ACIT 14(1)(2), MUMBAI V. DOW AGRO SCIENCES INDIA P.LTD, MUMBAI

ITA 2119/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1531 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Bench Allotted: I
• Assessment Year: 2002-2003
• Appeal Filed On: 10-04-2015
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Bad and doubtful debts; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO.2119/M/2015 (ASSESSMENT YEAR: 2002 - 2003) ACIT - 14(1)(2), MUMBAI. / VS. M/S. DOW AGRO SCIENCES INDIA PVT LTD (FORMERLY KNOWN AS DE - NOCIL CORP PROTECTION PVT LTD), 1 ST FLOOR, UNIT NO.8, SAKHI HOUSE, CORPORATE PARK, V N PURAV MARG, CHEMBUR, MUMBAI 400071. ./ PAN :AAACD3813H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI T.A. KHAN, DR / RESPONDENT BY : SHRI NISHANT THAKKAR / DATE OF HEARING : 01.12.2016 / DATE OF PRONOUNCEMENT : 16 .12.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 10.4.2015 IS AGAINST THE ORDER OF THE CIT (A) - 22, MUMBAI FOR THE ASSESSMENT YEAR 2002 - 2003. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING EFFECTIVE GROUND WHICH READS AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN TREATING THE CAPITAL EXPENDITURE ON RESEARCH AND DEVELOPMENT OF RS. 93,41,333/ - AS REVENUE EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE EXPENDITURE SPEND FOR ENDURING BENEFIT TO THE ASSES SEE AND IT IS A DEPRECIABLE ASSET. 2. IN THIS APPEAL, REVENUE IS AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT (A) IN RESPECT OF RESEARCH AND DEVELOPMENT (R&D) EXPENSES OF RS. 93.41 LAKHS. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PESTICIDES, AGRO CHEMICALS AND SEEDS. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE LOSS AT RS. 4,17,19,058/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, WHEREIN AO MADE CERTAIN DISALL OWANCE AND 2 DISALLOWANCE OF RS. 93.41 LAKHS IS ONE OF SUCH DISALLOWANCE, WHICH IS THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL. IN THE RETURN OF INCOME, A SSESSEE CLAIMED THE SAID EXPENDITURE OF RS. 93.41 LAKHS AS A L L O W A B L E EXPENDITURE AND IN THE SCRUTI NY ASSESSMENT, AO TREATED THE SAME AS CAPITAL EXPENDITURE A N D A D D E D T O T H E I N C O M E O F T H E A S S E S S E E . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) GRANTED RELIEF TO THE ASSESSEE BY TREATING THE SAID AMOUNT OF RS. 93.41 LAKHS AS REVENUE EXPENDITURE AS CLAIMED BY THE ASSESSEE. WHILE GRANTING RELIEF, CIT (A) RELIED ON HIS ORDER IN THE ASSESSEES OWN CASE FOR THE AY 2005 - 06. THE CONT ENTS OF PARAS 3.4 TO 3.7 OF THE CIT (A)S ORDER (PAGE 4 OF THE CIT (A)S ORDER) ARE RELEVANT IN THIS REGARD. AS PER THE CONTENTS OF PARA 3.6, CIT (A) HEAVILY RELIED ON THE ORDER OF THE CIT (A) FOR THE AY 2005 - 06 AND EXTRACTED THE CONTENTS OF PARA 7.4 OF TH AT ORDER OF THE CIT (A). AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE FILED AN ORDER OF THE TRIBUNAL IN ASS ESSEES OWN CASE VIDE ITA NO.8092/M/2011 FOR THE AY 2005 - 06 AND OTHERS, DATED 20.9.2016 AND SUBMITTED THAT THE RELIEF GRANTED BY THE CIT (A) IN THAT YEAR HAS ATTAINED FINALITY. BRINGING OUR ATTENTION TO THE GROUNDS RAISED BY THE REVENUE IN THAT YEAR, LD C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE RELATING TO THE EXPENSES ON ACCOUNT OF R & D WAS NEVER AGITATED BY THE REVENUE IN THE TRIBUNAL. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS RAISED BY THE REVENUE FOR TH E AY 2005 - 06 BEFORE THE TRIBUNAL. 5. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 6. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISION OF THE TRIBUNAL FOR THE AY 200 5 - 06 (SUPRA) AND THE RELEVANT MAT ERIAL PLACED BEFORE US, WE FIND I N T H E O R D E R O F T H E T R I B U N A L THE ISSUES RELATING TO FORWARD CONTRACTS, BAD DEBTS WERE ONLY RAISED BY THE REVENUE AND NOT THE GROUNDS RELATING TO R & D ISSUE. ON PERUSAL OF THE SAID ORDERS, WE FIND, R & 3 D ISSUE HAS REAC HED FINALITY AND IN FAVOUR OF THE ASSESSEE. CONSIDERING THE SAME, WE ARE OF THE OPINION, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN T HE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON 1 6 T H DECEMBER, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16.12 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI