The ACIT,(OSD)Circle-9, Ahmedabad V. Shri Rameshwar Mulji Jogi, Ahmedabad

ITA 1487/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76848 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 09-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-05-2011
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: B K BEHETI
• Keywords: Capital asset; Business expenditure; Revenue expenditure; Capital expenditure
• Section: 37(1); 37

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , !'# !$ !'# !$ !'# !$ !'# !$0 00 0! !! !0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & & & & BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1487/AHD/2011 ASSESSMENT YEAR 2007-08 ACIT (OSD), CIRCLE-9, AHMEDABAD. VS SHRI RAMESHWAR MULJI JOGI PROP. M/S. RAMESHWAR TRANSPORT CO. 7, MINAXI PARK SOCIETY, NH NO. 8, CTM ROAD, AMRAIWADI, AHMEDABAD. PAN: AANFS3214K )*/ APPELLANT ,-)* / RESPONDENT REVENUE BY : SHRI P. L. KUREEL, SR. DR ASSESSEE(S) BY : SHRI B.K. BEHETI, AR $'. / 0'/ // / DATE OF HEARING : 09/06/2014 123 / 0' / DATE OF PRONOUNCEMENT : 20/06/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDABAD DATED 29.03.2011. 2. GROUND NO. 1 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DELETING THE D ISALLOWANCE OF RS 12,03,436/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF PENALTY LEVIED BY ROAD TRANSPORT AUTHORITY AND ASSESSEE CLAIMED IT AS RTO EXPENSES, WHICH IS BREACH OF PROVISIONS OF SEC. 37(1) OF THE ACT. ITA NO. 1487/AHD/2011 RAMESHWAR MULJI JOGI, AHMEDABAD. FOR A.Y. 2007-08 - 2 - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEBIT ED RTO EXPENSES OF RS 21,20,095/- IN WHICH THE ASSESSEE HAD PAID PENALTY TO RTO OF RS 12,03,436/- WHICH IS NOT ALLOWABLE EXPENSE AS PER I NCOME TAX ACT. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PENALTY AMOUNT PAID TO RTO SHOULD NOT BE DISALLOWED. THE ASSESSEE COULD NOT G IVE ANY PLAUSIBLE EXPLANATION. THE ASSESSING OFFICER ON GOING THROUG H THE RECEIPTS ISSUED BY THE RTO AUTHORITY FOUND THAT THESE EXPENSES WERE IN CURRED FOR FINE/PENALTY FOR VARIOUS VIOLATIONS OF RTO ACT, FOR EXAMPLE DIME NSION OF THE TRUCKS/LORRIES, WIDTH, LENGTH AND HEIGHT ETC. ARE M ORE THAN LIMIT PRESCRIBED BY THE RTO AUTHORITY. THE ASSESSING OFFICER THEREF ORE HELD THAT THE PENALTY WAS IMPOSED FOR VIOLATION OF THE PERMISSION GIVEN B Y THE ROAD TRANSPORT AUTHORITY TO RUN THE VEHICLE WITH CAPACITY OF WEIGH T, WIDTH ETC. SINCE THE ASSESSEE HAD BROKEN/VIOLATED THE PERMISSION GRANTED TO RUN THE VEHICLE, FINE WAS IMPOSED. A FINE/PENALTY OF ANY AMOUNT BY WHATE VER NAME IT MAY BE CALLED IS NOT ALLOWED AS BUSINESS EXPENDITURE IF TH E NATURE OF EXPENDITURE IS PENALTY FOR VIOLATION OF ANY RULES AND REGULATIONS OF THE SAID ACT. ACCORDINGLY, HE DISALLOWED DEDUCTION TO THE ASSESSE E FOR RS 12,03,436/-. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI RAMESHWAR MULJI JOGI VS. DCIT IN ITA NO. 24 86/A/2009 PASSED IN ASSESSMENT YEAR 2006-07, ORDER DATED 21.12.2010. 5. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF THE ASSESSING OFFICER WHEREAS THE AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS). WE FIND THAT THE TRIBUNAL IN THE CASE OF SHRI RAMESHWAR MUL JI JOGI (SUPRA) HELD AS UNDER: ITA NO. 1487/AHD/2011 RAMESHWAR MULJI JOGI, AHMEDABAD. FOR A.Y. 2007-08 - 3 - 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERR ED IN CONFIRMING THE ADDITION MADE BY THE LEARNED ASSESSI NG OFFICER UNDER SECTION 37 OF THE ACT ON ACCOUNT OF PAYMENT O F RS 10,29,351/- MADE TO RTO AUTHORITY ON ACCOUNT OF OVE RLOADING AND OVER DIMENSION CONSIGNMENT, 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE PAID RS 10,29,351/- TO THE GUJARAT MOTOR VEHICLES D EPARTMENT OF THE GOVERNMENT OF GUJARAT FOR EXCESS LOADING. THE L OWER AUTHORITIES MADE THE DISALLOWANCE OF THE AFORESAID AMOUNT ON THE GROUND THAT THE SAID PAYMENT WAS MADE FOR VIOLA TION OF LAW. WE FIND THAT ON THE SIMILAR FACTS THE TRIBUNAL IN T HE CASE OF AGRAWAL ROADLINES (P) LTD,, VS. DY.CIT (2010) 129 T TJ (AHD)(UO) 49 HAS HELD AS UNDER:- GUJARAT HAD INTRODUCED A SCHEME OF GOLD CARD WHICH ENTITLED THE HOLDER OF THE CARD TO CARRY OVERLOAD O N PAYMENT OF ADDITIONAL FEES FIXED FOR THAT GOLD CARD , SUCH COMPENSATORY FEES WERE BEING PAID TO VARIOUS RTO AUTHORITIES' THAT PERMITTED THE TRANSPORTERS TO CAR RY OVERLOAD ON PAYMENT OF SUCH COMPENSATION FEES TO FI NAL DESTINATION WITHOUT STOPPING THEM TO UNLOAD THE EXC ESS WEIGHT, IN OUR CONSIDERED VIEW, PAYMENT OF FINE TOW ARDS CARRYING EXCESS LOAD CANNOT FALL INTO THE CATEGORY EITHER OF AN OFFENCE OR INFRINGEMENT OF LAW. IT IS EVIDENT FR OM THE RECORD THAT ON PAYMENT OF ADDITIONAL AMOUNT ALREADY FIXED BY RTOS, THEY HAVE ALLOWED VEHICLES TO MOVE FURTHER WHICH ITSELF SHOWS THAT AMOUNT COLLECTED BY THE RTOS WAS NOT PAYMENT TOWARDS INFRINGEMENT OF LAW BUT IN THE NATU RE OF COMPENSATION. IT IS PERTINENT TO STATE HERE THAT GOVERNMENT OF GUJARAT HAS ALLOWED TO CARRY SUCH EXC ESS LOAD AND COLLECTED ONLY COMPENSATORY AMOUNT FROM TH E ASSESSEE WHICH CANNOT BE TERMED AS PAYMENT TOWARDS INFRINGEMENT OF LAW. IT IS ALSO RELEVANT TO STATE T HAT LAWS OF STATE GOVERNMENT ALLOWED THE TRANSPORTERS TO CARRY EXCESS LOAD IN VEHICLES IN RELEVANT YEARS AND HENCE SUCH P AYMENT IS RIOT IN VIOLATION OF ANY LAW. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT PAYMENT OF PENALTY FOR EXCESS LOAD CARRIED WAS NOT FOR INFRINGEMENT OF LAW BUT IN THE NATURE OF COMPENSATION THE BUSINESS ACTIVITIES OF TRANSPORTAT ION OF GOODS.' 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T CITE ANY GOOD REASONS TO NOT TO FOLLOW THE ABOVE QUOTED DECISION OF ITA NO. 1487/AHD/2011 RAMESHWAR MULJI JOGI, AHMEDABAD. FOR A.Y. 2007-08 - 4 - THE TRIBUNAL. WE THEREFORE, FOLLOWING, THE ABOVE DE CISION DELETE THE DISALLOWANCE OF RS.10,29,351/- AND ALLOW THIS G ROUND OF APPEAL OF THE ASSESSEE. IN ABSENCE OF ANY DISTINGUISHING FEATURES POINTED O UT BY THE DEPARTMENTAL REPRESENTATIVE, THE FACTS BEING IDENTICAL, WE RESPE CTFULLY FOLLOWING THE PRECEDENT CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 6. GROUND NO. 2 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) DELETING THE A DDITION OF RS 3,89,430/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENSES OF MS PLATES WHICH WAS PURCHAS ED FOR MANUFACTURING OF A TROLLEY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT UNDER THE HEAD REP AIRS AND MAINTENANCE THE ASSESSEE CLAIMED RS 3,89,430/- TOWARDS PURCHASE OF MS PLATES WHICH WAS USED FOR MAKING TROLLEY. THE ASSESSING OFFICER OPINED THAT THE SAME WAS CAPITAL EXPENDITURE TO WHICH THE ASSESSEE ALSO AGREED. THEREFORE, THE ASSESSING OFFICER DISALLOWED DEDUCTION OF RS 3,89,4 30/- AND MADE ADDITION THEREOF TO THE INCOME OF THE ASSESSEE. 8. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) ALLOWED THE AFORESAID AMOUNT AS DEDUCTION TO THE ASSESSEE B Y TREATING THE SAME AS REVENUE EXPENDITURE ON THE GROUND THAT THE LIFE OF MS PLATE IS VERY SHORT. 9. WE FIND THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO SHOW THAT T HE LIFE OF MS PLATE IS VERY SHORT. IT IS NOT IN DISPUTE THAT THE MS PLATE WAS USED FOR MAKING TROLLEY WHICH IS CAPITAL ASSET IN THE HANDS OF THE ASSESSEE . NO MATERIAL WAS BROUGHT ITA NO. 1487/AHD/2011 RAMESHWAR MULJI JOGI, AHMEDABAD. FOR A.Y. 2007-08 - 5 - BEFORE US BY THE ASSESSEE TO SHOW THAT THE TROLLEY HAD A VERY SHORT LIFE AND THEREFORE ALLOWABLE AS REVENUE EXPENDITURE. WE, TH EREFORE, SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) O N THIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 20 TH OF JUNE, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 20/06/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. ,-)* / THE RESPONDENT. 3. ## 7 / CONCERNED CIT 4. 7() / THE CIT(A)-III, AHMEDABAD 5. 5': ,$ , , / DR, ITAT, AHMEDABAD 6. ;< =. / GUARD FILE. &4$ &4$ &4$ &4$ / BY ORDER, / // / # # # # ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD