Presidency Kid Leather P Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1836/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8438 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 17-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Revenue expenditure
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.1836/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) M/S. PRESIDENCY KID LEATHER P.LTD., 21, SPARTAN NAGAR, 1 ST FLOOR, MOGAPPAIR EAST, CHENNAI-600 037. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE V(1), CHENNAI. PAN: AAACP1952D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. SUPRIYO PAL, JCIT /DATE OF HEARING : 8 TH SEPTEMBER, 2016 /DATE OF PRONOUNCEMENT : 23 RD SEPTEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 3, CHENNAI DATED 30.03.2016 IN ITA NO.76/2014-15/CI T(A)-3 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE AC T. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF ` 76,24,932/- MADE BY THE LEARNED ASSESSING OFFICER TOWARDS PRELIMINARY /PREOPERATIVE EXPENDITURE WRITTEN OFF WHO HAD FAILED TO CONSIDER THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BY CITING THE DECISION OF THE 2 ITA NO.1836/MDS/2016 HONBLE APEX COURT IN THE CASE OF GOETZ INDIA LTD. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29.03.2012 ADMITTING INCOME OF RS.46,24,963/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 07.09.2012. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILE D REVISED COMPUTATION OF INCOME DATED 19.02.2014 WHER EIN THE ASSESSEE CLAIMED DEDUCTION OF PRELIMINARY/PRE-OPERA TIVE EXPENDITURE WRITTEN OFF AMOUNTING TO RS.6,99,22,700 /-. THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT TH E REVISED COMPUTATION OF INCOME MADE BY THE ASSESSEE FOR CLAI MING DEDUCTION CANNOT BE ENTERTAINED BECAUSE OF THE DECI SION OF THE HONBLE APEX COURT IN THE CASE OF GOETZ INDIA L TD. VS. CIT REPORTED IN 2006 TIOL 198-SC- IT . 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFI CER BY OBSERVING AS UNDER:- 3 ITA NO.1836/MDS/2016 IT IS ADMITTED BY THE APPELLANT COMPANY THAT THE S AID EXPENDITURE IS ENDURING IN NATURE, THEREFORE WANTED TO CLAIM THE SAME IN FUTURE YEARS WHICH IS EVIDENT FRO M THE ABOVE MENTIONED NOTE ON ACCOUNTS OF THE APPELLANT. IN MY CONSIDERED OPINION APPELLANT CLAIM CANNOT BE CONSID ERED ON THREE ACCOUNTS. I) THE DEFERRED EXPENDITURE IS N OT PERTAIN TO ASSESSMENT YEAR ON HAND I.E. 2011-12 AS SAME WAS NOT INCURRED DURING THE PREVIOUS YEAR RELEVANT YEAR 2011-12 (2) THE EXPENDITURE AS ADMITTED BY THE APPE LLANT COMPANY IS ENDURING IN NATURE AND SAME CANNOT BE ALLOWED BEING CAPITAL IN NATURE. THIRDLY, APPELLANT S CLAIM IS NOT GENUINE AND ALSO NOT REASONABLE. THEREFORE, THE RATIO OF JURISDICTIONAL HIGH COURT RELIED BY THE APPELLAN T IS NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. FU RTHER, THEIR LORDSHIPS HAS HELD THAT ADDITIONAL GROUNDS OM ITTED TO HAVE BEEN MENTIONED IN THE ORIGINAL MEMO OF GROUNDS CAN BE ENTERTAINED BY THE APPELLATE AUTHORITIES IF IT I S FOUND GENUINE AND REASONABLE. IN MY CONSIDERED OPINION, I T IS NOT GENUINE BECAUSE LOSS ON ACCOUNT OF FOREIGN EXCH ANGE IS ALSO BEING BROUGHT UNDER DEFERRED REVENUE EXPEND ITURE DURING THE APPELLATE PROCEEDINGS WHEREAS IN NOTES O F ACCOUNT SUBMITTED SAME IS NOT FOUND MENTIONED AS DEFERRED REVENUE EXPENDITURE EXCEPT STATING THAT FO REIGN EXCHANGE TRANSACTIONS ARE RECORDED AT THE EXCHANGE RATES PREVAILING ON THE DATE OF THE TRANSACTIONS. THIS P ART OF THE CLAIM IS NOT FOUND HAVE IN THE NOTES ON ACCOUNT EXC EPT SUBMISSIONS FILED BEFORE ME. FURTHER APPELLANT ADMI TS THAT THE EXPENDITURE IS PRE-OPERATIVE / PRELIMINARY EXPE NSES WHICH HAS TO BE CLAIMED ONLY UNDER SECTION 35D IF T HE CONDITIONS THEREIN ARE SATISFIED AND SAME IS CLAIME D IN THE ORIGINAL RETURN OF INCOME. THEREFORE, KEEPING IN V IEW OF THE ABOVE DISCUSSION, I HOLD THAT APPELLANTS CLAIM IS NOT GENUINE AND ALSO UNREASONABLE, THEREFORE NOT ENTERT AINED. APPEAL IS DISMISSED. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED BY STATING THAT THE TRIBUNAL HAS POWER TO AD MIT ANY ADDITIONAL LEGAL GROUND DURING THE COURSE OF THE AP PELLATE PROCEEDINGS AND ACCORDINGLY HE PRAYED THAT THE ADDI TIONAL GROUND MAY BE ADMITTED AND THE MATTER MAY BE REMITT ED 4 ITA NO.1836/MDS/2016 BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER T O CONSIDER THE CLAIM OF THE ASSESSEE AND DECIDE THE ISSUE AFRE SH. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, VEHEMENTLY OPPOSED TO THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND REQUESTED FOR CONFIRM ING THE ORDERS OF THE REVENUE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. THE HON BLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. VS. CIT REPORTED IN 229 ITR 383 (SC) HAS CATEGORIC ALLY HELD THAT THE TRIBUNAL HAS JURISDICTION TO DECIDE ANY AD DITIONAL LEGAL GROUND RAISED BEFORE IT FOR THE FIRST TIME. ACCORDI NGLY, WE HEREBY ADMIT THE ADDITIONAL GROUND RAISED BY THE AS SESSEE WITH REGARD TO THE CLAIM OF DEDUCTION OF PRELIMINAR Y / PRE- OPERATIVE EXPENDITURE AND REMIT THE SAME TO THE FIL E OF THE LEARNED ASSESSING OFFICER FOR FRESH CONSIDERATION. IT IS ORDERED ACCORDINGLY. 5 ITA NO.1836/MDS/2016 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD SEPTEMBER, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 23 RD SEPTEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF