GIRISH CHANDRA GUPTA J. - (1.) The revenue has come up in appeal against an order dated 24th April, 2009 passed by the ITAT - C Bench, Kolkata, in ITA No.1724/KOL/2008 to 1727/KOL/2008. The relevant assessment year is 1999 -2000. The solitary question of law which arises for determination in the instant case is as follows: - Whether on the facts and in the circumstances of the case the Tribunal was justified in law in deleting the addition of cess on green leaf for an amount of Rs.56,92,991/ - when cess is payable only on production of green leaf which is 100% agricultural activity and not an admissible deduction under income chargeable to tax and more so when judgment reported in 289 ITR 422 is completely in favour of addition?
(2.) The facts and circumstances leading up to the instant appeal are as follows: - The assessee company is engaged in the business of growing, manufacture and sale of tea. The assessee filed return for the assessment year 1999 -2000 which was assessed under Section 143(1) by the assessing officer. Subsequently, the assessing officer reopened the case under Section 147 on the ground that the cess on green leaf paid by the assessee is not deductible as expenditure for determination of 100% of composite income of growing, manufacturing and selling of tea. The assessee had claimed the expenditure in the profit and loss account as a part of the business expense.
(3.) The assessing officer by his order dated 19th December 2006, completed the assessment under Section 143(3)/147 of the Income Tax Act and disallowed the expenditure of Rs.56,92,991/ - on account of cess on green leaf paid by the assessee. The reasoning given by the assessing officer is as follows: "Scrutiny of records reveals that an amount of Rs. 56,92,991/ - being cess on green leaf was debited in the P and L account. Cess on green leaf is purely an agricultural expenditure and the same was deductible from 60% of composite income. While computing the composite income the said expenditure was not disallowed." ;