ASSAM COMPANY LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Being aggrieved by the order of the Commissioner (Appeals), the present appeal is filed by assessee in respect of the assessment year 1986-87.

(2.) The primary business of the assessee- company is growing, manufacturing and selling tea. The assessee filed Form No. 29 disclosing an income subject to advance tax at Rs ' 6,71,00,000 and corresponding net liability after adjustment of TDS and tax paid under section 209A at Rs. 2,88,94,297. The assessee claims several deductions in the return filed before the assessing officer. Some of the deductions were disallowed by the assessing officer on estimate basis which was also confirmed by the first appellate authority.

(3.) Ground No. 1 in this appeal is in respect of disallowance of Rs. 1,00,000 claimed by the assessee under the head general charges. The first appellate authority sustained the disallowance made by the assessing officer to the extent of Rs. 75,000. Mr. R.P. Agarwalla, the learned senior counsel, submitted on behalf of the assessee that this amount under the head "general charges" was disallowed by the assessing officer on the ground that the expenses were not attributed to business. The learned senior counsel further submitted that the expenditure incurred by the company was not disputed either by the assessing officer or by the first appellate authority. According to the learned senior counsel, the first appellate authority has observed that the expenses on account of sundries and petty expenses including vegetable garden cannot be categorised as expenses solely from business,point of view. The learned senior counsel further submitted that the assessee has debited a total sum of Rs. 86,93,304 which includes messing allowance for visiting agents, sundries and petty expenses for meeting the day-to-day administration of the 16 tea garden estates owned by the assessee-company and a vegetable garden for the welfare of the employees of the assessee-company, and also the maintenance of motor car for the purpose of business by the managers and assistant manager of the assessee-company. According to the learned counsel the first appellate authority disallowed a sum of Rs. 75,000 as against Rs. 1,00,000 by the assessing officer only on the ground that the sundry and petty expenses including the vegetable garden cannot be categorised as expenses for the purpose of business. The learned senior counsel has also invited our attention to the order of this Tribunal, in ITA Nos. 295/Gau and 196/Gau/1990 in respect of assessment years 1994-95 and 1995-96 of the very same assessee-company. In this order this Tribunal has allowed the expenditure in toto under the head "general expenses" which includes the sundry and petty expenses and also vegetable garden, Based upon the order of the Tribunal the learned senior counsel vehemently argued that since the deduction claimed by the assessee was allowed by this Tribunal in respect of the assessment years 1984-85 and 1985-86 and the amount actually incurred by the assessee was not disputed either by the assessing officer or by the first appellate authority, this entire amount claimed by the assessee under the head "general expenses" is to be allowed. According to the learned counsel the addition sustained by Rs. 75,000 by the first appellate authority is to be deleted from the total income of the assessee.