Modi Inds.Ltd., V. DCIT, CC 19,

ITA 2245/DEL/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9756 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 26-08-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 04-05-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT JAIN; N CH HILLAR
• Keywords: Depreciation; Revenue expenditure; Capital expenditure; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI D.R. SINGH, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.2245/DEL./2007 (ASSESSMENT YEAR : 2003-04) MODI INDUSTRIES LTD., VS. DCIT, CEN. CIRCLE 19 7, RAJ NIWAS MARG, NEW DELHI. DELHI. (PAN/GIR NO.AAACM2063Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT JAIN & SHRI N. CHHILLAR, REVENUE BY : SMT. KAVITA BHATNAGAR, CIT(DR) ORDER PER A.K. GARODIA: AM THIS IS ASSESSEES APPEAL DIRECTED AGAINST EH ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS)-VIII, NEW, DELHI DATED 5.2.2007 FOR A SSESSMENT YEAR 2003-04. 2. THE FIRST GROUND OF APPEAL READS AS UNDER: THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRE D ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF DEDUCTION FOR INTERE ST OF RS.2,40,000. 3. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE TH AT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE IN VARIOUS EARLIE R YEARS I.E. ASSESSMENT YEARS 1982-83 TO 85-86 AND ALSO IN ASSESSMENT YEAR 1995-96. HE ALS O SUBMITTED THAT IN THESE ORDERS, THE TRIBUNAL HAS FOLLOWED THE ORDER FOR ASSESSMENT YEAR S 1975-76 TO 77-78. IT IS SUBMITTED THAT IN SPITE OF THIS, THE ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE BECAUSE THERE ARE VARIOUS JUDGMENTS OF HONBLE ALLAHABAD HIGH COU RT IN THE CASE OF DHAMPUR SUGAR MILLS LTD. AND ALSO IN THE CASE OF SWEDESHI MINING AND MANUFACTURING CO. LTD. AND IN THE CASE OF SHADILAL ENTERPRISES LTD. HE ALSO SUBM ITTED THAT THESE JUDGMENTS WERE NOT CONSIDERED BY THE TRIBUNAL IN THE EARLIER YEARS AND HENCE THIS ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JUDGMENTS O F HONBLE ALLAHABAD HIGH COURT. AT I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 2 THIS JUNCTURE, IT WAS ENQUIRED BY THE BENCH AS TO W HETHER THE ASSESSEE HAS PREFERRED APPEAL BEFORE HONBLE DELHI HIGH COURT AGAINST THE TRIBUNA LS ORDER IN THE EARLIER YEARS. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE THAT APPEAL S ARE PENDING BEFORE HONBLE DELHI HIGH COURT. UNDER THIS SITUATION, WE FEEL IT FIT A ND PROPER TO DECIDE THIS ISSUE AGAINST THE ASSESSEE BY FOLLOWING VARIOUS DECISIONS OF THE TRIB UNAL IN THE EARLIER YEARS IN ASSESSEES OWN CASE. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS REJECTED. 2. GROUND NO.2 OF THE APPEAL READS AS UNDER: THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRE D ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF PROVISIONS FOR OBSOLETE STORES WRITTEN OFF AMOUNTING TO RS.24.38. 3. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE TH AT THIS ISSUE WAS ALSO DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE IN ITS OWN CASE F OR ASSESSMENT YEAR 2001-02. HE SUBMITTED THAT THE TRIBUNALS DECISION IS AVAILABLE ON PAPER BOOK PAGES 195-230. IT IS POINTED OUT THAT IN THIS YEAR, THE TRIBUNAL HAS DEC IDED THIS ISSUE AGAINST THE ASSESSEE ON THE BASIS OF TWO REASONING. OUR ATTENTION WAS DRAWN TO PARA. 9 OF THE TRIBUNALS DECISION. THE FIRST REASONING GIVEN BY THE TRIBUNAL IS THAT T HE ASSESSEE HAD MADE ONLY PROVISIONS AND THERE IS NO ACTUAL WRITE OFF. THE SECOND REASO N GIVEN IS THAT THE ASSESSEE HAS NOT CONSIDERED SCRAP VALUE OF THE OBSOLETE ITEMS. IT I S SUBMITTED THAT REGARDING THE FIRST ASPECT, NOW HONBLE DELHI HIGH COURT HAS DECIDED TH IS ISSUE IN FAVOUR OF THE ASSESSEE AS PER THE JUDGMENT RENDERED IN THE CASE OF CIT VS. HO TLINE TELE TUBE & COMPONENTS LTD. AS REPORTED IN 175 TAXMAN 286. IT IS SUBMITTED THA T AS PER THIS JUDGMENT, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE IN SPITE OF THE F ACT THAT IN THAT CASE ALSO, ONLY PROVISION WAS MADE FOR DIMINUTION IN VALUE OF STOCK. REGARDI NG THE SECOND ASPECT, IT WAS SUBMITTED THAT FOR THIS REASON, ENTIRE DISALLOWANCE IS NOT JUSTIFIED AND THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION AFTER ASCERTAINING THE SCRAP VALUE OF OBSOLETE ITEMS AND THE ADDITION SHOU LD BE CONFIRMED ONLY TO THAT EXTENT. IT WAS ALSO SUBMITTED THAT THE JUDGMENT OF DELHI HIGH COURT WAS NOT AVAILABLE BEFORE THE TRIBUNAL IN THE EARLIER YEAR. LD.DR OF THE REVENUE , SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND THE JUDGMENTS CITED BY THE LD.AR OF THE ASSESSEE. WE ARE IN AGREEMENT WITH LD .AR OF THE ASSESSEE THAT IN THE EARLIER YEAR, THE TRIBUNAL HAS DECIDED THIS ISSUE A GAINST THE ASSESSEE ON THE BASIS OF TWO REASONS. ONE REASON GIVEN BY THE TRIBUNAL IS THAT T HERE WAS ONLY PROVISION AND NO ACTUAL WRITE OFF. THIS ASPECT OF THE MATTER HAS BEEN DECI DED BY THE HONBLE DELHI HIGH COURT IN FAVOUR OF THE ASSESSEE IN THE CASE OF HOTLINE TELE TUBE & COMPONENTS LTD.(SUPRA). IN THAT CASE ALSO, THE ASSESSEE HAS MADE PROVISIONS FO R DIMINUTION OF VALUE OF STOCK AND THE SAME WAS NOT ALLOWED BY THE REVENUE AUTHORITIES ON THE BASIS THAT THIS IS NOT A CRYSTALLIZED EXPENSES. THIS ISSUE WAS DECIDED BY HONBLE DELHI HIGH COURT IN FAVOUR OF THE ASSESSEE ON THE BASIS THAT THE ASSESSEE HAS MADE PROVISION F OR DIMINUTION OF VALUE OF STOCK. THIS IS ALLOWABLE BECAUSE STOCK IS TO BE VALUED AT COST OR MARKET PRICE, WHICHEVER IS LOWER. IN VIEW OF THIS JUDGMENT OF HONBLE DELHI HIGH COURT, WE FEEL IT FIT AND PROPER THAT THIS ASPECT OF THE MATTER HAS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. REGARDING THE SECOND ASPECT I.E. NON-CONSIDERATION OF SCRAP VALUE OF OBS OLETE ITEMS AS A VALUE OF CLOSING STOCK, WE FEEL THAT FOR THIS REASON, THE ENTIRE AMOUNT CAN NOT BE DISALLOWED AND THE DISALLOWANCE HAS TO BE RESTRICTED TO THE EXTENT OF SCRAP VALUE O F THE OBSOLETE ITEMS, BUT SINCE THE SAME IS NOT AVAILABLE ON RECORD, WE FEEL IT FIT AND PROPER TO RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION AFTER ASCERTAI NING THE SCRAP VALUE OF THE OBSOLETE ITEMS IN QUESTION AND ADDITION HAS TO BE RESTRICTED TO THAT EXTENT ONLY. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 5. GROUND NO.3 OF THE APPEAL READS AS UNDER: THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRE D ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF PRIOR EXPENSES AMOUNTING TO RS.15.38 LACS. 6. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE THA T OUT OF TOTAL AMOUNT OF PRIOR PERIOD EXPENSES OF RS.39.34 LAKH, THE ASSESSEE HAS ITSELF DISALLOWED THE AMOUNT OF RS.23.96 LAKHS AND DEDUCTION WAS CLAIMED BY THE ASS ESSEE ON THIS ACCOUNT TO THE EXTENT OF RS.15.38 LAKHS ONLY WHEREAS IN THE SAME YEAR, THE A SSESSEE HAS ALSO OFFERED AN AMOUNT OF RS.18.78 LAKHS AS INCOME RELATING TO PREVIOUS YEAR. IT IS SUBMITTED THAT SINCE INCOME OF PREVIOUS YEAR HAS BEEN ASSESSED IN THE PRESENT YEAR , EXPENSES OF THE PREVIOUS YEARS I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 4 SHOULD ALSO BE ALLOWED SINCE THE EXPENSES CLAIMED A RE LESSER THAN THE INCOME OF THIS YEAR. REGARDING THE VARIOUS DETAILS OF PREVIOUS YEARS EXP ENSES, IT WAS SUBMITTED THAT DETAILS ARE AVAILABLE ON PAGES 58-72 OF THE PAPER BOOK. ON TH E BASIS OF THESE DETAILS, IT WAS POINTED OUT BY THE BENCH THAT EVEN IF IT IS HELD THAT THE PREVIOUS YEAR EXPENSES CAN BE ALLOWED IN VIEW OF THIS FACT THAT PREVIOUS YEARS INCOME OFFER ED FOR TAX IN THE PRESENT YEAR IS HIGHER THAN THE PREVIOUS YEAR EXPENSES CLAIMED IN THIS YEA R, EVEN THEN IT HAS TO BE SEEN AS TO WHETHER SUCH EXPENSES ARE OTHERWISE ALLOWABLE OR NO T, BECAUSE IT IS NOTED THAT IT INCLUDES INFRASTRUCTURE EXPENSES OF RS.6.02 LAKHS ON PAPER B OOK PAGE NO.59 AND OF RS.4.82 LAKHS ON PAPER BOOK PAGE NO.61. IT IS ALSO POINTED OUT T HAT ON PAPER BOOK PAGE 61, THERE ARE THREE AMOUNTS OF PENALTY ALSO OF RS.0.32 LAKHS, 0. 42 LAKHS AND 0.19 LAKHS. IN THE SIMILAR MANNER, ALL SUCH EXPENSES HAVE TO BE EXAMINED AS TO WHETHER THE SAME ARE OTHERWISE ALLOWABLE OR NOT. IN REPLY, IT WAS ALSO SUBMITTED BY THE LD.AR OF THE ASSESSEE THAT FOR THIS PURPOSE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AU THORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT AS PER THE DETAILS FURNISHED BY THE ASSESSEE ON PAGE 19 OF THE PAPER BOOK, IN TH E PRESENT YEAR, THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF PRIOR PERIOD EXPENS ES OF RS.15.38 LAKHS AND AT THE SAME TIME, THE ASSESSEE HAS OFFERED PREVIOUS YEAR INCOME TO THE EXTENT OF RS.18.78 LAKHS. THIS SHOWS THAT INCOME OFFERED ON ACCOUNT OF PREVIOUS YE AR IS MORE THAN THE CLAIM OF THE ASSESSEE RELATING TO PREVIOUS YEAR EXPENSES. IF TH E PREVIOUS YEAR EXPENSES ARE NOT ALLOWABLE IN THE PRESENT YEAR THEN ON THE SAME LOGI C, PREVIOUS YEAR INCOME IS ALSO NOT ASSESSABLE IN THE PRESENT YEAR AND BOTH OF THEM SHO ULD BE CONSIDERED IN THE RELEVANT YEAR. SINCE, THE ASSESSING OFFICER HAS ALREADY ASSESSED P REVIOUS YEAR INCOME IN THE PRESENT YEAR, WE FIND NO REASON TO DISALLOW THE CLAIM OF TH E ASSESSEE REGARDING