ACIT CEN CIR 42, MUMBAI V. LODHA GLOWING CONSTRUCTION P. LTD, MUMBAI

ITA 1707/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1741 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHVEER MADNAPPA
• Keywords: Capital asset; Revenue expenditure; Capital expenditure

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI !, ' #$ %%, & #$ ' BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.1707/M/2014 ( &* + &* + &* + &* + / ASSESSMENT YEAR: 2009-10) ACIT, CEN. CIR.-42, ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 20 * * * * / VS. M/S. LODHA GLOWING CONSTRUCTIONS PVT. LTD., 216, SHAH & NAHAR INDUSTRIAL ESTATE, DR. E. MOSES ROAD, WORLI, MUMBAI 400 018 PAN:AABCL 2636B ( ,- / APPELLANT) ( ./,- /RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI RAGHVEER MADNAPPA, D.R. * 0 1' / DATE OF HEARING : 16.09.2015 23+ 0 1' / DATE OF PRONOUNCEMENT : 30.12.2015 # 4 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 09.12.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2009-10. 2. THE SOLE ISSUE RAISED IN THIS APPEAL BY THE REVE NUE IS AS TO WHETHER THE EXPENDITURE OF RS.1,08,27,467/- PAID TO A CONSULTAN T COMPANY NAMELY URBAN LAND CAPITAL (PVT.) LTD., HONGKONG WERE TO BE TREAT ED AS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE. 3. THE ASSESSEE IS A REAL ESTATE DEVELOPER AND PAID THE ABOVE STATED AMOUNT TO URBAN LAND CAPITAL (PVT.) LTD., HONGKONG TO FINA LISE AND APPOINT MASTER ITA NO.1707/M/2014 M/S. LODHA GLOWING CONSTRUCTIONS PVT. LTD. 2 PLAN FOR THE PROPOSED DHARAVI SLUM REDEVELOPMENT PR OJECT. THE ASSESSEE HAD PARTICIPATED IN THE BIDDING PROCESS OF DHARAVI SLUM REDEVELOPMENT UNDERTAKEN BY DHARAVI SLUM REHABILITATION AUTHORITY . THE ASSESSING OFFICERE (HEREINAFTER REFERRED TO AS THE AO) DISALLOWED THE SAID EXPENDITURE AS CAPITAL EXPENDITURE HOLDING THAT THE AMOUNT PAID ON THE PRO JECT REPORT WAS NOT FOR THE BUSINESS ACTIVITY OF ASSESSEE RATHER THE SAME WAS A TTRIBUTABLE TO CAPITAL EXPENDITURE INCURRED WITH A VIEW TO BRING AN ASSET FOR ADVANTAGE INTO EXISTENCE HAVING ENDURING BENEFIT. 4. THE LD. CIT(A), HOWEVER, DELETED THE ADDITION MA DE BY THE AO AND HELD THAT THE SAID EXPENDITURE WAS REVENUE IN NATURE. W HILE HOLDING SO, HE AGREED WITH THE CONTENTION OF THE ASSESSEE THAT EVEN IF TH E PROJECT WOULD HAVE MATERIALISED AND THE REDEVELOPMENT WOULD HAVE TAKEN PLACE, THE RESULTANT PROPERTY WOULD NOT HAVE FORMED PART OF ASSESSEES F IXED ASSETS AND THE EXPENSES THEREFORE COULD NOT HAVE BEEN CLASSIFIED A S CAPITAL EXPENSES. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE HAS COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. WE FIND THAT THE LD. CIT(A) IN HIS DETAILE D ORDER, AFTER ANALYZING THE FACTS OF THE CASE IN THE LIGHT OF THE VARIOUS JUDIC IAL DECISIONS, HAS OBSERVED THAT THE ASSESSEE BEING IN THE BUSINESS OF REAL ESTATE H AD INCURRED THE SAID EXPENDITURE FOR BUSINESS PURPOSES. THE LD. CIT(A) HAS OBSERVED THAT IN THIS CASE, THE ACQUIRING OF NEW ASSET WHICH WAS IN THE F ORM OF LAND AND THE DEVELOPMENT OF LAND AND CONSTRUCTION OF SUPER STRUC TURE OVER IT BEING THE BUSINESS ACTIVITY OF THE ASSESSEE, HENCE THE SAME W AS A TRADABLE ITEM FINDING PLACE IN THE PROFIT & LOSS ACCOUNT AS STOCK IN TRAD E. THE YARDSTICK ADOPTED BY THE LD. CIT(A) IS THAT EVEN IF THE PROJECT WOULD HA VE BEEN MATERIALISED, WHETHER THE ASSET WHICH WOULD HAVE COME INTO EXISTE NCE WAS TO BE TREATED AS A CAPITAL ASSET OR STOCK IN TRADE. ADMITTEDLY, THE A SSESSEE BEING IN THE BUSINESS OF REAL ESTATE, THE PROJECT BEING A PART OF BUSINES S ACTIVITY, THE ASSET COULD NOT ITA NO.1707/M/2014 M/S. LODHA GLOWING CONSTRUCTIONS PVT. LTD. 3 HAVE BEEN CLASSIFIED AS A CAPITAL ASSET EVEN IF THE PROJECT HAS BEEN MATURED. UNDER SUCH CIRCUMSTANCES, THE EXPENDITURE WAS INCUR RED BY THE ASSESSEE FOR ITS BUSINESS ACTIVITY. THE FACTS OF THE CASE ARE SQUAR ELY COVERED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . DHOOMKETU BUILDERS AND DEVELOPMENT P. LTD. (2014) 368 ITR 680 (DELHI). W E, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND TH E SAME IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.12.2015. # 4 0 23+ ' 5 6#*7 30.12.2015 3 0 % SD/- SD/- ( ! / RAJENDRA) ( %% / SANJAY GARG) ' #$ / ACCOUNTANT MEMBER & #$ / JUDICIAL MEMBER /MUMBAI ; 6#* / DATED 30.12.2015 * KISHORE # 4 0 .&1HI J I+1 # 4 0 .&1HI J I+1 # 4 0 .&1HI J I+1 # 4 0 .&1HI J I+1/COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED TO TOTO TO : :: : 1. ,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. [1 () / THE CIT(A)- 4. [1 / CIT 5. IA% .&1&* , , / THE DR CONCERNED BENCH, 6. %E F / GUARD FILE. # 4* # 4* # 4* # 4* / // / BY ORDER, /I1 .&1 //TRUE COPY// J JJ J/ // /K K K K ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI