The Jtcit (Asstt) Sr-2, Ahmedabad V. M/S Mihir Textile Ltd, Ahmedabad

ITA 1106/AHD/2001

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0441 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-11-2009
• Assessment Year: 1991-1992
• Appeal Filed On: 15-05-2001
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Cost of acquisition; Revenue expenditure; Capital expenditure
• Section: 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B, AHMEDABAD BEFORE SHRI HL KARWA, JM AND SHRI DC AGARWAL, AM I.T.A. NO.1106/A/2001 (ASSESSMENT YEAR 1991-92) JCIT, SR-2 VS MIHIR TEXTILES LTD AHMEDABAD MAFATLAL HOUSE H.T. PAREKH MARG BACKBAY RECLAMATION, MUMBAI-20 PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PR GHOSH RESPONDENT BY: SHRI TUSHAR P HEMANI O R D E R D.C. AGARWAL : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-IV, AHMEDABAD FOR THE ASSESSMENT YEAR 1991-92. 2. THIS IS A RECALLED MATTER. VIDE ORDER DATED 09- 10-2006 IN MA NO.230/AHD/2007 THE TRIBUNAL RECALLED THE ORDER OF THE TRIBUNAL DATED 26-12- 2006 FOR THE LIMITED PURPOSE OF DISPOSING OF GROUND NO.1(IV). THE TRIBUNAL WHILE RECALLING THE ORDER HAS OBSERVED THAT GROUND NO.1(IV) HAS NOT BEEN CORRECTLY DISPOSED OF IN THE SENSE THAT TRIBUNAL HA D RELIED UPON CIT VS BHARAT SURYODAYA MILLS CO LTD REPORTED IN 202 ITR 942 (GUJ ) WHICH IS IN FAVOUR OF THE REVENUE WHEREAS THE APPEAL HAD BEEN DECIDED IN FAVO UR OF THE ASSESSEE. THE TRIBUNAL, THEREFORE, RECALLED THE ORDER DATED 2 6-12-2006 ON THE FOLLOWING BASIS TO DISPOSE OF GROUND NO.1(IV) AFRESH: 6. IT IS PERTINENT TO NOTE THAT THE TRIBUNAL RELIE D ON THE DECISION OF CIT VS BHARAT SURYODAYA MILLS CO LTD RE PORTED IN 202 ITR 942 (GUJ) WHICH PRIMA-FACIE REQUIRE TO EXAMINE THE NATURE OF EXPENDITURE. ADMITTEDLY, IN THE SAID JUDGMENT THE HON'BLE GUJARAT HIGH COURT HELD THAT COMMISSION PAID FOR PROVIDING GUARANTEE FOR PURCHASE OF MACHINERY ETC. IS INTEGRAL PART OF COST OF ACQUISITION OF CAPITAL ASSETS AND THE SAME IS NOT ALLOWABLE AS REV ENUE EXPENDITURE. WHEN THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) IS MERGED WIT THE ORDER OF THE TRIBUNAL IN ITA 1106/A/2001 2 THAT EVENT ONE HAS TO LOOK AT THE ORDER OF THE TRIB UNAL AND NOT THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS). AS A MATTER OF FACT, IN PARA 9 IN PAGE 3 OF THE ORDER OF THE TRIBUNAL THERE IS NO DISCUSSION REGARDING FACTS ETC., BIFURCATION OF THE AMOUNT OF RS.10,83,343/-. IN THIS VIEW OF T HE MATTER, IN OUR CONSIDERED OPINION IT WOULD MEET END OF JUSTICE IF THE DECISION OF THE TRIBUNAL IN GROUND NO.4 OF THE REVENUES APPEAL FOR ASSESSMENT YEAR 1991-92 IS RECALLED FOR DECIDING AF RESH AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES AND IN ACCORDANCE WITH LAW. FOR THIS LIMITED PURPOSE, I.E . FOR RE- ADJUDICATING THE GROUND NO.4 OF THE APPEAL FOR ASSE SSMENT YEAR 1991-92 IN ITA NO.1106/AHD/2001, THE DECISION OF TH E TRIBUNAL IS RECALLED AND THE REGISTRY IS DIRECTED TO FIX THE AP PEAL NO. ITA 1106/AHD/2007 (SIC) FOR ASSESSMENT YEAR 1991-92 IN DUE COURSE OF TIME. 3. THUS, THE MATTER CAME UP BEFORE US FOR READJUDIC ATION OF GROUND NO.1(IV), WHICH READS AS BELOW: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN : (IV) DELETING DISALLOWANCE OF BANK GUARANTEE COMMISSION RS.10,83,343/-. 4. THE FACTS LEADING TO THE ISSUE ARE THAT THE ASSE SSEE CLAIMED BANK GUARANTEE COMMISSION RELATING TO EXCISE DUTY AND IN SURANCE ON PLANT AND MACHINERY AS REVENUE EXPENDITURE BUT THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF RS.10,27,895 BEING BANK GUARANTEE COMM ISSION PAID IN RESPECT OF EXCISE DUTY AND INSURANCE. IN ADDITION, HE ALSO DISALLOWED A SUM OF RS.73,928 BEING THE BANK GUARANTEE COMMISSION DIREC TLY ON PLANT AND MACHINERY. THE ASSESSEE HAD CLAIMED THAT SUM OF RS .10,27,895 BEING THE TOTAL BANK GUARANTEE COMMISSION ALSO INCLUDE A SUM OF RS.73,928 BEING THE GUARANTEE COMMISSION ON PLANT AND MACHINERY, BUT TH E ASSESSING OFFICER DID NOT AGREE AND MADE TWO SEPARATE ADDITIONS, ONE FOR RS.10,27,895 AND THE OTHER OF RS.73,928. THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) TREATED THE BANK GUARANTEE COMMISSION AS A WHOLE AS REVENUE EXPENDITURE IN VIEW OF THE JUDGMENT OF THE HON'BLE APEX COURT IN C IT VS AKKAMAMBA TEXTILES LTD 227 ITR 464 (SC) WHEREIN IT IS HELD TH AT GUARANTEE COMMISSION PAID TO BANKS AND INSURANCE COMPANY FOR INSURING DE FERRED PAYMENT OF PURCHASE CONSIDERATION OF MACHINERY WILL CONSTITUTE REVENUE EXPENDITURE. HE ITA 1106/A/2001 3 ACCORDINGLY ALLOWED THE CLAIM IN RESPECT OF SUM OF RS.10,27,095. HE ALSO HELD THAT SUM OF RS.73,928 IS INCLUDED IN THE SUM O F RS.10,27,895 AND THEREFORE, THAT ADDITION WAS ALSO DELETED. HOWEVER , HE REVERSED THE DEPRECIATION OF RS.18,480 ALLOWED BY THE ASSESSING BY CAPITALISING THE IMPUGNED EXPENDITURE. 5. WE HAVE HEARD THE PARTIES. WE ARE OF THE CONSID ERED VIEW THAT THE ISSUE IS NOW FULLY COVERED BY THE DECISION OF THE H ON'BLE SUPREME COURT REFERRED TO ABOVE WHICH HAVE BEEN SUBSEQUENTLY FOLL OWED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF AMBICA MILLS LTD VS CIT (1999) 235 ITR 264 (GUJ); CIT VS ROHIT MILLS LTD (1999) 236 ITR 436 (G UJ); VIKRAM MILLS LTD VS CIT (2000) 242 ITR 290 (GUJ); SINDH BIOTECHS LTD VS CIT (2003) 259 ITR 222 (GUJ); SINDH BIOTECHS LTD VS CIT (2007) 288 ITR 572 (GUJ); AND ELSCOPE PVT LTD VS CIT (2009) 313 ITR 293 (GUJ). THE RATIO OF THESE DECISIONS IS THAT BANK GUARANTEE COMMISSION WHETHER PAID IN RESPECT O F ITEMS OF CAPITAL EXPENDITURE OR IN RESPECT OF ITEMS OF REVENUE EXPEN DITURE WOULD ALWAYS BE IN THE REVENUE FIELD. THEREFORE, RESPECTFULLY FOLLOWI NG ABOVE JUDGMENTS OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE DECIDE THE IS SUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. GROUND 1(IV) RAI SED BY THE REVENUE IS DISMISSED. 6. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. 7. ORDER PRONOUNCED ON 13 TH DAY OF NOVEMBER, 2009. SD/- SD/- (H.L. KARWA) (D.C. AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DT : 13 TH NOVEMBER, 2009 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-(A) 4. THE CIT 5. THE DR, B BENCH /TRUE COPY/ DY. REGISTRAR / ASST.REGISTRAR ITAT, AHMEDABAD BENCHES