PREVIOUS YEAR EXPENSES SINCE THESE EXPENSES ARE LESSER THAN SUCH INCOMES, BUT AT THE SAME TIME, THIS HAS TO BE SEEN AS TO WHETHER SUCH PREVIOUS YEAR EXPENSE S ARE OTHERWISE ALLOWABLE OR NOT BECAUSE WE HAVE NOTED THAT SOME OF THE EXPENSES ARE ON ACCOUNT OF PENALTY AND SOME OF THE EXPENSES ARE INFRASTRUCTURE EXPENSES WHICH MAY NOT TO BE FOUND OTHERWISE ALLOWABLE. WE, THEREFORE, SET ASIDE THE ORDER OF THE COMMISSIO NER OF INCOME-TAX (APPEALS) ON THIS I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 5 ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF T HE ASSESSING OFFICER FOR FRESH DECISION. THE ASSESSING OFFICER SHOULD EXAMINE THE NATURE OF THESE EXPENSES AND THE SAME SHOULD BE ALLOWED IF IT IS FOUND THAT THESE EXPENSES ARE O THERWISE ALLOWABLE. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 8. GROUND NO.4 OF THE APPEAL READS AS UNDER: THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRE D ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T REATING INFRASTRUCTURE CHARGES FOR INSTALLATION OF TRANSFORMER, OVERHEAD CABLES, E TC. IN RESIDENTIAL COLONY AMOUNTING TO RS.17,91,345 AS CAPITAL EXPENDITURE. 9. BRIEFLY STATED, THE FACTS ARE THAT IT IS NOTED B Y THE ASSESSING OFFICER IN PARA. 6 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.17,91,345 TOWARDS INFRASTRUCTURE CHARGES FOR RESIDENTIAL COLONY. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE AUDITORS HAD QUALIFIED IT TO BE CAPITAL IN NATU RE. THE ASSESSING OFFICER ASKED THE ASSESSEE TO SHOW-CAUSE AS TO WHY THIS SHOULD NOT BE DISALLOWED AS CAPITAL EXPENDITURE. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THIS EXPENDITURE IS REVENUE IN NATURE AND SHOULD BE ALLOWED. BUT, THI S CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AND DISALLOWANCE WAS MADE OF THIS AMOUNT HOLDING THE SAME AS CAPITAL EXPENDITURE BY FOLLOWING VARIOUS JU DGMENTS OF VARIOUS HIGH COURTS. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), BUT WITHOUT SUCCESS, AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 10. IN A CHART OF ISSUES FURNISHED BY THE LD.AR OF THE ASSESSEE, VARIOUS JUDGMENTS ARE NOTED AGAINST THIS GROUND, BUT IN COURSE OF ARGUMEN TS BEFORE US, RELIANCE WAS PLACED ONLY ONE JUDGMENT OF THE HONBLE DELHI HIGH COURT RENDE RED IN THE CASE OF CIT VS. SAW PIPE LTD. AS REPORTED IN 300 ITR 85. IT WAS POINTED OUT BY THE BENCH THAT IN THIS CASE, AS PER THE FACTS NOTED BY THE HONBLE DELHI HIGH COURT ON PAGE 39, THE CABLES DID NOT BELONG TO THE ASSESSEE BUT BELONG TO THE MSEB. A QUERY WAS M ADE IN THE PRESENT CASE AS TO THE TRANSFORMERS IN QUESTION BELONG TO WHOM? IN REPLY, IT WAS SUBMITTED BY LD.AR OF THE ASSESSEE THAT THE AGREEMENT WITH PARISHAD IS AVAI LABLE ON PAPER BOOK PAGES 39-42. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AU THORITIES BELOW. LA.AR ALSO I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 6 FURNISHED A TYPED ENGLISH VERSION OF THE AGREEMENT AND POINTED OUT THAT AS PER PARAS.5 & 7 OF THIS AGREEMENT, THE SERVICE LINE IS THE PROPER TY OF SUPPLIER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D THE JUDGMENT OF THE HONBLE DELHI HIGH COURT CITED BY THE LD.AR OF THE ASSESSEE. WE FIND THAT AS PER THIS JUDGMENT OF THE HONBLE DELHI HIGH COURT, IF THE ASSET IN QUESTION ON WHICH EXPENSES WERE INCURRED DOES NOT BELONG TO THE ASSESSEE, IT CANNOT BE HELD THAT THE EXPENDITURE IS CAPITAL IN NATURE. IN THE PRESENT CASE ALSO, IT IS SEEN THAT AS PER THE A GREEMENT, SERVICE LINE IS THE PROPERTY OF THE SUPPLIER AND NOT OF THE ASSESSEE. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THIS JUDGMENT OF THE HONBLE DELHI HIG H COURT CITED BY THE LD.AR OF THE ASSESSEE SQUARELY COVERS THE PRESENT ISSUE IN DISPU TE IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, DELETE THIS DISALLOWANCE. THIS GROUND O F THE ASSESSEE IS ALLOWED. 12. GROUND NO.5 OF THE APPEAL READS AS UNDER: THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRE D ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF DEDUCTION FOR REPOS SESSION CHARGES AMOUNTING TO RS.12,00,000. 13. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE T HAT THE ASSESSEE HAD GIVEN ITS GODOWN SPACE ON RENT TO ONE M/S ASSOCIATED TUBEWELL S AND THE SAME WAS GIVEN IN THE YEAR 1956. IT IS ALSO SUBMITTED THAT THE REPOSSESS ION CHARGES OF RS.12 LAKHS WERE PAID THROUGH SUGAR UNIT TO THE SAID FIRM TO VACATE THE S PACE. IT IS ALSO SUBMITTED THAT THIS PAYMENT WAS MADE AS A MATTER OF COMMERCIAL EXPEDIEN CY, AND HENCE ALLOWABLE AS REVENUE EXPENDITURE. RELIANCE WAS PLACED ON THE F OLLOWING JUDICIAL PRONOUNCEMENTS: 1. CIT VS. O.P.N. ARUNACHALA NADAR, 141 ITR 620 (MA D.) 2. CIT VS. MUIR MILLS CO. LTD., 148 ITR 418 (ALL.) 3. STATE OF TAMILNADU VS. C.H. SIMPSON, 197 ITR 237 (MAD.) 14. AS AGAINST THIS, LD.LD.DR OF THE REVENUE SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW AND RELIANCE WAS PLACED ON THE FOLLOWING JUDG MENTS: (A) CHLORIDE INDIA LTD., VS. CIT, 130 ITR 61. (B) CIT VS. LAKKI BHARAT GARRAGE, 174 ITR 576 (MP) I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 7 IT WAS ALSO SUBMITTED THAT THESE TWO JUDGMENTS OF H ONBLE CALCUTTA HIGH COURT AND HONBLE MP HIGH COURT ARE DIRECTLY ON THE ISSUE WHE REAS JUDGMENTS CITED BY THE LD.AR OF THE ASSESSEE ARE NOT DIRECTLY ON THE ISSUE. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW AND THE JUDGMENTS CITED BY BOTH THE SIDES. FIRST, WE CONSIDER THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT, RENDERED IN THE CASE OF CHLORIDE INDIA LTD. VS. CIT (SUPRA). AS PE R THE FACTS NOTED IN THIS CASE, THE ASSESSEE TOOK ON LEASE CERTAIN PREMISES WHICH WAS K EPT BY GE & CO. IN ORDER TO OBTAIN VACANT POSSESSION OF THE PREMISES, THE ASSESSEE PAI D RS.4.50 LAKH TO GE & CO. AND CLAIMED IT AS REVENUE EXPENDITURE. UNDER THESE FAC TS, IT WAS HELD THAT THIS PAYMENT OF RS.4.50 LAKHS WAS A CAPITAL EXPENDITURE. IN THIS C ASE, THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY IN QUESTION AND ONLY A LEASE WAS OBTAI NED BY THE ASSESSEE AND STILL IT WAS HELD THAT THE AMOUNT SPENT FOR GETTING VACANT POSSE SSION WAS CAPITAL EXPENDITURE. IN THE PRESENT CASE, THE ASSESSEE IS THE OWNER OF THE SPA CE IN QUESTION AND HENCE THIS JUDGMENT IS SQUARELY APPLICABLE IN THE PRESENT CASE AS PER W HICH THIS ISSUE IS COVERED AGAINST THE ASSESSEE. 