M/s. Cummins Turbo Technologies Limited, Indore V. The ACIT, Ujjain

ITA 2/IND/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9573 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 04-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Assessee Lawyers: ARVIND MANTRI
• Keywords: Depreciation; Rectification of order; Capital expenditure
• Section: 143(3); 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS.2 & 3 /IND/2010 A.YS. 1997-98 & 1998-99 CUMMINS TURBO TECHNOLOGIES LTD., DEWAS PAN AABCT 2018 B APPELLANT VS ACIT, CIR.-1(1), UJJAIN RESPONDENT APPELLANT BY : SHRI ARVIND MANTRI, FCA RESPONDENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THESE APPEALS ARE BY THE ASSESSEES AGAINST THE COMM ON ORDER OF THE LEARNED CIT(A)-UJJAIN, DATED 6.11.2009 ON THE C OMMON GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ASSESSMENT ORDER ON REJECTION OF APPLICATION FILED U/S 154 OF THE ACT AS THE AMOUNT OF RS.5,90,774/- AND RS.5,17,150/-, RESP ECTIVELY, BEING PAYMENT OF STAMP DUTY, ON LEASE HOLD LAND IS A REVE NUE EXPENDITURE, 2 THEREFORE, DEDUCTIBLE FROM TOTAL INCOME OF THE ASSE SSEE FOR THE RELEVANT ASSESSMENT YEAR, WHICH THE ASSESSEE DID NOT CLAIM. 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S HRI ARVIND MANTRI, LD. COUNSEL FOR THE ASSESSEE AND SHRI PRADE EP KUMAR MITRA, LEARNED SR. DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE UNIT WAS SET UP IN 1995 AND STARTED PR ODUCTION IN 1996. IN ASSESSMENT YEAR 2003-04, THE DEPRECIATION WAS DISAL LOWED. OUR ATTENTION WAS INVITED TO PAGE 27 OF THE PAPER BOOK ALONG WITH PAGE 14. ON THE OTHER HAND, THE LD. SR. DR STRONGLY DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE REGISTRATION EXPENSES OF THE LAND ARE CAPITAL COST ONLY AND THE EXPENDITURE WAS NOT CLAIMED, THEREFORE , NO QUESTION OF RECTIFICATION. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE MATERIAL ON RECORD. BRIEF FACTS ARE THAT THE ASSES SEE COMPANY DISCLOSED LOSS OF RS.67,80,152/- FOR THE ASSESSMENT YEAR 1997 -98 IN ITS RETURN FILED ON 26.11.1997 AND THE ASSESSMENT WAS COMPLETED ON 1 6.3.2000 U/S 143(3) OF THE ACT. ON FEBRUARY 3 RD , 2004, THE ASSESSEE FILED AN APPLICATION U/S 154 FOR RECTIFICATION OF MISTAKE ON ACCOUNT OF DEPRECIATION AS DOUBLE TAXATION ON INCOME FROM OTHER SOURCES, BE ING INTEREST. THE SAID APPLICATION WAS REJECTED BY THE LD. ASSESSING OFFICER ON THE GROUND THAT NO APPARENT MISTAKE IS THERE IN THE RECORD WHI CH WAS CHALLENGED BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE CLAIM ON DOUBLE TAXATION ON 3 INTEREST INCOME AND ON DEPRECIATION AFFIRMED THE ST AND OF THE ASSESSING OFFICER WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUN AL. 4. IN FY 1996-97, THE ASSESSEE COMPANY TOOK SOME LA ND ON SUB- LEASE BASIS AND MADE PAYMENT OF RS.5,90,774/- WHICH WAS CAPITALIZED UNDER THE HEAD FIXED ASSET I.E. LEASEHOLD LAND AN D CLAIMED DEPRECIATION. THE CLAIM OF THE ASSESSEE IS THAT SUC H REVENUE EXPENSES ARE NOT TO BE CAPITALISED BUT ARE TO BE ALLOWED AS EXPENDITURE FROM TOTAL INCOME OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YE AR AND ASSESSABLE LOSS IS TO BE ENHANCED. WHILE REGISTERING THE LEAS E DEED WITH THE REGISTERING AUTHORITY THE ASSESSEE CLAIMED TO HAVE INCURRED A SUM OF RS. 5,90,774/- TOWARDS STAMP EXPENSES AND OTHER LE GAL CHARGES. IN ITS ACCOUNTS THE ASSESSEE TREATED THE EXPENSES AS CAPIT AL EXPENDITURE AND CLAIMED AN EQUATED SUM AS DEPRECIATION TO AMORTIZE THE EXPENSES. WE HAVE PERUSED THE RECORD AND CONSIDERED THE ARGU MENTS ADVANCED BY THE LEARNED RESPECTIVE COUNSELS AND ARE OF THE CONSIDERED VIEW THAT THE REGISTRATION EXPENSES OF LAND ARE CAP ITAL COST ONLY AND SINCE THE EXPENSES WERE NOT CLAIMED DURING THE RELE VANT PERIOD, THEREFORE, THERE IS NO QUESTION OF RECTIFICATION. EVEN OTHERWISE, NO CLAIM WAS MADE U/S 139(3) OF THE ACT WHILE FILING THE RET URN FOR THE RELEVANT ASSESSMENT YEAR, THEREFORE, THERE IS NO QUESTION OF MISTAKE OR RECTIFICATION THEREOF U/S 154 OF THE ACT BECAUSE FO R SEEKING RECTIFICATION U/S 154 OF THE ACT THERE MUST BE APPARENT MISTAKE F ROM RECORD AND SUCH 4 MISTAKE MUST BE OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASO NING. IT IS ALSO OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSING OFFICER DISALLOWED THE C LAIM OF DEPRECIATION ON LAND WHEREIN THESE TWO EXPENSES WERE CAPITALIZED BY THE ASSESSEE BY NOT TREATING THE SAME AS CAPITAL EXPENDITURE. TH IS DEVELOPMENT PROMPTED THE ASSESSEE TO MAKE CLAIM U/S 154 FOR THE IMPUGNED ASSESSMENT YEARS WHEREAS THE ASSESSEE CONTESTED THE ISSUE OF DEPRECIATION ON ANOTHER COUNT WHICH WAS REJECTED BY THE DEPARTMENT. HOWEVER, SINCE NO CLAIM WAS MADE BY THE ASSESSEE IN ITS RETURN FILED U/S 139(3) OF THE ACT, THEREFORE, THERE IS NO QUESTION OF RECTIFICATION. , THEREFORE, BOTH THESE APPEALS OF THE ASSESSEE ARE HAVING NO MERIT, THEREFORE, DISMISSED. THE STAND OF THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) IS AFFIRMED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 1.3.2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1.3.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE DN/- 5