The ACIT, Circle-1, Bhavnagar V. M/s. Bansal International Ltd., Bhavnagar

ITA 1993/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6750 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH JAIN SRDR
• Assessee Lawyers: B R PAPAT
• Keywords: Capital asset; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER AND SHRI A.N.PHAUJA, HONBLE ACCOUNTANT MEMBER ITA NO.1993/AHD/2009 ASSESSMENT YEAR:2006-07 DATE OF HEARING:6.4.11 DRAFTED:15.4.11 ACIT, CIRCLE-1, JASHONATH CHOWK, BHAVNAGAR-360 001 V/S. M/S BANSAL INTERNATIONAL LTD. 2137, ATABHAI CHOWK, NR. GOLDEN ARC. BHAVNAGAR PAN NO.AACCB4796K (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI RAJESH JAIN, SR-DR RESPONDENT BY:- SHRI B.R. PAPAT, AR O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THIS IS REVENUES APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME- TAX(APPEALS)-XX, AHMEDABAD IN APPEAL NO CIT(A)-XX/9 /08-09 DATED 19-03- 2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS TAKEN FOLLOWING GROUND:- 1. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS.18,17,115/- MADE BY THE AO ON ACCOUNT OF GMB PLOT PREMIUM PAID TO MRS ASHARANI GUPTA, WITHOU T PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 1.2 IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS E RRED IN LAW AND O FACTS IN NOT APPRECIATING THAT SINCE THE SAID PLOT PREMIUM HAD NOT BEEN ITA NO.1993/AHD/2009 A.Y. 2006-07 ACIT CIR-1, BNG V.M/S BANSAL INTERNATIONAL LTD. PAGE 2 PAID TO GUJARAT MARITIME BOARD (GMB) BUT TO MRS. AS HARANI GUPTA WHO HAD RELINQUISHED HER RIGHT IN FAVOUR OF THE ASSESSE E FOR USING THE SAID PLOT, THE SAID EXPENDITURE WAS RIGHTLY DISALLOWED A S CAPITAL EXPENDITURE BY THE AO. 1.3 IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS E RRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE FACTS OF THE VAR IOUS DECISIONS RELIED UPON BY HIM IN THE APPELLATE ORDER ARE DISTINGUISHA BLE FROM THE FACTS OF THE ASSESSEES CASE AS IN THE PRESENT CASE, THE SAI D PAYMENT WAS NOT MADE TO GMB FOR UTILIZATION OF THE PLOT BUT WAS MAD E TO THE OWNER MRS. ASHARANI GUPTA FOR RELINQUISHING HER RIGHT IN FAVOU R OF THE ASSESSEE. 1.4 IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS E RRED IN LAW AND ON FACTS IN NOT FOLLOWING THE RATIO OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. KHIMLINE PUMPS LTD. REPORTED IN 258 ITR 459 (BOM) IN WHICH THE HONBLE COURT HAS HELD THAT THE PAYMENT FOR PURCHASE OF LEASEHOLD RIGHTS IN LAND WAS A CAPITAL EXPENDITURE. 3. THE DISALLOWANCE OF RS.18,17,115/- DEBITED TO GU JARAT MARITIME BOARD (GMB FOR SHORT) PLOT PREMIUM EXPENDITURE AMOUNT WHI CH HAS BEEN TREATED AS CAPITAL EXPENDITURE BY THE ASSESSING OFFICER. 4. DURING THE ASSESSMENT PROCEEDINGS ASSESSING OFFI CER OBSERVED THAT THE RIGHTS OVER THE SHIP BREAKING PLOT WERE ACQUIRE D BY ASSESSEE FROM MRS. ASHARANI GUPTA, WIDOW OF LT. SHIVCHAND GUPTA. THE A SSESSING OFFICER WAS THEREFORE OF THE VIEW THAT SINCE THE EXPENDITURE HA S BEEN PAID TO MRS. ASHARANI GUPTA WHO RELINQUISHED HER RIGHT IN FAVOUR OF ASSESSEE TO USE THE SHIP BREAKING PLOT AND SINCE THE SAME HAS NOT BEEN PAID TO GMB AND SAME CANNOT BE CONSIDERED TO BE A REVENUE EXPENDITURE AN D THE CLAIM WAS DISALLOWED TREATED IT AS CAPITAL EXPENDITURE FOR AC QUISITION OF RIGHTS TO UTILIZE THE PLOT. BEFORE LD. CIT(A) ASSESSEES CONTENTION W AS THAT RIGHTS OVER THE SHIP BREAKING PLOT ACQUIRED UNDER THE REGULATIONS NOTIFI ED BY GOVERNMENT OF GUJARAT WHICH ARE TITLED AS GUJARAT MARITIME BOARD (CONDITIONS AND PROCEDURES FOR GRANTING PERMISSION FOR UTILIZING SH IP BREAKING PLOT) REGULATIONS 1994. THE SAME WAS ACQUIRED ONLY FOR THE REMAINING PERIOD OF THE ORIGINAL CONTRACT AND WERE FURTHER SUBJECTED TO PAYMENT OF T RANSFER FEES TO GMB AND ITA NO.1993/AHD/2009 A.Y. 2006-07 ACIT CIR-1, BNG V.M/S BANSAL INTERNATIONAL LTD. PAGE 3 COMPLIANCE OF ALL THE TERMS AND CONDITIONS OF THE S AID REGULATIONS. ASSESSEE ALSO RELIED ON THE JUDGMENT OF HONBLE APEX COURT I N THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. V. CIT (1997) 225 ITR 802 IN THIS REGARD. ASSESSEE ALSO RELIED ON THE JUDGMENT OF ITA T RAJKOT BENCH IN THE CASE OF JCIT V. KAPOORCHAND BANSAL (2004) 88 TTJ 379 (RJT) HOLDING THAT THE PAYMENT MADE FOR ALLOTMENT OF PLOT UNDER GUJARAT MA RITIME BOARD ACT, 1981 IS OF REVENUE NATURE AS NO CAPITAL ASSET OF ENDURING N ATURE IS BEING ACQUIRED BY THIS PAYMENT. IT WAS ALSO THE CONTENTION OF THE ASS ESSEE THAT THE NATURE OF EXPENDITURE IS TO BE SEEN WITH REFERENCE TO ITS CHA RACTERISTIC AND NOT WITH REFERENCE TO IDENTITY OF THE PAYEE. 5. TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASSESSEE LD. CIT(A) ALLOWED THE APPEAL OF ASSESSEE TREATING THE EXPENDI TURE OF RS.18,17,115/- AS REVENUE EXPENDITURE. AGGRIEVED BY THIS ORDER, NOW T HE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING LD. DR RELIED ON THE ORDE R OF ASSESSING OFFICER WHILE LD. AUTHORIZED REPRESENTATIVE RELIED ON THE O RDER OF LD. CIT(A). AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT LD. CIT(A) WHILE ALLOWING THE APPEAL OF ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. (SUPRA) AND THE DECISION OF THE TRIBUNAL IN THE CA SE OF KAPOORCHAND BANSAL (SUPRA) THE RELEVANT PORTION OF THE ORDER FOR THE S AKE OF BREVITY IS HEREBY REPRODUCED AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSION OF THE APPELLANT IN THIS REGARD. IT IS NOTICED FROM THE RE CORDS AVAILABLE THAT THE RIGHTS OVER THE SHIP BREAKING PLOT HAVE BEEN ACQUIR ED UNDER THE GUIDELINES FRAMED BY GUJARAT MARITIME BOARD AND THE SE HAVE BEEN ACQUIRED BY AN AGREEMENT OF 17 TH DECEMBER, 2004 ONLY FOR THE LIMITED PERIOD OF THE UNUTILIZED CONTRACT. THE AGREEMENT IS EXPRESSLY MADE EFFECTIVE AS PER THE REGULATIONS ISSUED BY GOVERNME NT OF GUJARAT AND THESE HAVE BEEN CLAIMED AS DEDUCTION PROPORTIONATEL Y IN THE RELEVANT ASSESSMENT YEARS INCLUDING A CLAIM OF DEDUCTION OF RS.18,17,115/- IN A.Y. 2006-07. CONSIDERING THE ABOVE FACTS AND GOING THROUGH THE ITA NO.1993/AHD/2009 A.Y. 2006-07 ACIT CIR-1, BNG V.M/S BANSAL INTERNATIONAL LTD. PAGE 4 AFORESAID REGULATIONS NOTIFIED BY THE GOVERNMENT OF GUJARAT, I FIND THAT THE MATTER IS DIRECTLY COVERED BY VARIOUS JUDGMENTS CITED BY THE ASSESSEE. THE EXPENDITURE WHETHER CAPITAL, REVENUE OR PERSONAL IS TO BE SEEN WITH ITS INTRINSIC CHARACTERISTIC WHICH CAN BE ASCERTAINED FROM THE SURROUNDING CIRCUMSTANCES, THE APPLICABLE REGUL ATIONS, THE TERMS OF THE CONTRACT ETC. AND A MERE FACT OF THERE BEING A NON GMB TRANSFEROR DOES NOT ENABLE THE AO TO TREAT THIS AS CAPITAL EXP ENDITURE, DISREGARDING THE DIRECT JUDGMENT OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD VS. CIT (1997) 225 ITR 802 AND OF JCIT VS. KAPOORCHAND BANSAL (2004) 88 TTJ 379. THEREFORE, THE ADDITION OF RS.18,17,115/- MADE BY THE AO IS NOT HELD TO BE JUSTIFIED AND THE AO IS DIRECTED TO TREAT THIS EXPENDITURE AS DEDUCTIBLE REVENUE EXPENDITURE. THIS GROUND OF A PPEAL STANDS ALLOWED. IN VIEW OF THE ABOVE, THE ORDER PASSED BY LD. CIT(A ) IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06/05/2011 SD/- SD/- (A.N.PHAUJA) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 06/05/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-XX, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD