DCIT, New Delhi V. M/s Shivalik Global Ltd., New Delhi

ITA 1971/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2304 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-11-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

I.T.A. NO.1971 /DEL/09 1/3 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO.1971 /DEL/2009 ASSESSMENT YEAR : 2005-06 DCIT, M/S SHIVALIK GLOBAL LTD., CIRCLE-8 (1), UNIT NO.11, BLOCK NO.01, NEW DELHI. V. IST FLOOR,.TRIBHUAN COMPLEX, ISHWAR NAGAR, N. DELHI. APPELLANT) (RESPONDENT) PAN /GIR/NO.AABCS-7835-F APPELLANT BY : SHRI KISHORE B. SR. DR. RESPONDENT BY : SHRI VED JAIN, C.A. ORDER PER A.K. GARODIA, AM: THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF LD CIT(A)-XI, NEW DELHI DATED 24.2.2009 FOR ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND RAISED BY THE REVENUE READS AS U NDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.2,10 ,000/- LEVIED BY THE AO U/S 271(1)( C) OF THE IT ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT IN THE PRESENT YEAR, THE AO HAS COMPLETED THE ASSESSMENT U/S 143(3) BY ORDER DATED 20.12.2007 DEEMING THE TOTAL INCOME AT RS.2,09,24,330/- AS AGAINST RETURNED INCOME AT R S.2,03,43,946/-. THE TWO . I.T.A. NO.1971/DEL/09 2/3 ADDITIONS WERE MADE BY THE AO BY HOLDING THAT THE E XPENSES INCURRED BY THE ASSESSEE ON REPAIRS IS CAPITAL IN NATURE. ONE ADDIT ION IS OF RS.3,28,496/- OUT OF REPAIRS OF PLANT AND MACHINERY EXPENSES, AND THE SE COND ADDITION IS OF RS.2,51,890/- OUT OF EXPENSES ON REPAIRS AND MAINTE NANCE OF BUILDING. THESE TWO ADDITIONS WERE MADE BY THE AO BY TREATING PART EXPENSES OF REPAIR AS CAPITAL IN NATURE AND THE NET AMOUNT WAS ADDED AFTER ALLOWI NG DEPRECIATION. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) AND AF TER HEARING THE ASSESSEE IMPOSED A PENALTY OF RS.2.10 LAKHS. AGAINST THE PE NALTY ORDER OF THE AO, THE ASSESSEE WAS IN APPEAL BEFORE LD CIT(A) WHO HAS DEL ETED THE PENALTY AND NOW THE REVENUE IS IN APPEAL BEFORE US. 4. LD DR OF THE REVENUE SUPPORTED THE PENALTY ORDER PASSED BY THE AO WHEREAS LD AR OF THE ASSESSEE SUPPORTED THE ORDER O F LD CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD CIT(A) HAS DEL ETED THIS PENALTY BY OBSERVING THAT THE DISALLOWANCE WAS MADE BY THE AO BY TREATIN G PART OF REPAIRS TO BUILDING AND PLANT & MACHINERY EXPENSES AS CAPITAL AND HENCE , IT DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS ALSO OBSERVED BY HIM THAT THIS ISSUE WAS OF DEBATABLE NATURE AND TWO VIEWS ARE EQU ALLY PROBABLE AND AFTER MAKING THESE OBSERVATIONS, THE LD CIT(A) HAS DELETE D THE PENALTY. NO SPECIFIC DEFECT COULD BE POINTED OUT BY THE LD DR OF THE REV ENUE IN THE ORDER OF LD CIT(A). WE ARE IN AGREEMENT WITH LD CIT(A) THAT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, PENALTY IS NOT JUSTIFIED BECAUSE THIS ISSUE IS ALWAYS DEBATABLE AS TO WHETHER THE PARTICULAR REPAIR EXPENSES IS OF REVENUE NATURE OR OF CAPITAL NATURE. IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFOR E LD CIT(A) THAT THE EXPENSES UNDER CONSIDERATION WAS VERY MUCH OF REVEN UE NATURE AS THE ITEMS PURCHASED AS SPARE PARTS WERE HAVING SHORT SPAN OF LIFE AND THESE ARE COMMONLY NEEDED PARTS ONLY FOR OPERATING MACHINERIES. SIMIL ARLY FOR BUILDING REPAIRS, IT WAS SUBMITTED THAT THESE EXPENSES WERE IN THE NATURE OF NORMAL UPKEEP AND MAINTENANCE. IT WAS ALSO SUBMITTED BY THE LD CIT(A ) THAT BECAUSE OF SMALL AMOUNT INVOLVED, THE ASSESSEE DID NOT FILE QUANTUM APPEAL BUT PENALTY IS NOT . I.T.A. NO.1971/DEL/09 3/3 JUSTIFIED. CONSIDERING ALL THESE FACTS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD CIT(A) AND HENCE, WE UPHOLD THE SAME. THIS GROUN D OF THE REVENUE IS REJECTED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH DECEM BER, 2009. SD/- SD/- (GEORGEMATHAN) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 4.12.2009. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).