Tushar Hukumchand Mehta, Pune V. Deputy Commissioner of Income-tax, Circle - 8, Pune

ITA 172/PUN/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6184 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 17-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revenue expenditure; Capital expenditure
• Section: 143(3); 22

Judgement Text

आयकर अपीलीय अिधकरण “ए” ᭠यायपीठ पुणे मᱶ । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE (Through Virtual Court) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM आयकर अपील सं. / ITA No.172/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2013-14 Tushar Hukumchand Mehta, Mehta Pressings, J-530, MIDC Bhosari, Pune-411026. PAN : AAZPM6526G .......अपीलाथᱮ / Appellant बनाम / V/s. DCIT, Circle-8, Pune. ......ᮧ᭜यथᱮ / Respondent Assessee by : Shri Kishor Phadke Revenue by : Shri S. P. Walimbe सुनवाई कᳱ तारीख / Date of Hearing : 16.12.2021 घोषणा कᳱ तारीख / Date of Pronouncement : 17.12.2021 आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax- 8, Pune [‘CIT(A)’ for short] dated 09.11.2017 for the assessment year 2013-14. 2. Briefly, the facts of the case are as under : The appellant is an individual engaged in the business of manufacturing of Auto Components. The return of income for the assessment year 2013-14 was filed on 13.09.2013 declaring business loss of Rs.61,86,308/- and capital loss of Rs.13,39,946/-. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Circle-8, Pune (‘the Assessing Officer’) vide order dated 08.02.2016 2 ITA No.172/PUN/2018 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) disallowing short term capital loss of Rs.13,39,946/-. The brief facts relating to the claim as under : During the year 2007, the appellant acquired a plot of land from Karnataka Industrial Areas Development Board, Dharwad under the lease- cum-sale agreement for the purpose of setting up of a new plant. It also made an initial deposit of Rs.13,51,028/-. However, due to some reasons, the appellant give-up the idea of starting new plant at Dharwad. Consequentially, no civil construction works, erection of machinery had taken place within the period of 24 months from the date of taking possession of the plot thereby violating the terms of the allotment. Subsequently, the assessee surrendered the plot as it could not comply with the terms of allotment. The Karnataka Industrial Areas Development Board vide letter dated 08 th August, 2012 cancelled the allotment of land and forfeited 20% of the initial deposit i.e. Rs.4,50,361/-. In the return of income, the appellant had claimed as long term capital loss of Rs.13,39,946/-. However, the Assessing Officer as well as the ld. CIT(A) denied the claim holding that there was no transfer of any capital asset. For the first time before the ld. CIT(A), the claim for deduction of Rs.4,50,361/- as ‘revenue expenditure’ was made and the same was denied by the ld. CIT(A) holding it to be ‘capital expenditure’. 3. Being aggrieved, the appellant is before us in the present appeal. 4. It is submitted before us that the advance was made during the normal course of business and, therefore, forfeiture of the deposits should be allowed as deduction placing reliance on the decisions of the Hon’ble Karnataka High Court in the case of CIT vs. Tyco Electronics Corpn. India (P.) Ltd., 22 3 ITA No.172/PUN/2018 taxmann.com 267 (Karnataka) and the Hon’ble Madras High Court in the case of Tamilnadu Magnesite Ltd. vs. ACIT, 95 taxmann.com 239 (Madras). 5. On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities. 6. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the allowability of forfeiture of initial deposit on surrender of the plot of land to Karnataka Industrial Areas Development Board. Admittedly, the initial deposit for acquisition of plot was made by the assessee during the normal course of business. As a result of forfeiture of deposit on surrender of the land, there is no creation of any new asset, the expenditure incurred towards acquisition of land would be considered as ‘revenue in nature’. The ratio of the decisions of the Hon’ble Karnataka High Court in the case of CIT vs. Tyco Electronics Corpn. India (P.) Ltd., 22 taxmann.com 267 (Karnataka) and the Hon’ble Madras High Court in the case of Tamilnadu Magnesite Ltd. vs. ACIT, 95 taxmann.com 239 (Madras) are hereby squarely applicable to the facts of the present case. Accordingly, we direct the Assessing Officer to allow the amount of forfeiture of deposits of Rs.4,50,361/- as ‘revenue expenditure’. Thus, the issue raised by the assessee in the ground of appeal stands allowed. 7. In the result, the appeal of the assessee stands allowed. Order pronounced on this 17 th day of December, 2021. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) ᭠याियक सद᭭य/JUDICIAL MEMBER लेखा सद᭭य/ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 17 th December, 2021. Sujeet 4 ITA No.172/PUN/2018 आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-8, Pune. 4. The Pr.CIT-5, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.