M/s. Delphi Automotive Systems Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 64/DEL/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2790 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 15-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER & SHRI K.N. CHARY, JUDICIAL MEMBER CROSS OBJECTION NO.-64/DEL./2016 (IN ITA NO. 6224/DEL/2013) ( ASSESSMENT YEAR: 2004-05) DELPHI AUTOMOTIVE SYSTEMS PVT. LTD. B-92, HIMALAYA HOUSE, 23, KG MARG, NEW DELHI. AAACD0226E VS DCIT CIRCLE 10(1) NEW DELHI. ASSESSEE BY SH. GAGAN KUMAR, ADV. REVENUE BY SH. ANIL KUMAR SHARMA, SR. DR ORDER PER K. NARSIMHA CHARY, J.M. THE CROSS OBJECTION IS FILED BY THE ASSESSEE CHALLE NGING THE FINDING OF THE LEARNED CIT(A) IN RESPECT OF THE EX PENDITURE INCURRED BY THE ASSESSEE IN INCREASING THE AUTHORISED CAPITA L FOR THE PURPOSE OF EXPANSION OF INDUSTRIAL UNDERTAKING. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED A DEDUCTION OF RS.8,00,90 0/- UNDER SECTION 35 D OF THE ACT INCURRED ON ACCOUNT OF FEE PAID TO THE REGISTRAR OF COMPANIES FOR ENHANCEMENT OF SHARE CAP ITAL AND THEY DATE OF HEARING 15.03.2017 DATE OF PRONOUNCEMENT 15.03.2017 CO NO. 64/DEL/2016 2 HAD WRITTEN OFF THIS AMOUNT IN THE BALANCE SHEET AF TER CONSIDERING THE SAME AS DEFERRED REVENUE EXPENDITURE. LEARNED A SSESSING OFFICER DISALLOWED THIS EXPENDITURE AND ON APPEAL L D. CIT(A) CONFIRMED THE SAME. CHALLENGING THE ORDERS OF THE A UTHORITIES BELOW ON THIS ASPECT, THE ASSESSEE PREFERRED THIS CROSS O BJECTION. 2. AT THE OUTSET, IT IS OBSERVED THAT CHALLENGING T HE ORDER DATED 4/9/2013 PASSED BY THE LEARNED CIT(A), REVENUE PREF ERRED AN APPEAL ON 21 ST NOVEMBER, 2013 AND A NOTICE OF APPEAL WAS SERVED ON THE ASSESSEE ON 13/02/2014. TIME FOR FILING OF C ROSS OBJECTIONS TO THE APPEAL PREFERRED BY THE REVENUE WAS TO EXPIR E BY 15/03/2014. HOWEVER, ACCORDING TO THE ASSESSEE BY S UCH DATE, THE ORDER OF THE TRIBUNAL IN ITA NO. 1476/DELL/2013 WAS NOT AVAILABLE SINCE THIS ORDER CAME TO BE PASSED 08/08/2014 GRANT ING RELIEF TO THE ASSESSEE ON THE ISSUE OF DISALLOWANCE OF THE DI RECTION OF RS. 8,00,090/- IN RESPECT OF THE ASSESSMENT YEARS 2002- 03, AS SUCH THE CROSS OBJECTIONS FILED ALONG WITH A PETITION TO CON DONE THE DELAY. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL IN ITA NO. 1 476/DEL/2013, WE ARE CONVINCED THAT THE SAID ORDER WAS NOT AVAILABLE TO THE ASSESSEE AS ON THE DATE OF EXPIRY OF TIME PERMISSIBLE FOR FI LING THE CROSS CO NO. 64/DEL/2016 3 OBJECTION. SINCE NO RIGHTS ARE CRYSTALLIZED IN THE REVENUE BY AFFLUX OF TIME AND NO PREJUDICE WILL BE CAUSED TO THEM BY CONDONING THE DELAY IN FILING THE CROSS OBJECTIONS, WE CONDONE TH E DELAY IN FILING THE CORSS OBJECTIONS AND PROCEED TO DEAL WITH THE M ERITS OF THE CASE. 3. AS COULD BE SEEN FROM THE ORDER OF THE LD. CIT(A ) THE DECISIONS OF THE ITAT IN THE CASE OF PEPSICO INDIA HOLDING PV T. LTD. VS. DCIT (ITA 1226/DEL/2003), NEELU