ACIT Circle-1(1) Panaji, Panaji V. Dr. Prafulla R. Hede, Panaji

ITA 119/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93528 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-06-2015
• Assessment Year: misc
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANGARI LD
• Assessee Lawyers: D E ROBINSON
• Keywords: Capital asset; Revenue expenditure; Capital expenditure
• Section: 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER ITA N O . 119 /PNJ/20 14 : (A.Y 2007 - 08) ACIT, CIRCLE - 1(1), PANAJI ( APPELLANT) VS. DR. PRAFULLA R. HEDE C/O. HEDE CONSULTANCY CO. PVT. LTD., DR. MALBARAO ROAD, RUA ISAMAEL GRACIAS, PANAJI, GOA. PAN : AAIPH6374A (RESPONDENT) ITA N O . 120 /PNJ/20 14 : (A.Y 2007 - 08) ACIT, CIRCLE - 1(1), PANAJI ( APPELLANT) VS. MRS. SHOBHA P. HEDE C/O. HEDE CONSULTANCY CO. PVT. LTD., DR. MALBARAO ROAD, RUA ISAMAEL GRACIAS, PANAJI, GOA. PAN : AARPH2237D (RESPONDENT) ASSESSEES BY : D. E . ROBINSON, ADV. REVENUE BY : M.R. BANGARI, LD. DR DATE OF HEARING : 10 / 06 /201 5 DATE OF PRONOUNCEMENT : 10 / 06 /201 5 O R D E R 1. ITA NO. 119/PNJ/2014 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), PANAJI IN ITA NO. 246/PNJ/2009 - 10 DT. 24.12.2013 FOR THE A.Y 2007 - 08 IN THE CASE OF DR. PRAFULLA R. HEDE. ITA NO. 120/PNJ/2014 IS AN APPEAL FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A), PANAJI IN ITA NO. 245/PNJ/2009 - 10 DT. 24.12.2013 FOR THE A.Y 2007 - 08 IN THE CASE OF MRS. SHOBHA P. HEDE, WIFE OF DR. PRAFULLA R. HEDE. SHRI M.R. BANGARI, LD. DR 2 ITA NOS. 119 & 120/PNJ/2014 (A.Y : 2007 - 08) REPRESENTED ON BEHALF OF THE REVENUE AND SHRI D.E. ROBINSON , ADV. REPRESENTED ON BEHALF OF THE ASSESSEES. 2. IT WAS SUBMITTED BY THE LD. DR THAT IN BOTH THE APPEALS THE ISSUES WAS COMMON AND IDENTICAL. IT WAS THE SUBMISSION THAT THE ONLY ISSUE I N BOTH THE APPEALS WERE AGAINST THE ORDER OF LD. CIT(A) IN DELETIN G THE ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF AFFORESTATION CHARGES PAID TO THE DY. CONSERVATOR OF FOREST AS REVENUE EXPENDITURE WHEREAS THE AO HAD HELD THE SAME AS CAPITAL EXPENDITURE. IT WAS THE SUBMISSION THAT IN 2002 THE HON'BLE SUPREME COURT OF INDIA HAD DIRECTED THE STATE GOVERNMENT TO COLLECT AFFORESTATION CHARGES FROM THE MINE OWNERS FOR THE USE OF THE FOREST LAND FOR NON - FOREST PURPOSES SUCH AS MINING. IT WAS THE SUBMISSION THAT CONSEQUENT TO THE SAID DECISION OF THE HON'BLE SUPREME COURT, T HE AFFORESTATION CHARGES HAD BEEN COLLECTED. IT WAS THE SUBMISSION THAT THE AFFORESTATION CHARGE IS A CESS OR FEE COLLECTED BY THE STATE GOVERNMENT. IT WAS THE SUBMISSION THAT THE AO HAD HELD THAT THE SAID EXPENDITURE WAS IN THE NATURE OF CAPITAL EXPENDI TURE INSOFAR AS IT GIVES AN ENDURING BENEFIT TO THE ASSESSEES AND IT WAS NON - RECURRING OUTLAY AND IT HELPED THE ASSESSEES TO PERFORM THE MINING ACTIVITY ON THE FOREST LAND FOR A NUMBER OF YEARS. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 3. IN REPLY, THE LD. AR SUBMITTED THAT FOR THE IMMEDIATELY PRECEDING YEAR THIS ISSUE HAD COME UP IN AN ORDER U/S 263 PASSED BY THE COMMISSIONER OF INCOME TAX, PANAJI AND THE SAID ORDER U/S 263 WAS THE SUBJECT MATTER OF AN APPEAL BEFORE THE INCOME TAX APPELLATE T RIBUNAL WHICH HAD VIDE ORDER IN ITA NO. 135 & 136/PNJ/2011 DT. 29.8.2011 HELD THE SAID EXPENDITURE TO BE REVENUE EXPENDITURE. IN THE SAID ORDER IN PARA 13, THE COORDINATE BENCH OF THIS TRIBUNAL HAD HELD AS FOLLOWS : 3 ITA NOS. 119 & 120/PNJ/2014 (A.Y : 2007 - 08) 8. HE FURTHER HELD THAT THE EXPENDITU RE IS RELATABLE TO THE CAPITAL ASSET AND IS ON NON RECURRING OUTLAY. THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE IN LUMP SUM. THE PAYMENTS BEING NON - RECURRING IN NATURE AND PAID IN LUMPSUM TOWARDS ACQUIRING A RIGHT TO PERFORM ACTIVITIES TO DERIVE BENEFIT A RE TO BE TREATED AS CAPITAL EXPENDITURE. RELIANCE HAS BEEN PLACED ON JCIT VS MUKUND LTD 291 ITR (SB) (MUMBAI ITAT) 249 AND CONTINENTAL TOURIST HOME VS CIT 234 ITR 65 (KER) CONSIDERING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS ACTUALLY IN THE NATURE OF ACQUIRING OR IMPROVING FIXED ASSET AND BENEFIT ON THIS ACCOUNT IS NORMALLY AVAILABLE TO THE ASSESSEE FOR NORMAL OR SUBSEQUENT ASSESSEE I.E LASTING UPTO A PERIOD OF 30 YEARS IS TO BE TAKEN AS CAPITAL IN NATURE IN TERMS OF THE FOLLOWING JUDGEMENTS ; (1) R.B. SETH MOOLCHAND SUGANDHCHAND VS CIT (1972) 86 ITR 647 (2) ENTERPRISING ENTERPRISES VS CIT (2004) 268 ITR 95 (MAD) (3) CIT VS TATA HONEYWELL LTD (2005) 93 ITR 507 9. SINCE THE ASSESSING OFFICER HAS FAILED TO HOLD THIS PAYMENT AS EXPENDITURE OF CAPITAL NATURE THE ORDER PASSED BY HIM HAS BEEN HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE THEREFORE SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTION OF THE ASSESSING OFFICER TO DISALLOW THE AFFORESTATION CHARGES PAID BY THE TREATING THE SAME AS AN EXPENDITURE OF CAPITAL IN NATURE. 10. THE LEARNED COUNSEL FOR THE ASSESSES MADE ELABORATE ARGUMENTS INTER ALIA EXPLAINING THE SCHEME UNDER WHICH THE AMOUNT OF EXPENDITURE WAS LIABLE TO BE PAID. THE EXPENDITURE INCURRED IS STATED TO BE WHOLL Y AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND IN NO TERMS IT WAS CAPITAL EXPENDITURE NOR ANY ENDURING BENEFIT THERE FROM HAS ARISEN TO THE ASSESSEE. THE VIEW ENTERTAINED BY THE ASSESSING AUTHORITY IS AFTER CONSIDERING THE ISSUE IN DETAIL AND INFORMATIO N THAT CAME TO BE CONSIDERED BY HIM IS PLACED IN HIS PAPER BOOK. THE ASSESSING OFFICER THUS TOOK CONSIDERED VIEW AND THUS HIS ORDER IS SUSTAINABLE IN LAW WHEREAS THE LEARNED CIT TOOK A VIEW ON ERRONEOUS ASSUMPTIONS AND HAD DRAWN CONCLUSION CONTRARY TO FACT S ON RECORD. RELIANCE HAS BEEN PLACED ON JUDICIAL PRONOUNCEMENTS BY APEX COURT AS WELL AS RAJASTHAN HIGH COURT. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE CONFIRMED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THIS ISSUE AS TO WHETHER THE AFFORESTATION CHARGES IS CAPITAL EXPENDITURE OR REVENUE EXPENDITURE HAS ALREADY BEEN DECIDED IN THE ASSESSEES OWN CASE FOR THE A.Y 4 ITA NOS. 119 & 120/PNJ/2014 (A.Y : 2007 - 08) 2006 - 07, WHEN DECIDING THE ISS UE U/S 263 AS HAS BEEN EXTRACTED HEREINABOVE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL THE FINDING OF THE LD. CIT(A) ON THIS ISSUE STANDS CONFIRMED. 5. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/06/2015. S D / - (N.K. BILLAIYA) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 0 /06/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT - (I) DR. PRAFULLA R. HEDE & (II) MRS. SHOBHA P. HEDE (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 5 ITA NOS. 119 & 120/PNJ/2014 (A.Y : 2007 - 08) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 10/06/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 10/06/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 10/06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 10/06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 10/06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 10/06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 10/06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER