The ACIT, Circle-8, Surat V. M/s. Navrang Cream Corner, Surat

ITA 147/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89436 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M J PAUL
• Assessee Lawyers: M K PATEL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO. 147/AHD/2012 / ASSESSMENT YEAR: 2008-09 ACIT, CIRCLE-8, SURAT . APPELLANT VS. M/S. NAVRANG CREAM CORNER, 24-25, ROYAL IND. ESTATE, BHARIMATA ROAD, VARIYALI BAZAR, SURAT . RESPONDENT PAN : AADFN 5248 A REVENUE BY : SHRI M.J. PAUL, SR. DR. ASSESSEE(S) BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 07/05/2015 ! /DATE OF PRONOUNCEMENT: 14/05/2015 '# '# '# '#/ // / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-V, SURAT DATED 15.09.2011 FOR ASSESSMENT YEAR 2008-09, ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN ALLOWING CLAIM OF MACHINERY REPAIRING EXPENSES OF RS.12,81,600/- PERTAINING TO FY 2006-07 RELEVANT TO AY 2007-08 AND NOT IN THE YEAR UNDER ASSESSMENT I.E. 2008-09 BY HOLDIN G THAT ITA NO.147/AHD/ 2012 ACIT V. NAVRANG CREAM CORNER AY 2008-09 - 2 - THE ASSESSEE IS ELIGIBLE FOR CLAIM FOR SUCH EXPENDI TURE IN THE RELEVANT YEAR AS INSPECTION AND DRY RUNS WERE COMPLETED ONLY IN FY 2007-08 RELEVANT TO AY 2008-09 . 2. THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THE ADDI TION MADE BY THE AO ON THE GROUNDS THAT IT WAS PRIOR PER IOD EXPENDITURE AS EVIDENCED FROM MACHINERY REPAIRING B ILLS FURNISHED BY THE ASSESSEE AS THE ASSESSEE WAS FOLLO WING MERCANTILE SYSTEM OF ACCOUNTING. 3. THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THE ADDI TION MADE BY THE AO OF PRIOR PERIOD REPAIRING EXPENDITUR E OF RS.12,81,600/- AS INSPECTION AND DRY RUNS ON THE MACHINERY COMPLETED IN SUBSEQUENT FY 2007-08 RELEVA NT TO AY 2008-09 DID NOT RESULT IN ANY FURTHER EXPENDI TURE IN THE RELEVANT AY 2008-09 AND EVEN OTHERWISE THE SAME COULD HAVE BEEN CLAIMED IN THE RELEVANT YEAR IN WHI CH IT WAS INCURRED. 4. HENCE THE DECISION OF THE LD. CIT(A) OUGHT TO B E SET- ASIDE AND THAT OF THE AO RESTORED. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING AND TRADING OF ICE CREAM AND VARIOUS MILK PRODUCTS. 3. THE ONLY GROUND RELATED TO THE ADDITION OF RS.12 ,81,600/- MADE ON ACCOUNT OF DISALLOWANCE OF MACHINERY REPAIR ING EXPENSES. IN THE ASSESSMENT YEAR 2008-09, THE CORR ESPONDING ACCOUNTING YEAR ENDED ON 31.03.2008, RETURN OF INCO ME DECLARING TOTAL INCOME OF RS. NIL WAS FILED BY THE ASSESSEE ON 03.10.2008. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEB ITED ITA NO.147/AHD/ 2012 ACIT V. NAVRANG CREAM CORNER AY 2008-09 - 3 - RS.12,81,000/- IN THE PROFIT AND LOSS ACCOUNT AS RE PAIRS OF MACHINERY. SUBSEQUENTLY, CERTAIN DETAILS WERE ASKE D ON BEHALF OF THE REVENUE BY THE ASSESSING OFFICER IN THIS REG ARD AND HAVING CONSIDERED THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER REJECTED THE EXPLANATION FURNISHE D BY THE ASSESSEE AND ADDED RS.12,81,000/- IN THE HANDS OF T HE ASSESSEE. 3.1 THE MATTER WAS CARRIED BEFORE THE FIRST APPELLA TE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) ALL OWED THE APPEAL AND THE SAME HAS BEEN OPPOSED ON BEHALF OF R EVENUE INTER ALIA SUBMITTING THAT THE CIT(A) ERRED IN ALLOWING CLAIM OF MACHINERY REPAIRING EXPENSES OF RS.12,81,600/- PERT AINING TO FY 2006-07 RELEVANT TO AY 2007-08 AND NOT IN THE YE AR UNDER ASSESSMENT I.E. 2008-09 BY HOLDING THAT THE ASSESSE E IS ELIGIBLE FOR CLAIM FOR SUCH EXPENDITURE IN THE RELEVANT YEAR AS INSPECTION AND DRY RUNS WERE COMPLETED ONLY IN FY 2 007-08 RELEVANT TO AY 2008-09; HE SHOULD HAVE CONFIRMED T HE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUNDS THAT I T WAS PRIOR PERIOD EXPENDITURE AS EVIDENCED FROM MACHINERY REPA IRING BILLS FURNISHED BY THE ASSESSEE AS THE ASSESSEE WAS FOLLO WING MERCANTILE SYSTEM OF ACCOUNTING, AND CIT(A) ALSO SH OULD HAVE CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R OF PRIOR PERIOD REPAIRING EXPENDITURE OF RS.12,81,600/- AS I NSPECTION AND DRY RUNS ON THE MACHINERY COMPLETED IN SUBSEQUE NT FY 2007-08 RELEVANT TO AY 2008-09 DID NOT RESULT IN AN Y FURTHER EXPENDITURE IN THE RELEVANT AY 2008-09 AND EVEN OTH ERWISE THE ITA NO.147/AHD/ 2012 ACIT V. NAVRANG CREAM CORNER AY 2008-09 - 4 - SAME COULD HAVE BEEN CLAIMED IN THE RELEVANT YEAR I N WHICH IT WAS INCURRED; ACCORDINGLY, THE ORDER OF THE CIT(A) IN THIS REGARD BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPO RTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNTS, AUDITED BY C HARTERED ACCOUNTANT WHICH WAS VERIFIED BY THE ASSESSING OFFI CER AT THE RELEVANT POINT OF TIME. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE STAND OF THE ASSESSEE HAS BEEN THAT THE TOTAL MACHINERY WERE DESTROYED IN FLOOD AND GIVEN T O PWS ENGINEERING PVT LTD FOR REPAIRING AND THE WORK WAS COMPLETED IN JANUARY AND BILLS FOR REPAIRS WERE ISSUED ON THA T DATE, BUT THE SAME COULD ONLY BE PUT TO USE AFTER THE INSPECT ION AND DRY RUNS ONLY. THE INSPECTION & DRY RUNS WERE COMPLETE D IN THE YEAR UNDER CONSIDERATION I.E. FY 2007-08 RELEVANT T O AY 2008- 09 AND THE EXPENSES WERE ACCOUNTED FOR IN THE FY 20 07-08, RELEVANT TO ASSESSMENT YEAR 2008-09. IF THE DRY RUN WOULD HAVE FAILED FURTHER TIME WOULD HAVE TAKEN. THEREFOR E, THE AMOUNT IN QUESTION WOULD HAVE BEEN ACCOUNTED FOR IN ONLY AFTER GETTING SATISFACTION THAT EVERYTHING IS FINE AS FAR AS THE REPAIR IS CONCERNED. THEREFORE, THE CIT(A) HAS RIGH TLY ALLOWED THE CLAIM OF THE ASSESSEE IN THIS REGARD. THUS, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A), BECAUSE THE ISSUE OF CRYSTALLIZATION BY WAY OF DRY RUNS HAS NOT BEEN ITA NO.147/AHD/ 2012 ACIT V. NAVRANG CREAM CORNER AY 2008-09 - 5 - DISPUTED BY THE REVENUE. ACCORDINGLY, THE ORDER OF THE CIT(A) IN THIS REGARD IS UPHELD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT ON 14 TH OF MAY, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 14/05/2015 *BIJU T, PS '# &' ('' '# &' ('' '# &' ('' '# &' (''/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. &+)* / THE RESPONDENT. 3. , / CONCERNED CIT 4. , ( ) / THE CIT(A), 5. '/0 & , , / DR, ITAT, AHMEDABAD 6. 02 3 / GUARD FILE. '# '# '# '# / BY ORDER, //TRUE COPY// 4 44 4/ // / 5 5 5 5 (DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD