense cannot also be considered as capital in nature.
Ultimately, it is argued by him that the expense has got to be considered as an expense laid out solely and exclusively for the business purpose of the assessee and also allowable as revenue expense. In support of his contentions in these regards, he has relied on a number of decisions, to which we shall refer to later on.
7. On the other hand, the learned Departmental Representative strongly supports the orders of the lower authorities by arguing that the business obligations of the assessee are somewhat different from other obligations like social/tribal obligations. He argues in this connection that although the assessee might have been under the pressure from the Government to incur the expenditure under consideration, yet the said expenditure cannot be considered to be having any nexus with the actual business of the assessee, viz., exploitation of forest products. It is furthermore argued in this connection that by incurring the expenditure, the assessee might have carried out the orders as well as the directives of its owner, i.e. the Orissa Government, but that by itself does not make the expense as connected with the business of the assessee.
8. We have gone through the facts of the case as above and have perused the orders of all the authorities minutely. We have also examined the detailed and voluminous papers submitted by the assessee before the AO and also before us in the form of the paper book. These papers consist of the directives issued mostly by Government of India to the Government of Orissa and sometimes to the assessee also directly emphasizing the necessity of afforestation procedure being undertaken to preserve the forest cover in the country and also to implement certain other policies of the Government relating to social afforestation, tribal afforestation, etc. From the examination of such papers, it appears to us that although there might not have been any legal binding on the part of the assessee to follow the above directives of the Government, yet looking into the position of the assessee being wholly owned by the State Government and also engaged in operations relating to forestry, it has got to be held that the assessee was indeed under the obligations to follow the various policies of the Central Government (mainly) as well as of the State Government to some extent, in the matter of afforestation programmes and that is why, the assessee was recruited to incur the huge expenditure towards plantation in different areas. There may not be any statutory obligation but where both the Central as well as the State Government want the assessee to get engaged in the afforestation programmes, it has got to be held that the obligation on the part of the assessee was rather a binding one. No Government Undertaking can exist by flouting the directives of the Government.
It may thereafter be considered as to whether the binding nature of the obligation was so as to have affected the business interests of the assessee, had the assessee chosen not to undertake the afforestation programme Rotho strongly argues in this connection that had the assessee not followed the directives of the State Government, it might have been debarred from the benefits of being allotted the exploitation rights in a large manner. This particular explanation may not be very attracting. However, as we have already held above that no Government Undertaking can dare to flout the directives of the Government, the question of any punitive measure being taken in case of violation of the Government directives need not be taken into considffiation. The state of affairs in the country is such that the Government Undertakings must follow the directives of the Government in the matter of plans and policies undertaken by the Government and the resources of the undertaking must be spent in that connection. The question of not following the plan programmes of the Government by the undertaking cannot arise at all.
9. Now we are required to look into the exact connection of the afforestation programme with the business operations of the assessee. It is required to be remembered in this connection that the assessee-Corporation, which is a Forest Development Corporation has been directed by the Government to implement the policy relating to afforestation and not undertakings of other nature. The connection of the assessee with forestry affairs cannot be denied. It is quite natural that as an undertaking engaged in exploitation of forest products, the assessee would have to get it self-engaged in the policies of the Government relating to forestry. The afforestation is one of such policies of the Government. The matter may be looked into from another angle also. The assessee is in the business of exploiting forest products, i.e. denuding forest covers by felling trees and collecting timbers. Forest products are of the nature of) wasting asset although the denudation effect can be made good by planting new saplings. In other words, while the assessee is engaged in de-foresting by felling trees, in the process it renders great damage to the mother nature. It is, therefore, required of the assessee not only from ethical and moral point of view but from its business prudence also, to make good the loss to the nature by taking part in afforestation programme. It may be that the assessee will not reap immediate benefit out of the afforestation programme. However, in its business interest in the long run, such afforestation programme is absolutely necessary, otherwise, no forest cover would be left to the assessee for being exploited in distant future. Thus, by undertaking afforestation programme, the assessee caters to its own business needs considered over a long span of time and the assessee should get itself engaged in afforestation programme for its own business interests even de hors the directives of the Government in that regard. Generally the assessee is required to undertake afforestation programme in the areas which have been exploited by it. Even if such programme be undertaken in some other areas and although the assessee may not get the right of exploitation in the newly afforestated areas (it will take quite sometime for the saplings to grow into mature trees), yet expectations would be there for the assessee to get the exploitation right over the years whether aforestated by itself or some other concern at some future point of time. When different business organisations undertake some work in the common interest of all, it is not the immediate sector where one particular business concern takes up the work of development at the present moment of that matters. When the collective interest of the business community as a whole is fructified by the joint action of different organisations together, each of them should be considered to be contributing to his own business needs although there may not be any immediate on direct link between the expense incurred, by the business concern and the result of such expense.
In this connection, we may take into consideration the cases of underground coal mines. After full or even partial exploitation of a particular pit, the miner is required to carry on stowing work, i.e. filling the cavity caused by exploitation of coal with sand. Although there may be a statutory obligation on the part of the miner to do so, yet even the commercial expediency involved in the process is also required to be taken into consideration. Unless the stowing operation is carried on by the minor, the surface area is likely to subside which may affect the mining operation of the miner in some other nearby areas. Otherwise, even the interest of the society as a whole is required to be taken into consideration by the miner. That is why, expenses on stowing operations are allowed as revenue expense even from commercial angle also.
Finally, the expression 'business needs' should not be looked into from a narrow angle and the immediate benefits arising out of spending a particular amount of money should not be the lookout of a businessman. The overall needs of the business running over a long span of time is envisaged in business expediency. Furthermore, under the modern day concepts, even social and similar other obligations are also required to be considered as part of the business obligations of a businessman. From that angle also, the expenditure incurred by the assessee towards plantation cannot be considered to be unrelated to its business.
The assessee is in business in the line of forestry. The plantation operations are closely connected with the forestry operation. The assessee would not go to spend such huge expenses towards plantation unless it was under obligation to do so or the same was, in an overall way, connected with the business needs of the assessee.
Here, one question is required to be resolved. The learned Departmental Representative has tried to argue that since the assessee is a wholly owned undertaking of the State Government, it carried out merely the orders of its owner in implementing the afforestation programme. It is argued that all expenses incurred by a business organisation simply at the instance of the owner of the same need not be considered to be expenses connected with the business and hence, allowable. On this issue, it is required to be stated that the policies and directives have been found out by us to be mostly of the Central Government, simply conveyed to the assessee through the State Government. The assessee was thus carrying out the directives of the Central Government and not of the Orissa Government which is its owner. Even if it be contended that some of the policies and orders came from the State Government, it has got to be argued that the State Government has got a dual capacity. As owner of the assessee-Corporation, the only interest of the State Government should be to improve the business prospects of the assessee. As a Government, however, it is also the lookout and responsibility of the State Government to cater to the needs of the society. When the State Government directs the assessee to carry out certain programmes from the angle of social needs, it cannot be said that the orders are being issued by it as owner of the assessee-undertaking. On the other hand, the State Government assumes a different role in that connection and the orders or sometimes even the requests of the State Government partake of a binding nature on every businessman not to speak of a Government Undertaking. It has been held in umpteen number of cases that when a business concern is required to spend money just to abide by the orders of the Government, such spending will have to be allowed as deduction.
Furthermore, it is not a case of fulfilling the whims and fancies of the owner of the assessee-Corporation. On the other hand, we have seen that the afforestation programme is closely connected with the actual business operations of the assessee although the assessee may not be expected to derive any direct benefit out of the spending in that regard in the immediate future.
As pointed out by Rotho, the Tribunal has already allowed the claim of the assessee towards incurring of expenses towards building up of houses for the flood-striken people in the asst. yrs. 1985-86 and 1986-87. In that case, there was not even any direct nexus between the operation undertaken by the assessee and the business in which the assessee is engaged.
10. When a Government Undertaking is under the obligation to carry out some work at the instance of or under the directions of the Government, incurring loss thereby, the loss cannot be ignored in computing the total income of the undertaking. It is of common knowledge that the State Bank of India and other nationalised banks are required to implement various programmes of the Government towards alleviation of the conditions of the poor and rural people like arranging loan-melas, lending to agricultural and small scale sectors at much lesser rate of interest. All these operations result in substantial loss to the banks. However, neither can the banks refuse to carry out the directions of the Government, nor can themselves be denied the losses incurred in the process, in their respective income-tax assessments. No IT authorities has ever tried to segregate the loss undertaken by nationalised banks incurred in implementing the policy measures of the Government, which are bound to cause loss to the Banks.
Rotho relies on the some decisions of Hon'ble Supreme Court in this connection. The judgment of the Supreme Court in the case of CIT v. Delhi Safe Deposit Co. Ltd. (1982) 133 ITR 756 (SC) has been referred to in this connection. In that particular case, that assessee-company being a partner in a managing agency firm had agreed to make good part of loss to the managed company in respect of money advanced by the managed company to a third party on recommendation of a partner of firm. It was held ultimately that the amount paid by that assessee was allowable as revenue expenditure. Furthermore, reliance has also been placed on another judgment of the Supreme Court in the case of Patnaik & Co. Ltd v. CIT (1986) 161 ITR 365 (SC). In that case, it was held that the loss incurred by making investment in Government loans for the purpose of furthering sales and to boost the business of that assessee-company by procuring orders from the Government for motor vehicles, was allowable.
Taking into consideration all these aspects, we are finally of the view that there is no reason to consider the expenses incurred by the assessee being not connected with its business operations. The result of the stand taken by the Department will be that whereas on the one hand, the Government Undertakings will be required to incur expenses towards various social and other purposes under the instructions of the Government, at the same time again, such expenses being denied in their income-tax assessments, they will be required to pay huge amount of taxes on notional profits not actually earned by them. The state of affairs cannot accord with the canons of justice in the field of income-tax assessments.
11. Now we are required to look into whether the expenses under consideration can be considered to be of an agricultural or capital nature. Apparently, the expenses may look like agricultural expenses inasmuch as, the expenses were incurred towards planting and rearing nurseries and saplings. However, as pointed out by Rotho, the assessee does not have any agricultural income at all. Hence, no part of the expenses incurred by it can be considered to be pertaining to the earning of agricultural income. The expression 'agricultural expenses' has not been defined anywhere in the IT Act. Such expenses which are necessarily required to be incurred for earnings agricultural income, can alone be considered as agricultural expenses. In the instant case, there being no agricultural income, there cannot also be any agricultural expense.
12. It is an admitted fact that the assessee was not the owner of the land in which the plantation operations were carried out. The saplings planted or the trees grown thereby certainly do not belong to the assessee. As such, it cannot be considered that the assessee acquired any asset or even any benefit of any enduring nature by incurring the plantation expense. Rotho has relied on the judgment of the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. v. CIT (1980) 124 ITR 1 (SC), in this connection, in accordance with which, unless the expense operates on a capital field, it cannot be treated as a capital expense. As discussed earlier, the expenses under consideration do not relate to the capital assets of the assessee in anyway.
In the case of L.H. Sugar Factory & Oil Mills (P) Ltd. v. CIT (1980) 125 ITR 293 (SC), that assessee-company had made contribution towards part of cost of construction of roads in areas around the factory. The road did not belong to that assessee. It was held by the Hon'ble Supreme Court that the. expense had been laid out wholly and exclusively for the business purpose of that assessee and furthermore that no advantage of enduring nature having been obtained by the assessee, the expense was required to be allowed as revenue expense.
In the case of CIT v. Associated Cement Cos. Ltd. (1988) 172 ITR 257 (SC), that assessee-company agreed to provide water pipe lines and electrical facilities to the Municipality within the limits of which its factory premises were included. As a result, the assessee-company was required not to pay municipal taxes for 15 years. It was provided that the pipe lines would become the property of the Municipality. Ultimately, it was held that the advantage secured by the assessee was in the field of revenue and hence, could not be disallowed as capital expenditure.
In the case of CIT v. T.V. Sundaram Iyengai & Sons (P) Ltd. (1990) 186 ITR 276 (SC). The amount spent by the assessee for purchasing land in the name of the company to be utilised towards housing construction for employees under the subsidised scheme of the Government was held to be of the nature of revenue expenditure.
Finally, Rotho has argued that for determining the character of an expense, the treatment given by the assessee in its books is not at all important. On the other hand, the nature of the transactions alone is required to be taken into consideration. In support of this consideration, he has placed reliance on the judgment of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363 (SC).
13. Taking cue from the abovementioned judgments, we are of the opinion that, inasmuch as, no asset or even any enduring benefit was acquired by the process of incurring of plantation expenses by the assessee, the expense has got to be treated as revenue expense. The fact that in some of the years, the expense was capitalised in the accounts of the assessee or that the A.G. opined that the expense should be shown as capital expense in the assessee's accounts, is of little consequence in determining the nature of the expense. We, therefore, consider the expense to be of revenue nature.
14. Ultimately, therefore, we hold that the plantation expenses incurred by the assessee over the different years are not only expenses laid out wholly and exclusively for the purpose of the business of the assessee, but also are non-agricultural as well as revenue in nature. We reverse the orders of the lower authorities and direct that the expenses be allowed in the assessments for all the years under consideration.
15. We now come to the other issues raised in these appeals. It may be mentioned in this connection that these issues were also raised in the appeals before the Tribunal at the earlier stage and the Tribunal, by its order dt. 14th March, 1995 restored these matters also back to the file of the AO for reconciliation and fresh decision in the light of the Tribunal's other order dt. 11th Oct., 1991 in ITA Nos. 127 & 128/Ctk/1990 for asst. yrs. 1985-86 and 1986-87. However, all the issues raised herein are not exactly covered by the abovementioned order of the Tribunal dt. llth Oct., 1991. It is required to be mentioned in this connection that the representatives of neither sides put forward any arguments on any of these issues.
16. In asst. yr. 1979-80, the assessee challenges the addition on account of valuation of closing stock of Sal seeds as made in the original assessment and sustained in the impugned assessment and finally by the CIT(A) also. The CIT(A) states in this connection that in respect of various opportunities, the reports sent by the District Managers-in-charge of various depot relating to the issue, could not be filed either before the AO or even before him. He adds that no material could be produced to show that the changed claim by the assessee in the valuation of the closing stock of Sal seeds was for bona fide purpose and that the assessee would continue to follow the changed system. Furthermore, no material was also produced to show that the stock had deteriorated in quality in comparison to previous years. In view of these considerations, the CIT(A) declined to interfere with the addition.
For the same reasons, we also decline to interfere with the orders of the lower authorities and uphold the same.
17. The issue relating to disallowance of conventional expenses under the head 'entertainment' is there in these appeals filed by the assessee for asst. yrs. 1979-80 to 1984-85 and also 1987-88. In the assessments, only one per cent of the expenses under consideration was allowed as conventional expense and the balance amount was treated as entertainment expenses. On the other hand, the CIT(A) allowed 30 per cent of the amount claimed as conventional expenses under Section 37, and held that the balance 70 per cent of the expenditure was to be treated as entertainment expense, inasmuch as, the details in that regard were not available. The details are not available with us also. Hence, we have got no other alternative but to uphold the order of the learned CIT(A) for all the years under consideration. Accordingly, we do so.
18. An issue has been taken regarding the claim of investment allowance on addition of plant and machinery for the asst. yrs. 1979-80 to 1984-85 and also for 1987-88. On this issue, the CIT(A) states that the AO did not initially allow the aforesaid claim in absence of details and creation of reserve. He adds that since in the meantime, reserves have been created, the AO "is required to allow the investment allowance as per Section 32A of the Act after verification of the creation of reserve". We are unable to find the significance of the ground taken up by the assessee, in this regard. In fact, the CIT(A) has actually allowed the claim of the assessee subject merely to verification about the creation of the reserves. We are unable to interfere with his order and uphold the same.
19. For asst. yrs. 1988-89 and 1990-91, disallowance of guest house expenses is being challenged. The CIT(A) states that the action of the AO is based on the provisions of IT Act. He has, therefore, sustained the disallowances.
In view of the fact that no material has been placed on our record about allowability of the guest house expenses and also taking into consideration the provisions of Section. 37(4) and 37(5), we uphold the orders of the learned CIT(A) in sustaining the disallowances in this regard.
20. For asst. yr. 1981-82, the addition in respect of Mahua seeds is being objected to. The CIT(A) has agreed with the AO that this point was not directed by the Tribunal to be reexamined, in its order dt. 11th Oct., 1991. In view of this position, the CIT(A) held that the AO was justified to follow the earlier decision of the learned CIT(A) on this item. Accordingly, the disallowance was sustained by the learned CIT(A).
In view of the abovementioned position, we uphold the order of the learned CIT(A) on this issue.
21. For asst. yr. 1991-92, a point has been taken up by the assessee that the rental income derived by the assessee from house property should be assessed as business income and not by way of income from house property. Full repair expenses in respect of the building have also thus been claimed. The CIT(A) states in this connection that since the income is purely of the nature of rental income from a house property which does not form the business asset of the assessee and, inasmuch as, the assessee does not deal in buildings, the rental income has necessarily got to be treated as income from house property and not as business income. The CIT(A) has directed the AO to allow deduction in respect of repairs as per the provisions of Section 24 of the IT Act.
In view of the statement of the factual position as above, we agree with the learned CIT(A) that the income under consideration is required to be treated as income from house property only. We uphold the order of the learned CIT(A) in this regard.
22. A common ground has been taken up in all the appeals to the effect that the learned CIT(A) ought to have held that charging of interest has been incorrect and hence, not tenable. At the stage of the hearing of the appeals, Rotho admits that the relief claimed is merely consequential in nature and that the assessee does not deny the liability towards interest as such. Since consequential relief in respect of interest charged is required to be allowed, automatically, the appellate ground in that regard becomes infructuous, and is thus being dismissed.
23. In the result, the appeals filed by the assessee for all the years excepting asst. yr. 1979-80 are being partially allowed to the abovementioned extent. The appeal for asst. yr. 1979-80 is, however, being dismissed.