TEXTILES LTD VERSUS ACIT AND TULIP INVESTMENT INVESTMENTS LIMITED VERSUS ACIT (ITA NO 5990/DEL/2012) , THE DECISION OF THE RAJASTHAN HIGH COURT IN CIT VERSUS MULTI-METALS LTD 188 ITR 151 (RAJ) WERE BRO UGHT TO THE NOTICE OF THE LD CIT(A) AND IT WAS ARGUED THAT IN PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED VERSUS A CIT TO 25 ITR 792 AND BROOKE BOND INDIA LTD VERSUS ACIT 225 ITR 7 98 THE HONBLE SUPREME COURT DID NOT ADVERT TO THE PROVISI ONS UNDER SECTION 35 D OF THE ACT AND AS A MATTER OF FACT THE QUESTION ARISEN IN THE CASE OF BROOKE BOND INDIA LTD RELATES TO THE ASSESSMENT YEAR 1969-70 WHEN SECTION 35 D WAS NOT EVEN INSERTED IN THE STATUTE BOOK, THE LD. CIT(A) WITHOUT DISCUSSING THE MATTER ON MERITS, PROCEEDED TO HOLD THAT THE EXPENDITURE WAS MADE FOR EXPANDING THE CO NO. 64/DEL/2016 4 CAPITAL BASE OF THE COMPANY WHICH WAS CLEARLY IN TH E NATURE OF CAPITAL EXPENDITURE, AND CONFIRMED BY HIM AND HIS P REDECESSORS FOR THE ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04, AND SINCE THERE WAS NO CHANGE IN THE FACTS AND CIRCUMSTANCES LD CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OF FICER. 4. LD. AR BROUGHT TO OUR NOTICE THE ORDER DATED 08/ 08/2014 IN ITA NO. 1476/DELL/2013 FOR THE A.Y. 2002-03 WHICH I S THE ASSESSEES OWN CASE, WHEREIN A COORDINATE BENCH OF THIS TRIBUNAL CONSIDERED THE DECISION REPORTED IN PEPSICO HOLDING S VERSUS DCIT IN ITA NO. 1226/DEL/2003 AND M/S TULIP INVESTMENTS LIMITED IN ITA NO. 5990/DELL/12, AND ALSO THE JUDGEMENT OF THE RAJASTHAN HIGH COURT IN CIT VERSUS MULTI-METALS LTD 118 ITR 1 51 (RAJ) AND HELD THAT THE EXPENDITURE WAS ELIGIBLE UNDER SECTIO N 35D(2)(C)(VI) OF THE ACT AND THE ASSESSEE CAN CLAIM 10% OF SUCH EXPE NDITURE IN THE YEAR UNDER SECTION 35D OF THE ACT. SINCE THIS IS TH E DECISION RENDERED FOLLOWING THE EARLIER DECISIONS OF THE TRI BUNAL AND ALSO THE HONBLE RAJASTHAN HIGH COURT, WE FIND THAT THE MATT ER IN ISSUE IS NO LONGER RES INTEGRA AND FOLLOWING THE SAME WE HOL D THAT THE ASSESSEE IS ENTITLED TO CLAIM 10% OF THE EXPENDITUR E INCURRED FOR CO NO. 64/DEL/2016 5 PAYMENT TO THE REGISTRAR OF COMPANIES IN CONNECTION WITH THE EXPANSION OF THE SHARE CAPITAL. WE ACCORDINGLY ALLO W THE CROSS OBJECTION AND DELETE THE ADDITION MADE ON THIS ACCO UNT. 5. IN THE RESULT CROSS OBJECTION BEARING NO. 64/DEL /2016 PREFERRED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03.2017 SD/- SD/- (B.P. JAIN) (K.N. CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15.03.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 15.03.2017 CO NO. 64/DEL/2016 6 DRAFT PLACED BEFORE AUTHOR 15.03.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 15.03.2017 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 15.03.2017 APPROVED DRAFT COMES TO THE SR.PS/PS 15.03.2017 KEPT FOR PRONOUNCEMENT ON 15.03.2017 FILE SENT TO THE BENCH CLERK 15.03.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.