The ACIT, Circle-1, Bhavnagar V. Shree Electromelts Ltd., Bhavnagar

ITA 2052/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8281 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA
• Assessee Lawyers: ABHIMANYU SINGH BHATI
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA.NO.2052/AHD/2013 / ASSTT.YEAR : 2009-10 ACIT, CIR.1 BHAVNAGAR. VS SHREE ELETROMELTS LTD. 3-4, KARTIKEY COMPLEX KALANALA BHAVNAGAR 364 001. PAN : AADCS 0001 K / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI RAJESH MEENA, SR.DR ASSESSEE BY : SHRI ABHIMANYU SINGH BHATI / DATE OF HEARING : 11/10/2017 / DATE OF PRONOUNCEMENT: 24/10/2017 !'/ O R D E R REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)- XX, AHMEDABAD DATED 2.5.2013 PASSED FOR THE ASSTT.Y EAR 2009-10. 2. SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT (A) HAS ERRED IN TREATING PAYMENT OF RS.44,95,710/-MADE TO PGVCL NEW CONNECTION CHARGES AS REVENUE EXPENDITURE AS AGAINST CAPITAL EXPENDITU RE TREATED BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ELECTRONICALLY DECLARING INCOME AT RS.40,25,160/-. THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.44,95,710/-. UNDER THE HEAD PGVCL NEW CONNECTION ITA NO.2052/AHD/2013 2 CHARGES. IN OTHER WORDS, THE ASSESSEE HAS APPLIED FOR NEW CONNECTION TO ELECTRICITY BOARD WHICH HAS GRANTED CONNECTION ON T HE CONDITION THAT THE ASSESSEE WILL INCUR EXPENDITURE FOR LAYING A NEW TR ANSMIT LINE. THE ASSESSEE HAS TREATED THE EXPENDITURE AS REVENUE EXPENDITURE, WHEREAS THE LD.AO TREATED THE SAME AS CAPITAL EXPENDITURE. ON APPEAL, THE LD .CIT(A) HAS ACCEPTED CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT NO N EW ASSETS CAME INTO EXISTENCE. NO DOUBT THE ASSESSEE HAS INCURRED EXPE NDITURE FOR LAYING DOWN A NEW SERVICE LINE, BUT THIS ELECTRIC LINE WILL BE UN DER THE OWNERSHIP OF THE ELECTRICITY BOARD AND NOT WITH THE ASSESSEE. THUS, ACCORDING TO THE LD.CIT(A), THE EXPENDITURE INCURRED BY THE ASSESSEE DESERVES T O BE TREATED AS REVENUE EXPENDITURE. THE LD.CIT(A) HAS MADE REFERENCE TO T HE FOLLOWING CASE LAWS: I) SMT. PRABHAVATI S. SHAH VS. CIT, 31 ITR 1 (BOM) II) PAREKH AUTOMOBILES VS. ITO, 68 TTJ (RAJKOT) 722 III) ITO (EXEMPTION) VS. BAJORIA FOUNDATION, 254 ITR (AT ) 4. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESS EE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS. E XCEL INDUSTRIES LTD., 122 ITR 0995 AND DELHI HIGH COURT DECISION IN THE C ASE OF CIT VS. SAW PIPES LTD., 300 ITR 0035. THE LD.DR WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE ASSESSEE. HE RELIED UPON THE ORD ER OF THE LD.AO. 5. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ISSUE IN DISPUTE IS SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT AS WELL AS DELHI HIGH COURT. IN BOTH DECISIONS, THE ASSESSEE HAS INCURRE D EXPENDITURE FOR AVAILING ELECTRICITY CONNECTION, WHEREBY THEY HAVE PAID FOR LAYING DOWN OVERHEAD LINE. HONBLE COURTS HAVE UPHELD THAT INCURRENCE OF SUCH EXPENDITURE IS IN THE NATURE OF REVENUE. THE LD.CIT(A) HAS PLACED RELIAN CE ON THESE DECISIONS, AND ITA NO.2052/AHD/2013 3 THEREAFTER TREATED THE EXPENDITURE AS REVENUE IN NA TURE. IN OUR OPINION, THE LD.CIT(A) HAS RIGHTLY CONSTRUED THE POSITION OF LAW LAID DOWN BY THE HONBLE COURTS, AND THEREFORE, NO INTERFERENCE DESERVES TO BE CALLED FOR IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 24 TH OCTOBER, 2017 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER