ITO, Chandigarh V. M/s T.K. India (P) Ltd., Chandigarh

ITA 1120/CHANDI/2012

• Counselvise Citation: 112021514 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR
• Keywords: Tax effect; Capital expenditure
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 1120/CHD/2012 ASSESSMENT YEAR: 2007-08 THE ITO, VS M/S T.K. INDIA (P) LTD., WARD 1(2), PLOT NO. 346, CHANDIGARH. INDUSTRIAL AREA, PHASE-II, CHANDIGARH. PAN: AABCT2502N & CO 51/CHD/2012 IN ITA NO. 1120/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S T.K. INDIA (P) LTD., VS THE ITO, PLOT NO. 346, WARD 1(2), INDUSTRIAL AREA, PHASE-II, CHANDIGARH. CHANDIGARH. PAN: AABCT2502N (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SUSHIL KUMAR ASSESSEE BY : NONE DATE OF HEARING : 28.12.2015 DATE OF PRONOUNCEMENT : 29.12.2015 O R D E R PER BHAVNESH SAINI,JM THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTION BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 24.08.2012 FOR ASSESSMENT YEAR 2007-08. 2 2. ACCORDING TO CIRCULAR NO. 21/2015 DATED 10.12.2 015, THE CBDT IN SUPERCESSION OF EARLIER INSTRUCTIONS HA S DIRECTED THAT DEPARTMENTS APPEALS BEFORE ITAT SHAL L NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMIT OF RS. 10 LACS. THE TAX WILL NOT IN CLUDE ANY INTEREST THEREON. IT IS FURTHER CLARIFIED THAT IF IN THE CASE OF AN ASSESSEE, DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SO SP ECIFIED. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PEND ING APPEALS AND APPEALS TO BE FILED HENCEFORTH BEFORE T HE TRIBUNAL. THE PENDING APPEALS BELOW THE SPECIFIED T AX LIMIT MAY BE WITHDRAWN/NOT PRESSED. 3. ADMITTEDLY, IN THE DEPARTMENTAL APPEAL, THE TAX EFFECT IS LESS THAN RS. 10 LACS, THEREFORE, DEPARTMENTAL A PPEAL IS NOT MAINTAINABLE. THE LD. CIT(APPEALS) DECIDED THE ISSUE IN DEPARTMENTAL APPEAL ON FACTS AND THE CASE OF THE RE VENUE WOULD NOT FALL IN THE EXCEPTIONS PROVIDED IN THE AB OVE CIRCULAR. 4. IN VIEW OF THE ABOVE, LD. DR STATED THAT SINCE DEPARTMENTAL APPEAL IS FILED AGAINST THE CBDT INSTRUCTIONS, THEREFORE, HE WOULD NOT BE PRESSING DEPARTMENTAL APPEAL. THEREFORE, THE ABOVE DEPARTME NTAL APPEAL IS DISMISSED BEING NOT PRESSED. 3 5. THE ASSESSEE IN THE CROSS OBJECTION HAS CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN DENYING THE DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT I N A SUM OF RS. 2,07,129/-. THE ASSESSING OFFICER FROM THE PROFIT & LOSS ACCOUNT NOTICED THAT ASSESSEE HAS DEB ITED A SUM OF RS. 2,07,129/- UNDER THE HEAD LOSS ON SAL E OF ASSET. THE ASSESSING OFFICER OBSERVED THAT THE LO SS ON SALE OF ASSET IS NOT AN ALLOWABLE EXPENDITURE UNDER THE INCOME TAX ACT. THIS AMOUNT IS TO BE REDUCED FROM THE RELEVANT BLOCK OF ASSET. THE AMOUNT WAS ACCORDINGL Y, DISALLOWED AND SAME WAS EXCLUDED WHILE MAKING COMPUTATION OF INCOME FOR THE PURPOSE OF CALCULATIO N OF EXEMPTION UNDER SECTION 10B OF THE INCOME TAX ACT. 6. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT EXPENDITURE IS NOT ALLOWABLE BUT PROFIT IS INC REASED BY THE SAME AMOUNT FOR COMPUTING DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT AND RELIED UPON O RDER OF ITAT CHANDIGARH BENCH IN THE CASE OF BNAL PREFAB (P) LTD. DATED 27.06.2012 AND DECISION OF HIMACHAL PRAD ESH HIGH COURT IN THE CASE OF ALLIED INDUSTRIES. THE LD . CIT(APPEALS) NOTED THAT THE ORDER OF CHANDIGARH BEN CH IS NOT SUBMITTED BEFORE HIM AND THIS ISSUE IS NOT A RISING FROM THE JUDGEMENT OF ALLIED INDUSTRIES (SUPRA). T HE LD. CIT(APPEALS), THEREFORE, HELD THAT THE LOSS ON SALE OF ASSET IS A CAPITAL LOSS AND IS NOT ALLOWABLE AS DED UCTION AS SUCH. IT WAS ALSO HELD THAT SAME AMOUNT, THEREF ORE, 4 CANNOT BE CONSIDERED FOR THE PURPOSE OF EXEMPTION UNDER SECTION 10B OF THE INCOME TAX ACT. 7. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT I N THE CROSS OBJECTION OF THE ASSESSEE. THE ASSESSEE HAS FAILED TO EXPLAIN BEFORE THE AUTHORITIES BELOW AS T O HOW THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTIO N 10B OF THE INCOME TAX ACT ON SUCH ADDITION WHICH IS CLE ARLY CAPITAL EXPENDITURE IN NATURE. THE ASSESSEE ALSO ADMITTED BEFORE LD. CIT(APPEALS) THAT THIS EXPENDIT URE IS NOT ALLOWABLE. IN THE ABSENCE OF ANY REPRESENTA TION FROM THE SIDE OF THE ASSESSEE, WE DO NOT FIND ANY M ERIT IN THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE. THE SAME IS ACCORDINGLY, DISMISSED. 8. IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE I S DISMISSED. 9. IN THE RESULT, DEPARTMENTAL APPEAL AS WELL AS CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH DECEMBER, 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD