M/s Bellad & Company, Hubli V. DCIT, Hubli

ITA 1003/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0184 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C N BIPIN J
• Assessee Lawyers: C R NULVI
• Keywords: Depreciation; Revenue expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BANGALORE BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 1 00 3 / BANG/2015 (ASSESSMENT YEAR: 20 0 8 - 09 ) M/S.BELLAD & CO. , VIDYANAGAR, HUBBALLI. PA NO: AA ACB7277M VS. APPELLANT ADDL. COMMISSIONER OF INCOME - TAX, HUBBALLI. RESPONDENT APPELLANT BY : SHRI C.R.NULVI, CA RESPONDENT BY : SHRI C.N.BIPIN, JCIT(DR) DATE OF HEARING : 04/07/2016 DATE OF PRONOUNCEMENT : 27 /07/2016 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A), HUBLI, DATED 26/02/2015 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE A.O IS OPPOSITE TO THE LAW, JUDICIAL PRONOUNCEMENTS AND FACT AND CIRCUMSTANCES OF THE CASE. ITA NO . 1 003 / BANG/201 5 PAGE 2 OF 3 2. WHETHER THE AUTHORITIES BELOW RIGHT IN LAW AND UNDER THE FACT OF THE CASE IN HOLDING THE AMOUNT SPENT FOR CONSTRUCTION OF TEMPORARY STRUCTURE ON LEASEHOLD PREMISES A S CAPITAL IN NATURE AGAINST THE CLAIM MADE BY THE APPELLANT AS REVENUE IN NATURE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O ERRED IN DISALLOWING THE EXPENDITURE OF RS.35,300/ - ON SHAMIYANA EXPENDITURE WHICH IS INCURRED FOR THE PURPOSE OF BUSINES S. 4. FOR THESE AND OTHER REASONS WHICH MAY BE ADDUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS BEFORE THIS HON'BLE BENCH TO DELETE THE ADDITION MADE BY THE A.O. 5. APPELLANT CRAVES LEAVES, TO ADD, TO ALTER, TO AMEND AND TO DELETE ANY OF THE GROUND AT THE T IME OF HEARING. 2. GROUND NOS.1 , 4 & AND 5 ARE GENERAL IN NATURE AND DO NOT REQUIRE ADJUDICATION. 3. GROUND NO.2 RELATES TO DISALLOWANCE OF RS.26,28,636/ - INCURRED ON CONSTRUCTION OF SHED IN THE LEASE D PREMISES. IT IS THE CONTENTION OF THE ASS ESSEE THAT THE ASSESSEE HAD CONSTRUCTED A TEMPORARY STRUCTURE FOR OFFICE AS WELL AS WORKSHOP ON THE LEASED PREMISES. THE SAME MAY BE ALLOWED AS REVENUE EXPENDITURE. IN SUPPORT OF THIS, HE RELIED ON THE FOLLOWING DECISIONS: I. CIT VS ACC LTD ( 172 ITR 257 )( SC ) ; II. CIT VS. MADRAS AUTO SERVICES LTD. (233 ITR 468)(SC) III. CIT VS. TVS LEAN LOGISTICS LTD. (293 ITR 432)(MADRAS) IV. CIT VS HARI VIGNESH P V T LTD 281 ITR 338 V. CIT VS DR. A.M.SINGHWI ( 302 ITR 26 ) VI. HERBERT INTERNATIONAL P V T LTD VS ACIT ( 103 TTJ 78 ) ON THE OTHER HAND , LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. AM ITA NO . 1 003 / BANG/201 5 PAGE 3 OF 3 4. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. FROM THE PERUSAL OF THE SUBMISSIONS, IT IS CRYSTAL CLEAR THAT THE EXPENDITURE HAS RESULTED IN CREATION OF ASSET. THE FACT THAT NEW ASSET WAS CREATED IN THE LEASED PREMISES DOES NOT MAKE DIFFERENCE IN VIEW OF EXPLANATION INSERTED TO SECTION 32 OF THE IT ACT. THEREFORE, EXPENDITURE INCURRED IS OF CAPITAL NATURE AND IS ENTITLED ONLY F OR DEPRECIATION AS HELD BY THE AO. HENCE, GROUND NO.1 IS DISMISSED. 5. GROUND NO.3 RELATES TO SHAMIANA EXPENDITURE. THERE WAS NO DISPUTE ABOUT NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE. THIS KIND OF EXPENDITURE IS REVENUE IN NATURE. THE AO IS DIRECTED TO ALLOW THE SAME AS EXPENDITURE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY , 2016 SD/ - SD/ - ( SUNIL KUMAR YADAV ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE D A T E D : 27 /0 7 /2016 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE