- (1.) This appeal under Section 260A of the Income Tax Act, 1961 is directed against an order dated 16th July, 2002, passed by the Income Tax Appellate Tribunal, 'E' Bench, Calcutta in ITA No. 660 (Cal) of 2000 relating to the assessment year 1995-96 by which the said Tribunal dismissed the appeal preferred by the Appellant against an order dated 29th March, 2000, passed by CIT, West Bengal-II, Calcutta for the assessment year 1995-96 under Section 263 of the Income Tax Act, 1961.
(2.) A Division Bench of this Court by order dated 18th August, 2003 formulated the following questions of law in this appeal for hearing. (a) Whether in computing the composite income derived from sale of tea grown and manufactured by the Assessee CESS payable under the Assam Agricultural Income Tax Act on green tea leaves is allowable as a business expenditure in computing the composite income under Rule 8 of the Income Tax Rule, 1962? (b) Whether the condition precedent for the exercise of the owner under Section 263 of the Income Tax Act has been satisfied in the facts and circumstances of the case? The facts giving rise to filing of this appeal may be summed up thus: (a) The Assessing Officer while making assessment for the assessment year 1995-96 under Section 143(3) of the Act allowed Cess paid on green leaf to the Government as business expenditure. (b) Subsequently, a proposal under Section 263 of the Act had been sent by the concerned assessing officer to the Commissioner of Income Tax on the ground that while completing the assessment of the abovementioned year, the assessing officer had allowed Cess on green leaf paid to the Government by the assessing-company as business expenditure by disregarding the fact that the Guwahati High Court, in the case of Jorehaut Group Ltd. v. Agricultural Income Tax Officer,226 ITR 622 (Gau) held that the Cess should be deductible from agricultural income tax proceeding. According to the Assessing Officer, the aforesaid allowance of Cess in the income tax proceeding had made the assessment order erroneous and prejudicial to the interest of Revenue. (c) On receipt of such proposal, a show cause notice was issued to the Assessee and the Assessee filed written submission before the Commissioner of Income Tax, West Bengal (II) Calcutta. (d) The Commissioner of Income Tax, West Bengal (II), by order dated 29th March, 2002, directed the assessing officer to add back the whole of the 'Cess' on green leaf which was allowed as deduction by the assessing officer in the assessment.
(3.) Being dissatisfied, the Assessee preferred an appeal before the Income Tax Appellate Tribunal and the said Tribunal, by the order impugned herein, has dismissed the appeal by affirming the order of the Commissioner of Income Tax invoking his power under Section 263 of the Act.;