ITO, Ward - 12(4), Kolkata, Kolkata V. M/s. Caplet India Pvt. Ltd., Kolkata

ITA 166/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74969 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K DAS
• Assessee Lawyers: S L KOCHAR PER SHRI P K
• Keywords: Depreciation; Charitable institution; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI P.K.BANSAL, A.M. & SHRI GEORGE MATHAN, J.M. ] I.T.A. NOS. 1560/KOL/2011 & 166/KOL/2012 ASSESSMENT YEARS : 2006-07 & 2008-09 ITO, WARD-12(4), KOLKATA -VS- M/S. CAPLE T INDIA PVT. LTD.,KOLKATA ( APPELLANT ) PAN:AABCC 0624J RESPONDENT ) DATE OF CONCLUDING THE HEARING : 15.01.2014 DATE OF PRONOUNCING THE ORDER : 16.01.2014 APPEARANCES : FOR THE APPELLANT : SHRI K.K.DAS, JCIT, SR.DR : FOR THE RESPONDENT : SHRI S.L.KOCHAR O R D E R PER SHRI P.K.BANSAL, A.M. : BOTH THESE APPEALS HAVE BEEN FILED BY THE REVENUE A GAINST THE ORDERS OF THE CIT(A)-XII, KOLKATA DATED 17.08.2011 AND 17.11.2011 FOR THE ASSESSMENT YEARS 2006-07 AND 2008-09 RESPECTIVELY. SINCE BOTH THESE APPEALS FILED BY THE REVENUE INVOLVE THE COMMON ISSUE, THEREFORE, THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. IN ITA NO.1560/KOL/2011, THERE IS A DELAY OF FOU R DAYS IN FILING THE APPEAL. THE PETITION FOR THE CONDONATION OF THE DELAY WAS F ILED BY THE REVENUE. AFTER HEARING BOTH THE PARTIES, WE NOTED THAT THE REVENUE WAS PREVENTED BY SUFFICIENT CAUSE TO FILE THE APPEAL WITHIN THE STIPULATED TIME . WE, THEREFORE, CONDONE THE DELAY AND ADMIT THE APPEAL. 3. GROUND NO.1 IN REVENUES APPEAL FOR THE ASSESSME NT YEAR 2006-07 AND GROUND NO.1 IN REVENUES APPEAL FOR THE ASSESSMENT YEAR 2008-09 RELATE TO THE COMMON ISSUE IN RESPECT OF DELETION OF THE ADDITION ON ACCOUNT OF INDUSTRIAL PROMOTION ASSISTANCE RECEIVED FROM THE GOVT. OF WES T BENGAL TREATING AS CAPITAL RECEIPT BY THE CIT(A). 2 I.T.A. NOS.1560/KOL/2011 & 166/K OL/2012 M/S.CAPLET INDIA PVT.LTD. A.Y. 2006-07 & 2008-09 4. BRIEF FACTS RELATING TO THESE GROUNDS ARE THAT T HE ASSESSEE RECEIVED IN THE ASSESSMENT YEAR 2006-07 A SUM OF RS.30,99,263/- AS THE INDUSTRIAL PROMOTION ASSISTANCE FOR PURCHASING THE PLANT AND MACHINERY. THE AO TREATED IT TO BE THE REVENUE RECEIPT. WHEN THE MATTER WENT BEFORE THE CI T(A), THE CIT(A) ALLOWED THE SAME BY HOLDING THAT THE RECEIPT IS TO BE A CAPITAL RECEIPT BY HOLDING AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS AND THE GOVT. OF WEST BENGAL RESOLUTION DT. 27-05-1994. THE ASSESSEE HAS PLACED RELIANCE ON DCIT VS. M/S, S TRASSENBURG PHARMACEUTICALS LTD. (ITA NO.1131, 1132 & 1133/KOL/ 2009). THE HONBLE ITAT AFTER A DETAILED ANALYSIS HAS HELD THA T GRANT OF ASSISTANCE BY WBIPA AS CAPITAL RECEIPT SINCE THE SO LE PURPOSE BEHIND GRANT OF ASSISTANCE IS TO TIDE OVER THE FINANCIAL C RISIS AND PROMOTION OF INDUSTRIES AND BOTH THESE ACTIVITIES ARE RELATED TO CAPITAL FIELD. THEREFORE, RECEIPT OF RS.30,99,263/- FROM WBIPA IS A CAPITAL RECEIPT. HOWEVER, IN VIEW OF SEC. 43(1) EXPLANATION 10 OF TH E I.T. ACT, 1961 (AS PLEADED BY THE APPELLANT IN THE ADDITIONAL GROU NDS OF APPEAL) THE COST OF ASSETS NAMELY PLANT AND MACHINERY AND FACTO RY BUILDING SHOULD BE ADJUSTED BY THE SUBSIDY RECEIVED AND CONS EQUENT DEPRECIATION SHOULD BE ALLOWED ON THE REDUCED COST OF ASSETS. THEREFORE, THE GROUND NO.1 IS ALLOWED PARTLY. 5. THE LD. A.R. BEFORE US FILED THE COPY OF THE SCH EME AS WELL AS THE DECISION OF THIS TRIBUNAL DATED 29.04.2011 IN ITA NO.1982 TO 1986/KOL/2009 FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06 IN THE CASE OF HYDRO CARBONS & CHEMICALS- VS- ACIT, WHICH WE PERUSED AND WE NOTED THAT THE SC HEME UNDER WHICH THE ASSESSEE GOT THE ASSISTANCE HAS BEEN ELABORATELY DI SCUSSED BY THIS TRIBUNAL AND THE TRIBUNAL TOOK THE VIEW THAT RECEIPT IS A CAPITAL RE CEIPT. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE. RESPECTFULLY FOLLOWING OU R AFORESAID DECISION OF THIS TRIBUNAL DATED 29.04.2011, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND NO.1 TAKEN IN THE ASSESSMENT YEAR 2006-07 AN D THE ONLY GROUND TAKEN IN THE ASSESSMENT YEAR 2008-09. THUS, THIS DISPOSES OF THE APPEAL IN ITA NO.166/KOL/2012 FOR THE ASSESSMENT YEAR 2008-09. 6. GROUND NO.2 IN ITA NO.1560/KOL/2011 RELATES TO T HE DELETION OF DISALLOWANCE OUT OF THE TELEPHONE EXPENSES AND TRAV ELING & CONVEYANCE EXPENSES. 3 I.T.A. NOS.1560/KOL/2011 & 166/K OL/2012 M/S.CAPLET INDIA PVT.LTD. A.Y. 2006-07 & 2008-09 7. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERING THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW, WE NOTED THAT THE AO DISALLOWED THESE EXPENSES MERELY ON AD HOC BASIS AND NO SPECIFIC REASON FOR THE SAID DISALLOWANCE WAS MADE. THEREFORE, IN OUR OPINI ON, THE CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCES IN RESPECT OF TELEPHONE A S WELL AS TRAVELING & CONVEYANCE EXPENSES. WE, THEREFORE, DO NOT FIND ANY MERIT IN GROUND NO.2 TAKEN BY THE REVENUE, WHICH MAY WARRANT OUR INTERFERENCE. THUS, THIS GROUND IS DISMISSED. 8. GROUND NO.3 RELATES TO THE DELETION OF RS.53,945 /- OUT OF DONATION AND SUBSCRIPTION. 9. WE HEARD THE RIVAL SUBMISSIONS ON THIS ISSUE. WE NOTED THAT THE AO TOOK THE VIEW THAT THE EXPENSES INCURRED UNDER THE HEAD MIS CELLANEOUS EXPENSES RELATING TO THE SUBSCRIPTIONS TO VARIOUS ASSOCIATIONS. SINCE NONE OF THE ASSOCIATIONS IS APPROVED UNDER SECTION 80G, THEREFORE, HE DISALLOWE D THE EXPENDITURE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED T HE DISALLOWANCE BY OBSERVING THAT THE AO HAS FAILED TO UNDERSTAND THE NATURE OF THE PAYMENT. THESE PAYMENTS ARE NOT THE DONATIONS FOR CHARITABLE PURPOSES BUT T HESE ARE DONATIONS AND SUBSCRIPTIONS TO VARIOUS ASSOCIATIONS, LOCAL CLUBS, ETC. TO MAINTAIN GOOD RELATIONS AND RUN THE BUSINESS SMOOTHLY. 9.1. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY C ONSIDERED THE SAME. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOW LEDGE, WHICH MAY PROVE THAT THE EXPENSES SO INCURRED BY THE ASSESSEE ARE IN THE NATURE OF THE DONATIONS TO CHARITABLE INSTITUTIONS SO THAT THERE MAY NOT BE AN Y BUSINESS LINKAGE AND WE MAY HOLD THAT THE EXPENSES HAVE NOT BEEN INCURRED FOR T HE PURPOSE OF BUSINESS. THE CIT(A) HAS GIVEN A FINDING OF FACT. IN THE ABSENCE OF ANY CONTRARY COGENT MATERIAL BEING BROUGHT ON RECORD, WE DO NOT HAVE ANY ALTERNA TIVE EXCEPT TO ACCEPT THE 4 I.T.A. NOS.1560/KOL/2011 & 166/K OL/2012 M/S.CAPLET INDIA PVT.LTD. A.Y. 2006-07 & 2008-09 FINDINGS OF THE CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A). THUS, THE GROUND NO.3 IS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE STAND DISMISSED. THIS ORDER IS PRONOUNCED IN THE COURT ON 16 TH JANUARY, 2014. SD/- SD/- (GEORGE MATHAN) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH JANUARY, 2014 COPY OF THE ORDER FORWARDED TO: 1. M/S. CAPLET INDIA PVT. LTD., 284/1, BLOCK-B, BANGUR AVENUE, KOLKATA- 700 055 2. ITO, WARD-12(4), KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.)