The ACIT,GNR Circle, Gandhinagar V. Dahej Sez Ltd., Gandhinagar

ITA 1046/AHD/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3403 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A KHAN
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Revised return; Revenue expenditure; Capital expenditure; TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NOS: 1046/AHD/2012 & 1020/AHD/2014, ITA NO. 127/AHD/2015 & 2353/AHD/2015 (AYS: 2008-09 & 2010-11, 2011-12 & 2012-13) DEPUTY COMMISSIONER OF INCOME-TAX, GANDHINAGAR CIRCLE, GANDHINAGAR V/S DAHEZ SEZ LTD. BLOCK NO. 14, 3 RD FLOOR, SECTOR-11, GANDHINAGAR-382011 (APPELLANT) (RESPONDENT) PAN: AACCD8098E APPELLANT BY : SHRI M.S. A KHAN, CIT/DR RESPONDENT BY : SHRI MEHUL K. PATEL, A.R. ( )/ ORDER DATE OF HEARING : 29 -04-201 8 DATE OF PRONOUNCEMENT : 30 -04-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THESE FOUR APPEALS FILED BY THE REVENUE ARE DIRECTE D AGAINST THE ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 17.02.2012 , 24.01.2014, ITA NOS. 1046/A/1 2 & 1020/A/14 AND ORS. . A.YS. 2008-09, 20 10-11, 2011-12 & ORS. 2 14.10.2014 & 22.05.2015 PERTAINING TO A.YS. 2008-09 , 2010-11, 2011-12 & 2012-13. IN ALL THE FOUR APPEALS ISSUES ARE COMMON AND ONLY ASSESSMENT YEAR AND FIGURES ARE DIFFERENT BUT FOR THE SAKE OF CONVE NIENCE, WE WOULD LIKE TO DISPOSE OF ALL FOUR APPEALS TOGETHER. IN ITA NO. 10 46/AHD/2012 FOR A.Y. 2008-09, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN ALLOWING INTEREST ON UNPAID LEASE CHARGES OF RS. 73,42,902/- WHICH HAVE NOT CRY STALLIZED DURING THE YEAR. 2. THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LA W IN REDUCING LEASE INCOME BY 2,45,99,415/- WITHOUT CONFIRMING THE FACT WHETHER S AID INCOME IS OFFERED FOR TAX AS PER MERCANTILE SYSTEM FOLLOWED BY ASSESSEE IN EA RLIER YEAR. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D.CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEA RNED CIT (APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A GOVT COMPANY REGISTERED UNDER 617 OF THE COMPANY ACT 1956. ASSESSEE CO HAS FILED ITS RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME NIL. AS PER TH E CO. ACT ASSESSEE'S CO. STATUTORY AUDIT WERE APPOINTED BY COMPTROLLER OF AC COUNTANT GENERAL (C & A G). COMPANY STATUTORY AUDITOR M/S M K SHAH & CO. AH MEDABAD WAS APPOINTED. THE STATUTORY AUDIT WAS CARRIED OUT BY M /S M K SHAH ON 28.05.2010 AND THEREAFTER THE SAME WAS REVISED ON 1 4.10.2010. THUS ASSESSEE CO HAS FILED THE RETURN OF INCOME ON PROVISIONAL AC COUNTS. 3. THE ASSESSEE CO HAS INCURRED LOSS OF RS 8426272/- A ND CLAIMED FDR INTEREST OF RS 7285883V- AS INCOME FROM OTHER SOURCES AS PER TH E ACCOUNT ATTACHED WITH THE RETURN OF INCOME. HOWEVER THE ASSESSING OFFICER ADDED RS 36638613/- AS INTEREST INCOME WORKED OUT BY ASSESSING OFFICER ON ACCRUAL BASIS I.E ON ITA NOS. 1046/A/1 2 & 1020/A/14 AND ORS. . A.YS. 2008-09, 20 10-11, 2011-12 & ORS. 3 MERCANTILE SYSTEM. THE ASSESSEE CO HAS NOT FILED AN Y TDS CERTIFICATE ALONG WITH THE RETURN OF INCOME AS THE TDS CERTIFICATE MENTION BY ASSESSING OFFICER WAS RECEIVED BY THE ASSESSEE CO ITS SELF ON 30.06.2010. ASSESSING OFFICER HAS NOT CONSIDERED ASSESSEE'S EXPENSES CLAIMED BY THE ASSES SEE DURING THE ASSESSMENT PROCEEDING ON THE BASIS OF FINAL ACCOUNTS AUDITED B Y STATUTORY AUDITOR APPOINTED BY C & A G. ON MERCANTILE BASIS BY STATIN G THAT ASSESSEE HAS NOT CLAIMED BY FILLING REVISED RETURN OF INCOME. BUT LD . A.O. WAS NOT AGREED WITH THE CONTENTION OF THE ASSESSEE AND MADE TOTAL ADDIT ION OF RS. 35498220/-. 4. AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRST ST ATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DETERMINED INCOME OF THE ASSESSEE AT RS. 9290255/-. HOWEVER, HE ALSO DIRECTED TO VERIFY THE FIGURES GIVEN BY THE AS SESSEE IN ITS ANNEXURE TO THE ORDER OF THE LD. CIT(A) WHEREIN ALL THE DETAILS PER TAINING TO INTEREST AND LEASE CHARGES WERE GIVEN. 5. NOW, REVENUE HAS COME BEFORE US AND STATING THAT LD . CIT(A) HAS ERRED IN LAW AND ON FACTS TO GRANTING TO RELIEF TO THE ASSESSEE. 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. THERE ARE TWO ISSUES BEFORE US. ONE IS RELATING TO ALLOWING INTER EST ON UNPAID LEASE CHARGES OF RS. 73,42,902/- WHICH HAVE NOT CRYSTALLIZED DURING THE YEAR. IN THIS CASE, LD. A.O. HAS TAXED THE INTEREST INCOME ON FDRS ON ACCRU AL BASIS, WHEREAS THE EXPENSES CLAIMED ARE NOT ALLOWED ON THE GROUND THAT THE SAME ARE NOT CLAIMED BY FILING REVISED RETURN AND HENCE THEY ARE NOT ASC ERTAINED LIABILITIES AND NOT CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. A SSESSEES CONTENTION IS THAT REVISED RETURN COULD NOT HAVE BEEN FILED BECAUSE TH E ORIGINAL RETURN ITSELF WAS ITA NOS. 1046/A/1 2 & 1020/A/14 AND ORS. . A.YS. 2008-09, 20 10-11, 2011-12 & ORS. 4 FILED LATE. HOWEVER, IF THE INCOME IS TO BE TAXED O N ACCRUAL BASIS, THEN SIMILARLY, THE EXPENSES ARE ALSO TO BE ALLOWED ON SIMILAR BASI S. 7. IN SUPPORT OF ITS CONTENTION, ASSESSEE CITED A JUDG MENT OF JURISDICTIONAL HIGH COURT IN THE MATTER OF S.R. KOSHTI REPORTED AT 276 ITR 165 (GUJ.) WHEREIN IT IS HELD THAT REAL INCOME IS TO BE TAXED AND IF THERE A RE MISTAKES OR OMISSIONS OR IF THE REAL INCOME IS NOT SHOWN IN THE RETURN, THEN TH E AUTHORITIES UNDER THE ACT ARE REQUIRED TO ASSIST ASSESSEE AND ENSURE THAT ONL Y LEGITIMATE TAXES ARE COLLECTED AS TAX CAN BE COLLECTED ONLY AS PROVIDED UNDER THE ACT. 8. RESPECTFULLY FOLLOWING THE AFORESAID JURISDICTIONAL HIGH COURT, WE DISMISS THIS GROUND OF APPEAL. 9. NOW WE COME TO NEXT GROUND RELATING TO REDUCING LEA SE INCOME BY RS. 2,45,99,415/- WITHOUT CONFIRMING THE FACT WHETHER S AID INCOME IS OFFERED FOR TAX AS PER MERCANTILE SYSTEM FOLLOWED BY ASSESSEE I N EARLIER YEAR. 10. IN THIS CASE, ASSESSEES CONTENTION IS THAT EXPENSE S SHOULD ALSO BE ALLOWED ON ACCRUAL BASIS, JUST AS THE INCOME IS ALSO BEING TAX ED ON ACCRUAL BASIS. AS WE CAN SEE, ASSESSEE HAS WORKED OUT THE EXPENSES AND INCOM E FROM 01/09/2006 I.E. THE DATE FROM WHICH THE ASSESSEE GOT POSSESSION OF LAND FROM GIDC. THIS INDICATES THAT THE BUSINESS OF THE ASSESSEE HAS ALR EADY COMMENCED FROM THAT DATE. LD. A.R. SUBMITTED FOR ASSESSMENT YEAR 2009-1 0 WHEREIN CONTENTION OF THE ASSESSEE WAS ACCEPTED BY THE A.O. AND SAME IS P ART OF PAPER BOOK AT PAGE NOS. 236 & 237 AND SINCE ASSESSEE HAS FOLLOWING MER CANTILE SYSTEM AND LD., A.O. HAS ACCEPTED SIMILAR CONTENTION FOR ASSESSMENT YEAR 2009-10 AND LD. CIT(A) IN THIS CASE DIRECTED THE LD. A.O. TO VERIFY ALL THE DETAILS WHICH WERE FILED BY THE ASSESSEE AND LD. A.O. DID NOT FIND ANY ERROR IN THOSE DETAILS. ITA NOS. 1046/A/1 2 & 1020/A/14 AND ORS. . A.YS. 2008-09, 20 10-11, 2011-12 & ORS. 5 THEREFORE, WE DO NOT FIND ANY MERIT IN THE APPEAL F ILED BY THE REVENUE. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. 12. ITA NO. 1020/AHD/2014 FOR ASSESSMENT YEAR 2010-11. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE INTEREST ON UNPAID LEASE CHARGES OF RS.280006990/- WITHOUT A PPRECIATING THAT LEASE IS FOR A PERIOD OF 99 YEARS AND THAT THE SAME IS NOT ALLOW ABLE AS REVENUE EXPENDITURE. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE LEASE RENT ALLOWANCE OF RS.58714993/- WITHOUT APPRECIATIN G THAT TDS HAS NOT BEEN DEDUCTED. 3. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.58714993/- WITHOUT APPRECIATING THAT THE SAME WOULD NOT BE ALLOWABLE AS REVENUE EXPENDITURE. 4. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW IN ALL OWING THE NA CHARGES OF RS.8208000/- BEING THE CAPITAL EXPENDITURE. 5. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE - DISALLOWANCE OF INFRASTRUCTURE UP GRADATION CHARGES OF RS.44070975/- BY IGNORING THAT THE ASSESSEE HAS MADE SUCH A CLAIM BEFORE IT H AD REACHED FINALITY AND THAT TRUE INCOME OF A PARTICULAR YEAR HAS TO BE TAXED IN THAT YEAR ONLY. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 13. SINCE IN CONNECTING APPEAL IN ITA NO. 1046/AHD/2012 , WE HAVE DISMISSED THE APPEAL OF THE REVENUE FOR SIMILAR GROUND. IN PARITY WITH THE SAID ORDER, WE DISMISS THIS APPEAL OF THE REVENUE. 14. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ITA NOS. 1046/A/1 2 & 1020/A/14 AND ORS. . A.YS. 2008-09, 20 10-11, 2011-12 & ORS. 6 15. ITA NO. 127/AHD/2015 FOR A.Y. 2011-12. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING/DELETING THE INTEREST PAID @ 10% (BEING RS. 11,43,35,059/-) ON LEASE AMOU NT. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN A LLOWING/DELETING LEASE RENT AMOUNTING TO RS.5,48,49,770/-. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN A LLOWING/DELETING THE ADDITION MADE ON ACCOUNT OF NA CHARGES BEING RS. 1,41,89,083 /-. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEA RNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A,O. BE RESTORED TO THE ABOVE EXTENT. 16. SINCE IN CONNECTING APPEAL IN ITA NO. 1046/AHD/201 2, WE HAVE DISMISSED THE APPEAL OF THE REVENUE FOR SIMILAR GROUND. IN PA RITY WITH THE SAID ORDER, WE DISMISS THIS APPEAL OF THE REVENUE. 17. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. 18. ITA NO. 2353/AHD/2015 FOR A.Y. 2012-13. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: I) THE LD.CIT(A) HAS ERRED IN LAW & ON FACTS IN DEL ETING THE ADDITION OF RS.6,61,70,442/- MADE BY THE A.O, ON ACCOUNT OF INT EREST PAYABLE @ 10% P.A. ON LEASE AMOUNT, THE LD.CIT(A) HAS ERRED IN LAW & ON FACTS IN DELE TING THE ADDITION MADE OF RS.5,48,,49,770/- ON ACCOUNT OF AMORTIZATION OF LEA SE AMOUNT AS LEASE RENT TREATING IT AS CAPITAL EXPENDITURE. III) THE LD.CIT(A) HAS ERRED IN LAW & ON FACTS IN D ELETING THE ADDITION OF RS.3,06,29,456/- MADE BY THE A.O.. ON ACCOUNT OF NA CHARGES. IV) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. COMMISSIONER OF INCOME- TAX(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. V) IT IS, THEREFORE PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME- TAX(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSES SING OFFICER BE RESTORED. ITA NOS. 1046/A/1 2 & 1020/A/14 AND ORS. . A.YS. 2008-09, 20 10-11, 2011-12 & ORS. 7 19. SINCE IN CONNECTING APPEAL IN ITA NO. 1046/AHD/2012 , WE HAVE DISMISSED THE APPEAL OF THE REVENUE FOR SIMILAR GROUND. IN PARITY WITH THE SAID ORDER, WE DISMISS THIS APPEAL OF THE REVENUE. 20. IN THE RESULT, APPEALS FILED BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 30 - 04- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 30 /04/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD