ITO, Trichy V. R.Kalai Selvan, Trichy

ITA 1539/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7929 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 16-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-07-2015
• Court: TRIBUNAL
• Department Lawyers: A B KOLI JCIT
• Assessee Lawyers: KEERTHIRAJANC A
• Keywords: Tax effect; Revenue expenditure; Capital expenditure
• Section: 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , ! , ' #$ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.1539 /MDS./2015 ( / ASSESSMENT YEAR :2010-11) THE INCOME TAX OFFICER, WARD-1(1), TRICHY. VS. SHRI R.KALAI SELVAN, NO.1/52,PATTATHAMMAI STREET, BIKSHANDER KOIL STREET, TRICHY 621 207. PAN AKEPK 6081 Q ( () / APPELLANT ) ( %*() / RESPONDENT ) ./ I.T.A.NO.2049 /MDS./2015 ( / ASSESSMENT YEAR :2010-11) SHRI R.KALAI SELVAN, NO.1/52,PATTATHAMMAI STREET, BIKSHANDER KOIL STREET, TRICHY 621 207. VS. THE INCOME TAX OFFICER, WARD-1(1), TRICHY PAN AKEPK 6081 Q ( () / APPELLANT ) ( %*() / RESPONDENT ) ITA NOS.1539,2049 /MDS/2015 MR.R.KALAI SELVAN 2 ASSESSEE BY : MR.KEERTHIRAJAN,C.A REVENUE BY : MR.A.B.KOLI,JCIT, D.R / DATE OF HEARING : 16.02.2016 /DATE OF PRONOUNCEMENT : 19.02.2016 + / O R D E R PER CHALLA NAGENDRA PRASAD, ACCOUNTANT MEMBER: THESE TWO APPEALS ARE FILED BY THE REVENUE AND TH E ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-I, TIRUCHIRAPALLI DATED 19.03.2015 PASSED U NDER SEC.144 READ WITH SECTION 147 OF THE ACT FOR ASSESSMENT YEA R 2010-11. 2. IN SO FAR AS THE REVENUES APPEAL IS CONCERNED , THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE TAX EFFECT IN THI S APPEAL IS LESS THAN ` 10 LAKHS AS THE REVENUE IS CHALLENGING THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE OF COST OF IMPROVEMENT OF ` 26 LAKHS MADE BY THE AO. THE DEPARTMENTAL REPRESENTATIVE AGREES T HAT THE TAX EFFECT IN REVENUES APPEAL IS LESS THAN ` 10 LAKHS. IN VIEW OF THE CIRCULAR NO.21/2015 DATED 10.12.2015, CBDT INSTRUCT ED ITS OFFICERS TO WITHDRAW ALL THE APPEALS PENDING BEFORE THE ITAT WHERE THE TAX ITA NOS.1539,2049 /MDS/2015 MR.R.KALAI SELVAN 3 EFFECT IS LESS THAN ` 10 LAKHS. ACCORDINGLY, THE REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 STANDS DISMISSED. 3. IN ASSESSEES APPEAL, THOUGH THE ASSESSEE HAS R AISED SEVERAL GROUNDS OF APPEAL, AUTHORISED REPRESENTATIVE OF AS SESSEE SUBMITS THAT HE IS CHALLENGING THE ORDER OF THE CIT(A) IN S USTAINING THE DISALLOWANCE ONLY TO THE EXTENT OF ` 3,22,500/- IN RESPECT OF EXPENDITURE INCURRED ON REMOVING OF SHRUBS AT ` 1,00,000/- TO MR.R.GOPAL AND MUD FILLING OF ` 2,25,000/- TO MR.R.VAIRAMANI. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE AO AND T HE CIT(A) DISALLOWED ` 1,00,000/- TOWARDS THE PAYMENT MADE TO MR.R.GOPAL FOR REMOVING OF SHRUBS AS REVENUE EXPENDITURE. THE COU NSEL FOR THE ASSESSEE SUBMITS THAT IT IS NOT A REVENUE; SINCE IM PROVEMENT WAS NECESSITATED TO FETCH A BETTER PRICE FOR SALE OF LA ND, THE SAME MAY BE TREATED IT AS CAPITAL EXPENDITURE. IN RESPECT OF P AYMENT MADE TO MR.R.VAIRAMANI, THE AO DISALLOWED ` 2,25,000/- TOWARDS THE EXPENSES INCURRED FOR MUD FILLING FOR THE REASON THAT SUMMON S ISSUED TO THE ASSESSEE WERE RETURNED. THE COUNSEL FOR THE ASSESS EE SUBMITS THAT THE CONFIRMATIONS HAVE BEEN OBTAINED FROM MR.R.VAIR AMANI AND THE ITA NOS.1539,2049 /MDS/2015 MR.R.KALAI SELVAN 4 MATTER MAY BE REMITTED BACK, THE CONFIRMATIONS WILL BE PRODUCED BEFORE THE AO. THE D.R SUPPORTS THE ORDER OF THE L OWER AUTHORITIES. 4.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIAL ON RECORD. AS FAR AS THE DISALLOWANCE OF ` 1,00,000/- IS CONCERNED, IN RESPECT OF PAYMENT MADE TO MR.R.GOPAL FOR REMOVING OF SHRUBS TREATING IT AS REVENUE EXPENDITURE, WE ARE OF THE O PINION THAT BEFORE MUD FILLING, THE SHRUBS HAVE TO BE REMOVED AND IT S HOULD BE TREATED AS PART AND PARCEL OF CAPITAL EXPENDITURE INCURRED AS A WHOLE. THUS, WE DIRECT THE AO TO ALLOW THE PAYMENT MADE FOR REMO VING THE SHRUBS AS COST OF IMPROVEMENT. 4.2 IN SO FAR AS THE PAYMENT MADE TO MR.R.VAIRAMANI IS CONCERNED, WE RESTORE THE MATTER TO THE FILE OF THE AO AND THE ASSESSEE IS DIRECTED TO PRODUCE THE CONFIRMATION FROM MR.R.VAIR AMANI, THEREBY TO ESTABLISH PAYMENT HAS BEEN MADE TO MR.R.VAIRAMANI F OR MUD FILLING. ACCORDINGLY, WE SET ASIDE THE MATTER TO THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH EXAMINATION. ITA NOS.1539,2049 /MDS/2015 MR.R.KALAI SELVAN 5 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 19 TH OF FEBRUARY,2016 AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) ( ' #$ % ) ((CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 19 TH FEBRUARY,2016. K S SUNDARAM. !' #' /COPY TO: 1. $% /APPELLANT 2. &$% /RESPONDENT 3. ' () /CIT(A) 4. ' /CIT 5. '*+ , /DR 6. +- . /GF