Chennai Auto Agency Pvt Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1219/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8762 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Revenue expenditure; Capital expenditure
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI .. , ! , ' #$ BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO. 1219/MDS/2014 ' % &% / ASSESSMENT YEAR : 2005-06 M/S CHENNAI AUTO AGENCY PVT. LTD., 144, ANNA SALAI, CHENNAI - 600 002. PAN : AAACC 4158 L V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3), CHENNAI - 600 034. (!(/ APPELLANT) (*+!(/ RESPONDENT) !( , - / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE *+!( , - / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT . , / / DATE OF HEARING : 04.02.2015 01& , / / DATE OF PRONOUNCEMENT : 04.02.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING T HE ORDER DATED 24.2.2014 PASSED BY LD CIT(APPEALS)-1, CHENNA I AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE LD COUNSEL APPEARING FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAS CARRIED OUT REPAIR WORKS IN A LEAS ED PREMISES AND CLAIMED THE SAME AS REVENUE EXPENDITURE. THE ASSES SING OFFICER, 2 I.T.A. NO. 1219/MDS/2014 BY PLACING RELIANCE ON EXPLANATION 1 TO SEC. 32 O F THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AND ALSO ON THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF M/S SARAVANA SPINNING MILLS PRIVATE LIMITED (293 ITR 201)(SC) HAS TAKEN THE VIEW THAT T HE SAID EXPENDITURE WAS CAPITAL IN NATURE. ACCORDINGLY HE DISALLOWED THE CLAIM OF THE ASSESSEE. THE LD CIT(APPEALS) ALSO CO NFIRMED THE DISALLOWANCE SO MADE BY FULLY PLACING RELIANCE ON E XPLANATION 1 TO SEC. 32 OF THE ACT. 3. THE LD A.R FURTHER SUBMITTED THAT THE EXPLANATIO N 1 TO SEC. 32 SHALL APPLY ONLY IF THE RELEVANT EXPENDITURE IS CAPITAL IN NATURE. THE LD A.R SUBMITTED THAT THE ASSESSEE DID NOT INCU R ANY CAPITAL EXPENDITURE, BUT THE EXPENSES INCURRED WERE PURELY REVENUE IN NATURE, I.E., THEY HAVE BEEN INCURRED ON REPAIRS ON LY. THE LD A.R, IN THIS REGARD, HAS PLACED RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TVS LEAN LOGISTIC (293 ITR 432) AND THIRU AROORAN SUGAR LTD (350 ITR 324). THE LD A.R FURTHER SUBMITTED THAT THE ASSESSEE MAY BE GIVEN ONE MORE O PPORTUNITY TO SATISFY THE ASSESSING OFFICER AS TO THE NATURE OF E XPENDITURE INCURRED AND ACCORDINGLY PRAYED THAT THE MATTER MAY BE SET A SIDE TO THE FILE OF ASSESSING OFFICER. 3 I.T.A. NO. 1219/MDS/2014 4. WE HEARD LD D.R, WHO SUBMITTED THAT THE NATURE O F EXPENDITURE INCURRED WAS CONSIDERED TO BE CAPITAL I N NATURE BY LD CIT(APPEALS). 5. HAVING HEARD RIVAL SUBMISSIONS, WE ARE OF THE VI EW THAT THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO EX PLAIN THE NATURE OF EXPENSES, SINCE THE ASSESSEE CLAIMS THAT IT HAS CARRIED OUT ONLY REPAIR WORK AND DID NOT INCUR ANY CAPITAL EXPENDITURE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(APPEA LS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION OF THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSI ON OF HEARING ON THE 4 TH DAY OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( ! ) ( .. ) (VIKAS AWASTHY) (B.R. BASKARAN) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, A /DATED, THE 4 TH FEBRUARY, 2015. KRI. 4 I.T.A. NO. 1219/MDS/2014 B , *'/C D &/ /COPY TO: 1. !( /APPELLANT 2. *+!( /RESPONDENT 3. . E/ () /CIT(A)-I, CHENNAI 4. . E/ /CIT, CHENNAI-I, CHENNAI 5. FG *'/' /DR 6. GH% I /GF.