M/s Millennium Plaza Ltd., New Delhi V. ACIT, New Delhi

CO 42/DEL/2011

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0230 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-01-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 21-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GUNJAN PRASHAD
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 5247/DEL/2010 5247/DEL/2010 5247/DEL/2010 5247/DEL/2010 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2002 2002 2002 2002 - -- - 03 0303 03 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRC CENTRAL CIRC CENTRAL CIRC CENTRAL CIRCLE LELE LE- -- -2, 2,2, 2, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, 6, COMMUNITY CENTRE, 6, COMMUNITY CENTRE, 6, COMMUNITY CENTRE, 6, COMMUNITY CENTRE, SAKET, SAKET, SAKET, SAKET, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AACCM9795M. PAN : AACCM9795M. PAN : AACCM9795M. PAN : AACCM9795M. (APPELLANT) (RESPONDENT) CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION NO NONO NO .42/DEL/2011 .42/DEL/2011 .42/DEL/2011 .42/DEL/2011 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2002 2002 2002 2002 - -- - 03 0303 03 M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, 6, COMMUNITY 6, COMMUNITY 6, COMMUNITY 6, COMMUNITY CENTRE, CENTRE, CENTRE, CENTRE, SAKET, SAKET, SAKET, SAKET, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AACCM9795M. PAN : AACCM9795M. PAN : AACCM9795M. PAN : AACCM9795M. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -2, 2,2, 2, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI GUNJAN PRASHAD, CIT - DR. ASSESSEE BY : SHRI GAUTAM JAIN, ADVOCATE. ORDER ORDER ORDER ORDER PE PEPE PER G.D. AGRAWAL, VP R G.D. AGRAWAL, VP R G.D. AGRAWAL, VP R G.D. AGRAWAL, VP : :: : THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-III, NEW DELHI DATED 7 TH SEPTEMBER, 2010 FOR THE AY 2002-03. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - ITA-5247/DEL/2010 & C.O.-42/DEL/2011 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE DISALLOWANCE OF RS.37,67,394/- BY HOLDING IT AS REV ENUE EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RELYING UPON THE DECISION OF ITAT IN CASE OF ONGC VIDESH LTD. WI THOUT APPRECIATING THAT FACTS OF THAT CASE ARE DIFFERENT FROM THE PRESENT CASE. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF THE HEARING OF THE APPEAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED RELEVANT MATERIAL PLACED BEFORE US. IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT THE ASSESSING OFFICER HAS DISALLOWED T HE SUM OF `37,67,394/- IN RESPECT OF ABANDONMENT OF THEME AMU SEMENT PARK TREATING AS A CAPITAL EXPENDITURE. HE SUBMITTED TH AT THE NATURE OF THE EXPENDITURE WAS TRAVELLING, DESIGNING, CONSULTANCY FEES, LEGAL FEES ETC. THUS, THE ENTIRE EXPENDITURE WAS OF REVENUE NATURE. THE ASSESSEE WHO IS IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF REAL ESTATE HAD APPLIED FOR ALLOTMENT OF LAND FROM NOIDA AUTHORITIE S FOR THE THEME AMUSEMENT AND ENTERTAINMENT PARK PROJECT. HE HAD A LSO GIVEN THE DEPOSIT OF `50 LAKHS WITH THE NOIDA AUTHORITIES FOR THE ALLOTMENT OF LAND. HOWEVER, THE NOIDA AUTHORITIES DID NOT ALLOT THE LAND FOR THE AMUSEMENT PARK AND REFUNDED `50 LAKHS OF SECURITY D EPOSIT GIVEN BY THE ASSESSEE. THEREFORE, THE ASSESSEE CLAIMED THE REVENUE EXPENDITURE INCURRED IN RESPECT OF SUCH PROJECT BY THE ASSESSEE WHICH WAS IN THE NATURE OF TRAVELLING, DESIGNING, CONSULT ANCY FEES, LEGAL FEES ETC. HE SUBMITTED THAT THE ISSUE UNDER CONSIDERATI ON IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HON'BLE ITA-5247/DEL/2010 & C.O.-42/DEL/2011 3 JURISDICTIONAL HIGH COURT IN THE CASE OF INDO RAMA SYNTHETICS INDIA LTD. VS. CIT [2011] 333 ITR 18 (DELHI), WHEREIN THEIR L ORDSHIPS HELD :- ALLOWING THE APPEAL, (I) THAT THE EXPENDITURE INCU RRED WAS IN THE NATURE OF SALARY, WAGES, REPAIRS, MAINTENANCE, DESIGN AND ENGINEERING FEE, TRAVELLING AND OTHER EXPENSES OF ADMINISTRATIVE NATURE. INDUBITABLY, IN THE NORMAL COURSE, THESE EXPENSES WOULD BE TREATED AS REVENUE EXPENDITURE. THE UNIT, WHICH THE ASSESSEE PROPOSED TO SET UP HAD INEXTRICA BLE LINKAGE WITH THE EXISTING BUSINESS OF THE ASSESSEE. THE PROPOSED BUSINESS WAS NOT AN INDIVIDUAL BUSINESS BU T VERTICAL EXPANSION OF THE EXISTING BUSINESS. THUS, THE TEST OF EXISTING BUSINESS WITH COMMON ADMINISTRATIO N AND COMMON FUND WAS MET. SINCE THE PROJECT WAS ABANDONED, NO NEW ASSET ALSO CAME TO BE CREATED. T HE EXPENDITURE WAS DEDUCTIBLE. 4. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE S AND THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE RATIO O F THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUAR ELY APPLICABLE TO THE FACTS UNDER APPEAL. THE ASSESSEE IS IN THE BUSINES S OF CONSTRUCTION AND DEVELOPMENT OF REAL ESTATE. THE NET SALES DURI NG THE YEAR UNDER CONSIDERATION FROM THE REAL ESTATE BUSINESS WAS `49 .44 CRORES. THEREFORE, THE DEVELOPMENT OF THEME AMUSEMENT AND E NTERTAINMENT PARK WAS IN THE LINE OF BUSINESS OF DEVELOPMENT OF REAL ESTATE. THE EXPENDITURE INCURRED BY THE ASSESSEE WAS IN THE NAT URE OF REVENUE EXPENDITURE VIZ., ON TRAVELLING, DESIGNING, CONSULT ANCY FEE, LEGAL FEE ETC. THE PROJECT WAS ABANDONED BECAUSE THE NOIDA A UTHORITIES REFUSED TO ALLOT THE LAND. THEREFORE, THE RATIO OF THE ABO VE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICA BLE. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ITA-5247/DEL/2010 & C.O.-42/DEL/2011 4 5. IN THE CROSS-OBJECTION, THE ASSESSEE HAS CHALLEN GED THE VALIDITY OF ISSUE OF NOTICE UNDER SECTION 153A. HOWEVER, AT TH E TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THE CROSS- OBJECTION. ACCORDINGLY, THE SAME IS REJECTED AS NO T PRESSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY, 2015. SD/- SD/- ( (( ( CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 28.01.2015 VK. COPY FORWARDED TO: - 1. REVENUE : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -2, NEW DELHI. 2, NEW DELHI. 2, NEW DELHI. 2, NEW DELHI. 2. ASSESSEE : M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, M/S MILLENNIUM PLAZA LIMITED, 6, COMMUNITY CENTRE, SAKET, NEW DELHI. 6, COMMUNITY CENTRE, SAKET, NEW DELHI. 6, COMMUNITY CENTRE, SAKET, NEW DELHI. 6, COMMUNITY CENTRE, SAKET, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR