ACIT, CHENNAI V. M/s. Neyveli Lignite Corporation Ltd., Neyveli

ITA 223/CHNY/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4602 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-08-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 26-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN JT
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO.223/MDS/2009 ASSESSMENT YEAR : 2001-02 THE ASSTT. COMMISSIONER OF INCOME-TAX LARGE TAXPAYER UNIT CHENNAI VS M/S NEYVELI LIGNITE CORPORATION LTD CORPORATE OFFICE PO NEYVELI 607 801 CUDDALORE DISTRICT [PAN AAACN 1121 C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. MADHAVAN, JT. CIT RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE DATE OF HEARING : 29-08-2013 DATE OF PRONOUNCEMENT : 30-08-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE LD. CIT(A), LARGE TAXPAYER UNIT, CHENNAI, DATED 29.8.2008, BY TAKING THE FOLLOWING GROUNDS OF APPEAL: 1 . THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 . THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT THE EXPENDITURE INCURRED ON REPLACEMENT OF CONVEYOR BELT AND ACCESSORIES AS REVENUE EXPENDITUR E INSTEAD OF CAPITAL EXPENDITURE. I.T.A.NO.223/09 :- 2 -: 2.2. HAVING REGARD TO DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT V. SARAVANA SPINNING MILLS P. LTD. (293 ITR 201), THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER . 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 2. AT THE OUTSET, THE LD. A.R OF THE ASSESSEE POINTED OUT THAT THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AS THE PERMISSION SOUGHT FROM THE COMMITTEE ON DISPUTES(COD) OF THE C ENTRAL GOVERNMENT FOR PURSUING WITH ITS APPEAL BEFORE THE TRIBUNAL WAS DISMISSED AT THE MEETING HELD ON 17.2.2010 AND FILE D A COPY OF THE MINUTES OF THE SAID MEETING. HE POINTED OUT THAT A T ITEM NOS. 20 TO 25 THE ASSESSEES NAME APPEARS AND IT WILL BE SEEN FROM PAGE 2 OF THE SAID MINUTES OF MEETING THAT THE PERMISSION SOUGHT BY THE REVENUE TO PURSUE ITS APPEAL BEFORE THE TRIBUNAL WAS REJECTED . 3. THE LD. DR VERY FAIRLY AGREED WITH THE ABOVE SUBMIS SIONS OF THE LD. A.R OF THE ASSESSEE. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING TH E MATERIALS ON RECORD, WE FIND THAT THE COD IN ITS ME ETING HELD AT NEW DELHI ON 17.2.2010, WHILE DECIDING PERMISSION SOUGH T BY THE REVENUE I.T.A.NO.223/09 :- 3 -: TO PURSUE ITS APPEAL AGAINST THE ASSESSEE, DECLINED THE PERMISSION TO CBDT, BY OBSERVING AS UNDER: CENTRAL BOARD OF DIRECT TAXES NEYVELI LIGNITE CORPORA -TION LIMITED WHETHER CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF EXPENDITURE INCURRED ON REPLACEMENT OF CONVEYOR BELT AND ACCESSORIES 279/COD/256/ 2009-ITJ 22/09/2009 ITAT COMMISSIONER (APPEAL) ITA NO.15/07-08 29/08/2008 AMOUNT 7000 TAX 2450 2001-02 THE COMMITTEE HEARD BOTH PARTIES TO THE DISPUTE. TH E REPRESENTATIVE OF CBDT STATED THAT THE CIT(A) ERRED IN DELETING TH E ADDITION MADE ON ACCOUNT OF EXPENDITURE INCURRED ON REPLACEMENT OF C ONVEYOR BELT AND ACCESSORIES. THE A.O HAD REJECTED THE ASSESSEE'S C ONTENTION AND WAS OF THE VIEW THAT THE EXPENDITURE INCURRED IN RE PLACEMENT OF CONVEYOR BELT AND ACCESSORY WAS ONE TLIME EXPENDITU RE AND THE INVESTMENT IN CONVEYORS SYSTEM WOULD PRODUCE BENEFI T TO THE ASSESSEE FOR SEVERAL YEARS. THUS, THE DEPARTMENT IS OF THE VIEW THAT THE EXPENDITURE IS OF A CAPITAL NATURE. THE CIT(A) WAS OF THE VIEW THAT THE CONVEYOR BELTS UNDERGO WEAR AND TEAR DURING THE PROCESS OF TRANSPORTATION AND IT HAS TO BE REPLACED TO ENSURE THE MAINTENANCE AND RUNNING OF CONVEYOR SYSTEM. THUS, THE EXPENDITU RE IS OF A REVENUE NATURE. THE REPRESENTATIVE OF NEYVELI LIGNITE CORPORATION LIMITED STATED THAT THE CONVEYOR SYSTEM CONSISTS OF DRIVE HEAD, RAILS, FRAME, ROLLERS CONVEYOR BELTS AND TAIL END, CONVEYOR BELT IS A PAR T OF THE CONVEYOR SYSTEM AND ITS REPLACEMENT IS TO BE TREATED AS REPL ACEMENT OF SPARE ITEMS AND IT IS NOT A MACHINERY. THE A.O ERRED IN TREATING THE EXPENDITURE AS CAPITAL IN NATURE . THE COMMITTEE WAS OF THE VIEW THAT THERE IS NO INFI RMITY IN THE DECISION OF THE CIT(A) ON THIS ISSUE. IT, THEREFOR E, DECLINED PERMISSION TO CBDT TO PURSUE THE APPEAL BEFORE ITAT. I.T.A.NO.223/09 :- 4 -: 5. IN VIEW OF THE ABOVE, WE DISMISS THE APPEAL OF THE REVENUE AS NOT MAINTAINABLE, IN LIMINE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON FRIDAY, THE 30 TH OF AUGUST, 2013, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 30 TH AUGUST, 2013, RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR