M/s Vardhman Textiles Limited, Ludhiana V. ACIT, Ludhiana

ITA 1347/CHANDI/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6076 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1996-1997
• Appeal Filed On: 28-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital receipt; Revenue expenditure; Capital expenditure

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “बी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ी एन.के .सैनी, उपा य! एवं ी स ु धांश ु ीवा&तव, या(यक सद&य BEFORE: SHRI. N.K.SAINI, VP & SHRI. SUDHANSHU SRIVASTAVA, JM ITA NO.1347/Chd/2018 Assessment Year : 1996-97 M/s Vardhman Textiles Limited Vardhman Premises Chandigarh Road Ludhiana-Punjab The ACIT Range-1, Ludhiana- Punjab PAN NO: !"#$ % Appellant &' % Respondent ( ) * + Assessee by : Shri Pankaj Gupta, Advocate , * + Revenue by : Dr. Ranjeet Kaur, Sr. DR - . * ) / Date of Hearing : 25/03/2022 0123 * ) / Date of Pronouncement : 25/03/2022 आदेश/Order PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order dt. 21/08/2018 of the Ld. CIT(A)-2, Ludhiana. 2. Following grounds has been raised in this appeal: 1. That the Order passed by the Ld.CIT(A) is contrary to law and facts of the case. 2. That the Ld. CIT(A) erred in law and on facts in not allowing expenditure of Rs. 58.33 lacs paid to Punjab State Electricity Board as revenue expenditure. 3. That without pre-judice to above ground, the Ld. CIT(A) erred in not adjudicating the additional / alternate ground taken by the assessee regarding allowing depreciation on the amount of Rs. 58.33 lacs. From the aforesaid grounds it is gathered that the only grievance of the assessee relates to the expenditure of Rs. 58.33 lacs paid to Punjab State 2 Electricity Board (PSEB) claimed as revenue expenditure but considered by the AO as capital in nature. 3. Facts of the case in brief are that the assessee filed its return of income on 29/11/1996 declarign an income of Rs. 2,68,39,520/-, later on the case was selected for scrutiny. The assessee in the year 1994 applied for extension of power load to PSEB which was approved and the cost of 66 KV circuit was equally apportioned amongst three consumers i.e; the assessee, M/s Aarti Steels and M/s Punjab Con-Cast Steels, Ludhiana. The total cost came to Rs. 175.00 Lacs out of which the assessee’s share came to Rs. 58.33 Lacs. The assessee filed additional claim before the AO for allowing Rs. 58.33 Lacs as revenue expenditure which the AO denied. Thereafter the assessee filed an appeal before the Ld. CIT(A) who directed the AO to verify the claim, however the AO did not allow on the ground that the assessee had not claimed the said expenditure in its revised return. The assessee again approached the Ld. CIT(A) who confirmed the action of the AO vide order dt. 29/03/2007. 4. Being aggrieved the assessee carried the matter to the ITAT wherein vide order dt. 31/03/2008 the issue was remitted back to the CIT(A) to verify the facts whether the impugned amount was revenue or capital in nature and as to whether the claim of the assessee was allowed on identical facts in the preceding and subsequent assessment years. 5. The assessee raised the additional ground before the Ld. CIT(A) who vide order dt. 21/08/2018 held that the expenditure incurred by the assessee was in the nature of capital expenditure and could not be allowed as revenue expenditure. 6. Now the assessee is in appeal. 7. The Ld. Counsel for the assessee at the very outset stated that this issue is squqrely covered by the order dt. 28/05/2020 in ITA No. 484/Chd/2019 to 3 486/Chd/2019 for the A.Y. 2008-09, 2009-10 & 2013-14 respectively and in ITA No. 787/Chd/2015 & 483/Chd/2016 for the A.Y 2011-12 & 2012-13 vide order dt. 14/03/2019, the copies of the said orders were furnished which are placed on record. 8. In her rival submissions the Ld. Sr. DR supported the impugned order passed by the Ld. CIT(A). 9. We have considered the submissions of both the parties and perused the material available on the record. It is noticed that an identical issue having similar facts had been adjudicated vide order dt. 28/05/2020 in ITA No. 484 to 486/Chd/2019(supra) wherein the relevant findings have been given in para 28 to 33 which read as under: 28. Ground of appeal No.7 raised by the assessee relates to the treatment of line/bay charges amounting to Rs.4,00,72,000/- as capital expenditure; 29. Briefly stated, the facts relating to the issue are that the assessee had paid line/bay charges in its unit Anant Spinning Mills and Vardhman Yarns, both located in Madhya Pradesh Electricity Board amounting to Rs.4,00,72,000/-. The assessee had claimed the said expenditure as revenue contending before the AO that the said expenditure had been incurred for augmenting the business activities of the assessee company and the ownership of the assets so created vested with the State Electricity Board and the amount was not refundable at any stage. The explanation of the assessee did not find favour with the AO who treated the same as capital expenditure and allowed department on the same. 30. The Ld.CIT(A) upheld the order of the AO. 31. Before us the Ld.Counsel for the assessee pointed out that this issue stood adjudicated in favour of the assessee in its own case by the ITAT in assessment years 2011-12 and 2012-13 in ITA No.787/Chd/2015 and ITA No.483/Chd/2016 dated 14.3.2019. Our attention was drawn to the relevant findings of the ITAT in paras 33 and 34 of the order as under: “33. G round No .14 : Vide ground No.14, the assessee has agitated the action the CIT(A) in treating the line/bay charges as capital receipt instead of Revenue receipt. 34. The Ld. Counsel for the assessee has invited our attention to the decision of the Tribunal in the own case of the assessee for assessment year 2007-08 in ITA No. 1430/Chd/2010 order dated 31.3.2010, wherein, the Tribunal after discussing the details upheld the order of the CIT(A) in that year treating the aforesaid expenditure as Revenue expenditure. No contrary decision has been cited before us. In view of this, the issue is accordingly decided in favour of the 4 assessee and the Assessing officer is directed to treat the aforesaid expenditure as Revenue expenditure.” The Ld.Counsel for the assessee, therefore, contended that the issue stood covered in favour of the assessee. 32. The Ld. DR though fairly conceded to the above, however, relied upon the orders of the authorities below. 33. In view of the above since identical issue already stands decided in favour of the assessee by the ITAT in assessment year 2011-12 and 2012-13 and no distinguishing facts have been brought to our notice by the Ld. DR, the said decision will apply in the present case Assessing Officer, following which we hold that the line/bay charges to be revenue in nature. Ground of appeal NO.7 raised by the assessee is accordingly, allowed. Since the facts for the year under consideration are similar to the facts involved in ITA No. 484 to 486/Chd/2019 (supra). So respectfully following the aforesaid referred to order dt. 28/05/2020 of ITAT in assessee’s own case, we direct the AO to treat the impugned expenditure as revenue in nature. 10. In the result, appeal of the assessee is allowed. (Order pronounced in the open Court on 25/03/2022) Sd/- Sd/- स ु धांश ु ीवा&तव एन.के .सैनी, (SUDHANSHU SRIVASTAVA) ( N.K. SAINI) या(यक सद&य/ JUDICIAL MEMBER उपा य! / VICE PRESIDENT AG Date: 25/03/2022 1 4 * & )5 6 7 6 ) Copy of the order forwarded to : 1. % The Appellant 2. &' % The Respondent 3. - 8) CIT 4. - 8) 9 : The CIT(A) 5. 6 ; ग & ) = > / = > ?@A गB DR, ITAT, CHANDIGARH 6. ग A C . Guard File