- (1.) This appeal under Section 260A of the Income-tax Act is at the instance of an Assessee and is directed against an order dated April 23, 2004, passed by the Income-tax Appellate Tribunal, "B" Bench, Kolkata in ITA No. 895 (kol)/2002 for the Assessment Year 1997-98 dismissing the appeal preferred by the Assessee.
(2.) The facts giving rise to filing of this appeal may be summed up thus: a) The Assessee is a public limited liability company within the meaning of the Companies Act, 1956. The Appellant carries on the business of growing and manufacturing tea. b) The Appellant has 17 tea gardens and its employees from time to time come from the gardens to the Headquarter of the Appellant at Calcutta for the purpose of Appellant's business. c) The Appellant maintains a transit flat at Calcutta for the garden-employees who come to the Headquarters for official work and such transit flat is exclusively used by the employees of the Appellant who come to Calcutta for official work. The Appellant does not pay any allowance to such employees and no recovery is also made from them for their stay at the said transit flat. d) The Assessing Officer for the assessment for the Assessment Years 1988-89 to 1992-93 treated the transit flat as guest house within the meaning of Sub-sections (4) and (5) of Section 37 of the Act and disallowed the expenditure relating thereto. e) The Appellant succeeded before the Commissioner of Income-tax (Appeals) for the Assessment Year 1988-89 but in the subsequent years, the disallowance was upheld. On further appeal, the Tribunal upheld the treatment of the transit flat as guest house within the meaning of Sub-sections (4) and (5) of Section 37. The Tribunal, however, limited the nature of expenses which could be subjected to disallowance and held that disallowance could be made only in respect of depreciation and rent and that any other expenditure which was covered by the provisions of Sections 30 to 36 could not be disallowed under Section 37(4) of the Act. f) Section 80HHC of the Act provides for a deduction in respect of export profits and under the provisions of Rule 8 of the Income-tax Rules, 1962, the income from such composite business is required to be computed as if it were income derived from business and 40% of such income is liable to tax under the Act. In the context of the said provisions, a dispute arose as to whether the deduction under Section 80HHC was to be allowed before apportioning the composite income in the ration of 60:40 or after such apportionment and as to the method of quantification of the deduction under the said Section. g) For the Assessment Year 1997-98 the Appellant claimed deduction under Section 33AB of the Act amounting to Rs. 50,69,336/-. The Appellant also claimed deduction under Section 80HHC before apportioning the composite income in the ration of 60:40. h) In the order of assessment dated March 31, 2000, the Assessing Officer allowed deduction under Section 33AB as claimed in the return, though with reference to the assessed income, according to the Appellant, it was entitled to a higher deduction. The Assessing Officer computed and allowed deduction under Section 80HHC after apportioning the composite income in the ration 60:40. The Assessing Officer disallowed the transit flat expenditure under Section 37(4) of the Act. i) Being dissatisfied, the Appellant preferred an appeal before the Commissioner of Income-tax (Appeals), by the order dated March 26, 2002, the said authority upheld the disallowance of the transit flat expenditure under Section 37(4) of the Act. With regard to the Appellant's claim for higher deduction under Section 33AB with reference to the assessed income, the Commissioner of Income-tax (Appeals) held that deduction under Section 33 AB was to be allowed after apportioning the composite income in the ration 60:40 and with reference to 40% of the composite income. The Commissioner of Income-tax (Appeals) also rejected the claim of the Appellant under Section 80HHC by relying upon the retrospective amendment made by the Finance Act, 1999. j) Being dissatisfied, the Appellant preferred a further appeal before the Income-tax Appellate Tribunal and the said Tribunal by the order impugned in this appeal rejected the claim of the Appellant for deduction of transit flat expenditure as also the claim for deduction under Section 80HHC before apportioning the composite income in the ratio of 60:40. With regard to the Appellant's income of higher income under Section 33AB of the Act. The Tribunal observed the deduction under Section 33 AB was to be calculated on 40% of the composite income determined under Rule 8 of the Rules. The Tribunal, however, remanded the matter to the Commissioner of Income-tax (Appeals) for the purpose of deciding the quantum of deduction under Section 33 AB with reference to 40% of the composite income as assessed.
(3.) Being dissatisfied, the Assessee has come up with the present appeal.;