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1 - 8 of 8 (0.43 seconds)Jay Shree Tea & Industries Ltd., Kolkata vs Jcit, Cir-4, Kolkata, Kolkata on 16 March, 2018
We note that in order to qualify as substantial expansion , there has
to be increase in the investment in plant and machinery by atleast
25% of the book value of the plant and machinery before taking into
account the appreciation of any year as on the first day of the
previous year in which substantial expansion was undertaken as per
the provisions of Section 80IE(iii) of the Act. In our opinion the
direction u/s 80IE of the is allowable to the Assessee in the year of
completion of substantial expansion and it is not mandatory that the
substantial expansion should be completed in the year in which it was
first initiated and that is the mandate of the Section 80IE of the Act.
There is no time frame mentioned for the purpose of completion of
substantial expansion in the Act. The case of the assessee is squarely
covered by the decision of Jay Shree Industries Ltd. Vs. JCIT (2018)
170 ITD 479 (Kolkata-Trib.)
Section 43 in The Indian Evidence Act, 1872 [Entire Act]
Section 80 in The Indian Evidence Act, 1872 [Entire Act]
Dcit, Cir-4(1), Kolkata, Kolkata vs M/S Mcleod Russel India Ltd., Kolkata on 3 May, 2019
The above decision was
subsequently followed in DCIT v. Mcleod Russel India Ltd., ITA No.
116 & 117/Kol/2016 decided on February 1, 2019 (Page 164-173 of
the Paper Book). On the aspect as to what items of plant and
machinery should be considered for substantial expansion, it is
submitted that it is indisputable that the business of growing and
manufacturing tea is a composite activity. Because it is so, rule 8 of
the Income Tax Rules, 1962, provides that income derived from the
sale of tea grown and manufactured by the seller in India has to be
computed in a composite manner as if the whole of it were derived
from business and 40% of such income shall be deemed to be the
income liable to tax under the provisions of the Income Tax Act, 1961,
the rest 60% being agricultural income which cannot be so taxed. In
computing such composite income, that is, before apportionment of
the composite income in the ratio of 40:60, depreciation is computed
Page | 6
ITA No.451/KOL/2021
Amalgamated Plantations Pvt. Ltd.; A.Y. 2012-13
and allowed on all the plant and machinery including those used for
agricultural operations [please see Explanation 7 to section 43(6)],
except of course tea bushes [please see section 43(3)). The reason
why tea bushes are not treated as plant is because the cost of
planting bushes in replacement of bushes that have died or become
permanently useless in an area already planted is allowed as a
deduction under rule 8(2) of the Income Tax Rules, 1962. Such
provisions for computation and apportionment have been made
because of the composite nature of the business. It is well-known that
there are many tea garden undertakings in the State of Assam.
The Income Tax Act, 1961
Section 143 in The Indian Evidence Act, 1872 [Entire Act]
Jcit(Osd),Cir.-12(1) , Kolkata vs M/S Wearit Global Ltd., Kolkata on 13 April, 2021
"7.2 I have considered the submission of the Ars of the appellant in the backdrop of
the assessment order. The brief facts of the matter are that the AO had disallowed an
amount of ₹5,82,61,479/- claimed by the appellant company u/s 80IE of the Act on
the ground that there was no substantial expansion of the appellant's value of capital
investment in plant and machinery to the extent of 25% for the purpose of expansion
of capacity/ modernization and diversification as against an increase by 33 ½% which
was prescribed in NEIP, 1997. The matter is discussed by the AO from page 3 to page
8 of the assessment order. The AR of the appellant had laid stress on the point that the
substantial expansion can be done in any year and the definition of 'initial assessment
year' should be the year in which substantial expansion is made. The only requirement
of the Act is substantial expansion should be any data between 01.04.2007 and
31.03.2017, which the appellant had complied. Nowehere, has it mandated that the
substantial expansion once completed should be completed within same financial year.
On an overall analysis of the matter, I find the case of the appellant has been squarely
covered in its favour by the judgement of the jurisdictional Tribunal in the case of jay
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ITA No.451/KOL/2021
Amalgamated Plantations Pvt. Ltd.; A.Y. 2012-13
Shree Industries Ltd. Vs. JCIT (2018) 170 ITD 479 (Kolkata-Trib) and also by the
judgment of the jurisdictional Tribunal in the case of DCIT Vs. McleodRusselIndia Ltd.
(2019) in ITA No.116 & 117/KOL/2016 dated 01.02.2019 (copies of the orders on
record), facts and circumstances being on similar footings. In such view of the matter,
the AO is directed to delete the impugned disallowance of ₹5,82,61,479/- claimed by
the appellant u/s 80IE of the Act."
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