Goenca Resorts Pvt. Ltd., Calangute V. The Addl. Commissioner of Income Tax, Range-2, Panaji., Panaji

ITA 136/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1239 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 12-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Assessee Lawyers: D E ROBINSON
• Keywords: Capital asset; Depreciation; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 136 /P A N/201 6 (ASST. YEAR : 20 06 - 07 ) GOENCA RESORTS PVT. LTD., 111, HOTEL ORFIL, CALANGUTE, BARDEZ, NORTH GOA. VS. ADDL. CIT, RANGE - 2, PANAJI - GOA. PAN NO. AAACG 7218 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.E. ROBINSON ADV. DEPARTMENT BY : SHRI RAVIRAJ Y.V. - DR DATE OF HEARING : 2 1 / 0 9 /201 6 . DATE OF PRONOUNCEMENT : 21 / 0 9 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI - 1 IN APPEAL NO. 112/PNJ/08 - 09 , DATED 0 2/0 8 /201 3 FOR THE ASSESSMENT YEAR 2006 - 07. 2. SHRI D.E. ROBINSON, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI RAVIRAJ Y.V. REPRESENTED ON BEHALF OF THE REVENUE. 3 . IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE ASSESSEE IS RUNNING A RESORT BY THE SIDE OF A LAKE. FOR THE PURPOSE OF RESORT AND THE USE OF GUESTS, THE ASSESSEE HAD ADVANCED PAYMENT OF 5,53,042/ - TO FUTURE BEACH CORPORATION, POINT CLARK, CANADA FOR PURCHASE OF BOATS. IT WAS THE SUBMISSION THAT THE SAID 2 ITA NO. 136 /P A N/201 6 ADVANCE WAS IN THE NATURE OF CIRCULATING CAPITAL , HOWEVER, THE SAID CORPORATION WHICH WAS TO SUPPL Y BOATS, WHE T BANKRUPT AND AS THE TRANSACTION WAS WITH THE CANADA COMPANY AND AS THE COST OF LITIGATION WOULD BE FAR HIGHER THAN THE ADVANCE GIVEN BY THE ASSESSEE COMPANY , T HE ASSESSEE COMPANY WROTE OF F THE ADVANCES PAID TO THE FOREIGN COMPAN Y FOR PURCHASE OF THE BOATS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD CLAIMED THE SAME AS A BUSINESS LOSS/ BAD DEBT. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER TREATED THE ADVANCE TO HAVE BEEN MADE ON THE CAPITAL FIELD ON THE GROUND THAT THE PURCHASE OF THE BOATS WOULD GIVE BENEFIT OF ENDURING NATURE T O THE ASSESSEE AND CONSEQUENTLY, DISALLOWED THE CLAIM OF BAD DEBTS / BUSINESS LOSS AND HELD THE SAME AS A LOSS OF CAPITAL. IT WAS SUBMI TTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE BOATS WERE FOR THE PURPOSE OF THE BUSINESS OF RESORT RUN BY THE ASSESSEE AND THE ADVANCES GIVEN WERE IN THE COURSE OF BUSINESS OF THE ASSESSEE, CONSEQUE N TLY , THE SAME WAS LIABLE TO BE ALLOWED AS A BUSINESS LOSS. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS NOT ATTEMPTING TO START A NEW LINE OF BUSINES S. ADMITTEDLY, ONCE BOATS WERE PURCHASED AND DELIVERED, IT WOULD BECOME CAPITAL ASSETS IN THE HANDS OF THE ASSESSEE AND THE ASSESSEE WOULD BE ENTITLED TO DEPRECIATION ON THE SAME . BUT AS THE ADVANCE ITSELF WAS LOS T AND THE SAME WAS GIVEN IN THE COURSE OF THE ASSESSEES RESORT BUSINESS, THE SAME WAS LIABLE TO BE ALLOWED AS BUSINESS LOSS. 4 . IN REPLY, LEARNED STANDING COUNSEL ON BEHALF OF THE REVENUE SUBMITTED THAT THE BOATS ARE CAPITAL ASSET AND THE PAYMENT WAS FOR ACQUIRING CAPITAL ASSET. IT WAS THE SUBMISSION THAT THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE ASSESSING OFFICER WERE LIABLE TO BE SUSTAINED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS . ADMITTEDLY, THE BOATS WERE FOR THE BUSINESS PURPOSE OF THE ASSESSEE IN ITS RESORT BUSINESS. NO NEW BUSINESS WAS CONTEMPLATED BY THE ASSESSEE. THE BOATS WERE FOR 3 ITA NO. 136 /P A N/201 6 THE USE OF THE GUEST IN THE RESORT OF THE ASSESSEE , WHICH IS ADJACENT TO LAKE. THIS BEING SO, AS THE A DVANCE GIVEN IS IN THE COURSE OF BUSINESS OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE LOSS OF THE ADVANCE IS LIABLE TO BE ALLOWED AS BUSINESS LOSS. ACCORDINGLY , THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE AS BUSINESS LOSS. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 2 1 TH DAY OF SEPTEMBER , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 1 TH SEPTEMBER , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. GOENCA RESORTS PVT. LTD., 111, HOTEL ORFIL, CALANGUTE, BARDEZ, NORTH GOA. 2 . THE REVENUE. ADDL. CIT, RANGE - 2, PANAJI - GOA. 3 . THE PR. CIT, PANAJI. 4 . THE CIT(A) , PANAJI - 1, GOA. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI .