IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR TUESDAY, THE 22ND JANUARY 2008 / 2ND MAGHA 1929 OTC.No. 30 of 2004() -------------------- AITA.18/2003 of I.T.A.TRIBUNAL,COCHIN BENCH .................... PETITIONER: ---------------------------- M/S. RAM BAHADUR THAKUR (KERALA) PVT.LTD., MARAR ROAD, WILLINGDON ISLAND, COCHIN-682 003, REPRESENTED BY ITS CHIEF EXECUTIVE (TAXATION & FINANCE), MR. D.D. DINGH. BY ADV. SRI.JOSEPH MARKOSE (SR.) SRI.MITHUN MARKOS RESPONDENTS: ------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY (TAXES), TRIVANDRUM. BY G.P. SRI.K.P.PRADEEP THIS OTHER TAX CASES HAVING BEEN FINALLY HEARD ALONG WITH OTC NOS.31,32,33&34/2004 ON 22/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. .................................................................... O.T.C. Nos.30, 31, 32, 33, 34 and 35 of 2004 .................................................................... Dated this the 22nd day of January, 2008. JUDGMENT C.N.Ramachandran Nair, J. These connected tax revision cases filed under Section 78 of the Agricultural Income Tax Act arise from the petitioner's assessments for the assessment years 1991-92 to 1996-97. As common issues arise for consideration, we have heard the cases together and proceed to dispose of the cases by this common judgment. The petitioner has questioned the order of the Tribunal holding that sale proceeds of firewood for assessment years 1991-92, 1995-96 and 1996-97 constitute agricultural income. Counsel for the petitioner has relied on decision of the Supreme Court in STATE OF KERALA V. KARIMTHARUVI TEA ESTATE LTD. (1966) 60 ITR 275 wherein it was held that sale of shade trees maintained in tea plantation amounts to sale of capital assets and cannot be assessed as agricultural income. In this case the assessee is mainly engaged in cultivation of cardamom and has no tea plantation. Of course it is also cultivating minor crops like pepper and coffee. Shade regulations are there for cardamom and coffee and pepper being a creeper, needs supporting trees. It is not 2 clear from the finding of the Tribunal or any of the authorities as to whether petitioner cut and sold any shade trees. If shade trees are sold, assessee being a company, is liable to pay tax for capital gains under the Central Income Tax Act. Since the Tribunal has not considered any of these aspects and details of sale proceeds are also not on record, we feel one more opportunity can be given to the assessee to produce details and income tax assessments before the Assessing Officer. We, therefore, direct the Assessing Officer to give one more opportunity to the assessee to produce details and if proof is produced, the Assessing Officer will modify the assessment to the extent required. 2. The common issue arising for all the years pertains to disallowance of depreciation. Senior counsel appearing for the assessee contended that the assessee purchased the estate during the previous year relevant for the assessment year 1991-92. The claim of depreciation was disallowed and confirmed by the Tribunal for the reason that it was not claimed in the form Appendix-1 to Rule 8. The assessee is bound to follow Rule 8 for the purpose of claiming depreciation. In fact the purchase deed would have indicated separate cost of land, machinery etc. Even though there is no 3 scope for giving one more opportunity to prepare the schedule of items for claiming deduction, we feel if petitioner has filed statement of claim in Appendix-I, the Officer should grant eligible depreciation to the assessee. The Assessing Officer is directed to verify assessment records and if sale deed with schedule of claims was available showing cost of plant, machinery, building etc., there will be direction to the Assessing Officer to grant eligible depreciation. 3. Another common issue arising for consideration is disallowance of bonus in excess of 8.33% for the assessment years 1992-93, 1993-94 and 1994-95. The Tribunal has stated that bonus upto 80% of salary and wages are paid. However, the Assessing Officer states that the bonus payment is around 50% of the salary and wages. Bonus liability is governed by statutory provisions. However, there is no scope for restricting the claim to minimum bonus, if assessee has paid higher amounts under any settlement with the employees. Since the matter is remanded on other matters, we direct the Assessing Officer to verify whether terms of payment of bonus was governed by any settlement or order by any Tribunal or authority and if payments are made in accordance with any settlement or under any statute, 4 he will allow the actual bonus paid by the assessee. 4. Remaining issues pertain to estimation of income from cardamom for want of proof to justify low yield and income compared to income returned in the previous years. Even though low yield or low income is not a ground for rejecting accounts, it is for the assessee to establish as to how abnormal reduction happened in the yield or income. No evidence is produced before the lower authorities or Tribunal on these matters. We, therefore, do not find any ground to interfere with the estimation of income. 5. Similarly next question is disallowance of 50% expenditure for minor crops like coffee and pepper for the reason that expenditure exceeds income from coffee. It is clear from the orders that petitioner is not maintaining separate accounts for the expenditure on minor crops. We do not find anything irrational in estimating the income by disallowing part of the expenditure claimed. We, therefore, confirm the order of the Tribunal on this issue. 6. Another issue raised for the year 1995-96 is assessment of miscellaneous income. According to the assessee, these are credits found in the name of some parties in the balance sheet. If liability is not proved, 5 there is nothing wrong in assessing the amount as income. If the assessee has any evidence to show the liability representing the credit in the balance sheet, the assessee is given an opportunity to produce the same in the course of re-assessment as directed above. The Officer will examine this issue also along with other matters referred above. These tax revision cases are disposed of with the above directions. C.N.RAMACHANDRAN NAIR Judge T.R.RAMACHANDRAN NAIR Judge pms