Seasons Hotels Pvt.Ltd., Ahmedabad V. The ACIT.,(OSD),Circle-8, Ahmedabad

ITA 1258/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1755 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: P D SHAH
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 32; 37

Judgement Text

ITA NO .1258 / AHD/ 20 1 3 A.Y. 200 9 - 10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S.S. GODARA , JUDICIAL MEMBER ITA NO. 1 258 / AHD /201 3 ASSESSMENT YEAR : 200 9 - 10 SEASONS HOTELS PRIVATE LIMITED , VS. ASST. COMMISSI ONER OF INCOME TAX C/O. MEHTA LODHA & CO., (OSD), CIRCLE - 8, AHMEDABAD. CHARTERED ACCOUNTANTS , 105, SAKAR - I, ASHRAM ROD, AHMEDABAD 380 009. [PAN A A FCS 7065 K ] (APPELLANT ) (RESPONDENT) A PPELLANT BY : SHRI P.D. SHAH , A. R. RE SPONDENT BY : S HRI NARENDRA SINGH , SR. D.R. DATE OF HEARING : 0 5 .04 . 20 16 DATE OF PRONOUNCEMENT : 22 .04.2016 O R D E R PER S.S. GODARA , J.M. TH IS ASSESSEE S APPEAL FOR A SSESSMENT Y EAR 200 9 - 10 , ARISE S FROM ORDER OF THE CIT(A) - XIV , AHMEDABA D DATED 05.04.2013 , PASSED IN CASE NO.CIT(A) XIV/ACIT(OSD) CIR.8/137/2011 - 12 , IN PROCEEDINGS UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE S SOLITARY SUBSTANTIVE GRIEVANCE AVERS THAT THE CIT(A) HAS ERRED IN LAW AND F ACTS IN CONFIRMING ASSESSING OFFICER S ACTION TREATING ITS LICENCE FEE PAID IN THE IMPUGNED A SSESSMENT YEAR AS AN INTANGIBLE ASSET UNDER SECTION 32(1)(II) OF THE ACT NOT ENTITLED AS REVENUE EXPENDITURE. ITA NO .1258 / AHD/ 20 1 3 A.Y. 200 9 - 10 PAGE 2 OF 3 3 . WE COME TO RELEVANT FACTS OF THE CASE. THE ASS ESSEE C OMPANY IS IN HOSPITALITY BUSINESS. IT CLAIMED THE IMPUGNED SUM OF RS.2,29,168/ - PAID AS ANNUAL LICENCE FEE FOR OBTAINING LIQUOR SERVICE PERMISSION AS REVENUE EXPENDITURE. THE ASSESSING OFFICER IN A SSESSMENT O RDER DATED 15.11.2011 TREATED THE SAME AS CAPITAL EXPENDITURE BY HOLDING THAT SECTION 32(1)(II) WAS IN THE NATURE OF SPECIFIC LAWS PRESCRIBING DEPRECIATION RELIEF TO LICENCE AS HAVING OVERRIDING EFFECT ON SECTION 37 OF THE ACT. THIS MADE HIM TO TREAT THE IMPUGNED CLAIM AS CAPITAL EXPENDITURE E NTITLED FOR DEPRECIATION RELIEF @ 20% RESULTING IN IMPUGNED D ISALLOWANCE OF RS.1 , 67 , 876/ - . THE CIT(A) CONFIRMED ASSESSING OFFICER S ACTION. 4 . WE HAVE HEARD BOTH THE PARTIES. THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAS INCURRED THE IMPUGNE D LICENCE FEE SUM AS ANNUAL LIQUOR PERMISSION EXPENDITURE RENEWABLE FROM YEAR TO YEAR. BOTH THE AUTHORITIES PLACE RELIANCE ON SECTION 32(1)(II) OF THE ACT TO CONCLUDE THAT IT IS A CAPITAL EXPENDITURE BEING SPECIFICALLY PRESCRIBED ITEMS THEREIN. WE DO NOT FIND ANY ENDURING ADVANTAGE ACCRUED TO THE ASSESSEE ON INCURRING THE IMPUGNED LICENCE FEE. A CO - ORDINATE BENCH IN ITA NO. 2902/AHD/2011 - CA DILA HEALTH C ARE LIMITED VS. ADDITIONAL CIT DECIDED ON 24.01.2013 HOLDS THAT SUCH A REVENUE EXPENDITURE CLAIM S INCU RRED ON ANNUAL LICENCES OR REGISTRATION WHICH ARE OTHERWISE OF NOT CAPITAL EXPENDITURE CREATING NEW RIGHT OF PERMANENT CHARACTER ARE NOT TO BE DISALLOWED MERELY BECAUSE OF THE FACT THAT SECTION 32 ALLOWING DEPRECIATION RELIEF CONTAIN S SPECIFIC EXPRESSIONS T HEREIN. THE LEARNED CO - ORDINATE BENCH IN OTHER WORDS HOLDS THAT THESE REVENUE EXPENSES ARE ALLOWABLE INSPITE OF SECTION 32(1) OF THE ACT PROVIDING DEPRECIATION RELIEF. THE REVENUE IS UNABLE TO POINT OUT ANY DISTINCTION ON FACTS OR LAW. WE HOLD IN THESE FACTS AND CIRCUMSTANCES THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN REJECTING ASSESSEE S REVENUE EXPENDITURE CLAIM ON ANNUAL LIQUOR PERMISSION LICENCE FEE OF RS.2,29,168/ - . THE IMPUGNED DISALLOWANCE IS ACCORDINGLY DELETED. ITA NO .1258 / AHD/ 20 1 3 A.Y. 200 9 - 10 PAGE 3 OF 3 5 . THIS ASSESSEE S APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON TH E 22 ND DAY OF APRIL , 201 6 . SD/ - SD/ - PRAMOD KUMAR S .S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 22 ND DAY OF APRIL , 2016 PBN/* COP IES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD