The DCIT, GNR Circle, Gandhinagar V. Gujarat Port Infrastructure & Development Co.Ltd., Gandhinagar

ITA 1691/AHD/2012

• Counselvise Citation: 169120514 RSA 2012
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-09-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , .'# $ ,%& % ' BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A. NO.1691/AHD/2012 ( # ) # ) # ) # ) / / / / ASSESSMENT YEAR : 2009-10) DY.CIT GANBDHINAGAR # # # # / VS. GUJARAT PORT INFRASTRUCTURE & DEVT.CO.LTD. 6 TH FLOOR, GMB BHAVAN SECTOR-10A GANDHINGAR-382 010 * %& ./+, ./ PAN/GIR NO. : AAACG 7916 J ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 % / APPELLANT BY : SHRI T.SANKAR, SR.D.R. ./*- 1 0 % / RESPONDENT BY : NONE #2 1 & / / / / DATE OF HEARING : 27/09/2012 3') 1 & / DATE OF PRONOUNCEMENT : 28/09/12 %4 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LD.CIT(A)-GANDHINAGAR DATED 15/05/2012 PASSED FOR A .Y.2009-10 AND THE SOLITARY GROUND READS AS FOLLOWS:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITIONS MADE BY THE AO, BEING THE EX PENDITURE INCURRED ADJUSTED AGAINST INCOME FROM OTHER SOURCES AMOUNTING TO RS.1,64,68,903/-. ITA NO.1691/AHD/2012 DY.CIT VS. GUJARAT PORT INFRASTRUCTURE & DEVT.CO.LT D. ASST.YEAR 2009-10 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE IT ACT, DATED 30.11.2011 W ERE THAT THE ASSESSEE- COMPANY IS INCORPORATED FOR THE DEVELOPMENT OF PORT S. THE ASSESSEE- COMPANY IS A 100% GOVERNMENT OF GUJARAT OWNED COMPA NY. THE MAIN OBJECT IS TO PROMOTE, DEVELOP, UPGRADE PORT RELATED AND PORT DEVELOPMENT ACTIVITIES IN THE STATE OF GUJARAT AND UNION TERRIT ORY OF DADRA & NAGAR HAVELI. THE AOS ALLEGATION WAS THAT FROM THE F.YS . 1997-98 TO 2006- 07, THE COMPANY HAD NOT COMMENCED THE BUSINESS ACTI VITY. ACCORDING TO AO, THE COMPANY HAD NOT STARTED THE BUSINESS OF PROMOTING, ORGANIZING AND DEVELOPING PORTS. IN HIS OPINION, MERELY INVESTMENT MUST NOT BE TREATED AS AN ADVENTURE IN THE NATURE O F TRADE. HE HAS, THEREFORE, HELD THAT THE INCOME SHOWN AS PER P&L AC COUNT IS TO BE TAXED WITHOUT GRANTING EXPENDITURE INCURRED. THE AO HA S CONCLUDED AS UNDER:- 8. IN THE PROFIT & LOSS ACCOUNT, IT IS OBSERVED T HAT THE ASSESSEE HAS SHOWN THE FOLLOWING INCOME DURING THE YEAR- INTEREST ON SSNNL DEPOSITS RS. 13,65,000/- INT.ON GSFS DEPOSITS AND LQ DEPOSITS RS.1,47,87,796 /- MISCELLANEOUS INCOME RS. 1,07,272/- DEFERRED TAX RS. 2,08,835/- TOTAL RS.1,64,68,903/- 9. SINCE THE ASSESSEE COMPANY HAS NOT COMMENCED I TS BUSINESS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE EXPENDITURE INCURRED ARE DISALLO WED IN VIEW OF THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALIS CHEMICALS & FERTILIZERS LTD. (227 ITR 172). 10. IN VIEW OF THE ABOVE DISCUSSION, TOTAL INCOME OF THE ASSESSEE IS COMPUTED AT RS.1,64,68,903/-. ITA NO.1691/AHD/2012 DY.CIT VS. GUJARAT PORT INFRASTRUCTURE & DEVT.CO.LT D. ASST.YEAR 2009-10 - 3 - 3. WHEN THE MATTER WAS CARRIED BEFORE THE LD.CIT(A) , IT WAS NOTED THAT IN THE PAST, THIS ISSUE WAS DECIDED IN ASSESSE ES FAVOUR AND IN THIS REGARD, HIS OBSERVATION AS PER THE FOLLOWING PARAGR APHS ARE WORTH REPRODUCTION:- 5. THE ISSUE IS FROM LONG ONGOING LITIGATION IN THE APPELLANTS CASE. THE ASSESSING AUTHORITIES HAVE BEEN REJECTIN G APPELLANTS CLAIM FROM ASSESSMENT YEARS 2001-02 ONWARDS. AT TH E CIT(A)S LEVEL, THE ASSESSING OFFICERS ACTION HAS BEEN CONF IRMED IN ALL THESE YEARS, I.E. ASSESSMENT YEAR 2001-02 TO 2007-0 8. HOWEVER, SUBSEQUENT TO PASSING OF THE APPELLATE ORDER DATED 25/02/2009, PERTAINING TO ASSESSMENT YEAR 2006-07, ITATS DECIS ION ON THE ISSUE FOR THE EARLIER YEARS HAS BEEN RECEIVED THROU GH TWO ORDERS. VIDE ORDER DATED 27/02/2009, THE ITAT, AHMEDABAD BE NCH D, FOR ASSESSMENT YEARS 2001-02 TO 2005-06, SETTLED THE IS SUE IN THE APPELLANTS FAVOUR. THE OPERATIVE PORTION OF THE O RDER IS AS FOLLOWS:- .. .. SUBSEQUENTLY, VIDE ORDER DATED 01/04/2009, THE APPE AL FOR ASSESSMENT YEAR 2006-07 WAS ALSO DECIDED BY THE ITA T IN ASSESSEES FAVOUR, FOLLOWING THE EARLIER REFERRED C OMBINED ORDER. THEREFORE, SINCE THE TRIBUNAL HAS DECISIVELY DECIDE D THE ISSUE IN THE APPELLANTS FAVOUR, FOR ASSESSMENT YEARS 2007-0 8 AND 2008-09; NOTWITHSTANDING THE DECISION OF CIT(A)S LEVEL IN E ARLIER YEAR, IN ORDER TO FOLLOW THE JUDICIAL DISCIPLINE THE ORDERS OF ITAT WERE FOLLOWED. MEANWHILE, THE DEPARTMENT HAD CARRIED THE ISSUE TO THE HONORABLE HIGH COURT. THE HONORABLE JURISDICTIONAL HIGH COUR T VIDE ITS ORDER DATED 31/01/12, HAS CONFIRMED THE ORDER OF TH E ITAT AND ITA NO.1691/AHD/2012 DY.CIT VS. GUJARAT PORT INFRASTRUCTURE & DEVT.CO.LT D. ASST.YEAR 2009-10 - 4 - HELD THAT THE BUSINESS HAS BEEN SET UP BY THE APPEL LANT. THE APPEALS OF THE DEPARTMENT HAVE BEEN DISMISSED. THEREFORE, FOR THE YEAR UNDER CONSIDERATION ALSO, I T IS HELD THAT THE ASSESSEES BUSINESS HAD BEEN SET UP AND COMMENCED A ND THEREFORE, THE EXPENSES WHICH ARE NOT TO BE CAPITALIZED AS DIR ECTLY RELATED TO SPECIFIC ASSETS ARE TO BE ALLOWED AS REVENUE EXPENS ES. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT ARE THERE FORE ALLOWED. 4. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED T HE ORDERS REFERRED SUPRA. ONCE IN THE PAST, A VIEW HAS BEEN TAKEN THAT THE BUSINESS HAD BEEN COMMENCED, THEREFORE WE FIND NO REASON FOR THE AO TO DISALLOW THE EXPENDITURE. IN THIS REGARD, RELIANCE HAS BEE N PLACED ON FOLLOWING TWO ORDERS, (I) DECISION OF RESPECTED CO-ORDINATE B ENCH D ITAT AHMEDABAD IN ITA NO.2789/AHD/2006 FOR A.Y. 2001-02, ITA NO.3579/AHD/2007 FOR A.Y. 2002-03 & ITA NO.3580/AHD /2007 FOR A.Y. 2003-04 IN THE CASE OF ASST.CIT VS. GUJARAT PORTS I NFRASTRUCTURE & DEVELOPMENT CO.LTD. VIDE ORDER DATED 27.2.2009 & ( II) DECISION OF HON'BLE GUJARAT HIGH COURT IN TAX APPEAL NO.2139 OF 2009 WITH TAX APPEAL NO.2140 OF 2009 TO TAX APPEAL NO.2143 OF 200 9 IN THE CASE OF CIT VS. GUJARAT PORTS INFRASTRUCTURE AND DVELOPMENT CO.LTD. ORDER DATED 31/01/2012,WHEREIN IT WAS OPINED AS UNDER:- 14. ON THE BASIS OF SUCH MATERIALS, IF WE REVERT BACK TO THE DECISION OF THE TRIBUNAL UNDER CHALLENGE WE NOTICE THAT THE TRIBUNAL HAD COME TO THE CONCLUSION THAT THE ASSESS EE HAD SET UP ITS BUSINESS. WE ARE OF THE OPINION THAT THE TRIBU NAL COMMITTED NO ERROR. AS ALREADY NOTED, THE MAIN OBJECTS OF THE C OMPANY INCLUDED WIDE VARIETY OF SUBJECTS PRINCIPALLY CONCERNED WITH THE DEVELOPMENT OF MINOR PORTS IN AND OUTSIDE STATE OF GUJARAT. THIS ITA NO.1691/AHD/2012 DY.CIT VS. GUJARAT PORT INFRASTRUCTURE & DEVT.CO.LT D. ASST.YEAR 2009-10 - 5 - COULD BE DONE BY ACTING AS PROMOTERS, ORGANIZERS, M ANAGERS AND DEVELOPERS OF THE PORTS OR ALSO THROUGH ENTERING IN TO JOINT VENTURE UNDERTAKING. THE SUBSIDIARY OBJECTIVE, INCIDENTAL TO THE MAIN OBJECTS ALSO ENVISAGED THE COMPANY TO WORK AND ACT AS AGENT OF THE GOVERNMENT, MUNICIPAL LOCAL BOARDS, RAILWAY CONTRAC TORS, ETC. 5. RESPECTFULLY FOLLOWING THE PRECEDENTS CITED HERE INABOVE FOR THIS YEAR, AS WELL WE HEREBY CONFIRM THE FACTUAL AS ALSO LEGAL FINDINGS OF LD.CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- ( .'# $ ) ( ) %& ( A. MOHAN ALANKAMONY ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD; DATED 28 / 09 /2012 5..#, .#../ T.C. NAIR, SR. PS %4 1 .6 7%6) %4 1 .6 7%6) %4 1 .6 7%6) %4 1 .6 7%6)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-GANDHINAGAR 5. 6;< .# , , / DR, ITAT, AHMEDABAD 6. < =2 / GUARD FILE. %4# %4# %4# %4# / BY ORDER, /6 . //TRUE COPY// > >> >/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD