KALASA TEA AND PRODUCE CO LTD Vs. INSPECTING ASSISTANT COMMISSIONER
INCOME TAX APPELLATE TRIBUNAL
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S. Kannan, Accountant Member -
(1.) THE appeal relating to the assessment year 1983-84, which is a recalled appeal, and the appeal relating to the assessment year 1985-86 were heard together and are disposed of by a common order. Both the appeals give rise to common questions. We will first consider the recalled appeal relating to the assessment year 1983-84. Needless to add the decision thereon will be applicable to the assessment year 1985-86 also.
(2.) Assessment year : 1983-84
Issue No. 1 - Development allowance reserve
Being a company engaged in the business of manufacturing tea, the assessee was entitled to and was granted development allowance under Section 33A of the Income-tax Act, 1961. It is common ground that as stipulated by and under Section 33A(3)(i) of the Act the assessee created a development allowance reserve in a sum of Rs. 73,000. For the purposes of computing the capital base under the Companies (Profits) Surtax Act, the assessee took into account the said sum of Rs. 73,000. In this regard the assessee referred to and relied upon the order of the ITAT Cochin Bench in the case of Peermedu Tea Co. Ltd. [S.T. Appeal Nos. 4 & 5 (Coch.) of 1981, dated 25-3-1985]
The Assessing Officer rejected the said contention relying on the order of the ITAT Madras Bench-A in the case of Manjushree Plantations Ltd [ST Appeal No. 34 (Mad.) of 1979 and CO. No. 158 (Mad.) of 1979, dated 31-7-1980].
(3.) THIS issue was one of the subject matters of appeal filed by the assessee before the CIT(A). Besides reiterating the arguments that had earlier been advanced, unsuccessfully, before the Assessing Officer, the assessee also advanced before the CIT(A) an alternative contention, namely, that if the reserve in question was not eligible to be included in the capital base of the company, then under Rule 2(ii) of the Second Schedule of the Companies (Profits) Surtax Act, the reserve in question must be deducted from the cost of investment the income from which is excluded from the chargeable profits of the assessee.;
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