16. NOW, WE CONSIDER THE JUDGMENT OF THE HONBLE M. P. HIGH COURT IN THE CASE OF CIT VS. LAKKI BARAT GARRAGE, 174 ITR 576. IN THIS CASE ALSO, SOME PAYMENTS WERE MADE BY THE ASSESSEE TO TENANT FOR GETTING VACANT POSSES SION AND IT WAS HELD THAT SAME WAS CAPITAL EXPENDITURE. AS PER THIS JUDGMENT ALSO, TH E ISSUE IN THE PRESENT CASE IS SQUARELY COVERED AGAINST THE ASSESSEE. 17. NOW, WE ALSO EXAMINE AND CONSIDER THE JUDGMENT CITED BY THE LD.AR OF THE ASSESSEE. IN THE CASE OF CIT VS. O.P.N. ARUNACHAL A NADAR(SUPRA), THE ISSUE INVOLVED WAS REGARDING LEGAL EXPENSES INCURRED BY THE ASSESSEE TO RETAIN POSSESSION OF LANDS WORKED AS SALTPANS. THE ISSUE IN DISPUTE BEFORE US IS DIFFER ENT AND HENCE THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. 18. NOW, WE CONSIDER THE JUDGMENT OF HONBLE ALLAHA BAD HIGH COURT RENDERED IN THE CASE OF CIT VS. MUIR MILLS CO. LTD.(SUPRA). IN THI S CASE ALSO, THE ISSUE INVOLVED WAS ABOUT LITIGATION EXPENSES AND HENCE THIS JUDGMENT I S ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 8 19. LASTLY, WE CONSIDER THE JUDGMENT OF HONBLE MAD RAS HIGH COURT IN THE CASE OF STATE OF TAMILNADU VS. C.M. SIMPSON(SUPRA). IN THI S CASE ALSO, THE ISSUE INVOLVED WAS REGARDING LEGAL EXPENSES TO ESTABLISH TITLE TO LAND AND SINCE THE FACTS ARE DIFFERENT, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE . 20. SINCE THE JUDGMENTS CITED BY THE LD.DR OF THE REVENUE SQUARELY COVERS THE ISSUE IN THIS CASE, WE DECIDE THIS ISSUE BY FOLLOWING THE SE JUDGMENTS. THIS GROUND OF THE ASSESSEE IS REJECTED. 21. GROUND NO.6 OF THE APPEAL READS AS UNDER: THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN NOT SPECIFYING THAT THE BROUGHT FORWARD UNABSORBED BUSINESS LOSSES AND UNAB SORBED DEPRECIATION AMOUNTING TO RS.4173.37 LACS SHALL BE CARRIED FORWA RD AND ADJUSTED AS PER THE PROVISIONS OF LAW. 22. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE T HAT NO SPECIFIC DIRECTION HAS BEEN GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT OR DER FOR FURTHER CARRY FORWARD OF BROUGHT FORWARD LOSSES WHICH COULD NOT BE SET OFF I N THE PRESENT YEAR. IT WAS HIS SUBMISSION THAT SUITABLE DIRECTION MAY BE GIVEN TO THE ASSESSING OFFICER. AS AGAINST THIS, IT WAS SUBMITTED BY THE LD.DR OF THE REVENUE THAT N O SUCH DIRECTION IS REQUIRED TO BE GIVEN AND NO SUCH DIRECTION WAS TO BE GIVEN BY THE ASSESSING OFFICER ALSO IN THE ASSESSMENT ORDER IN CONNECTION WITH LOSSES OF EARLI ER YEARS BECAUSE, IF THE LOSSES WERE ALLOWED TO BE CARRIED FORWARD IN THE EARLIER YEARS, THE SAME WILL BE AVAILABLE IN THE SUBSEQUENT YEAR ALSO TO THE EXTENT IT IS NOT SET OF F IN THE PRESENT YEAR. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE ARE IN AGREEMENT WITH THE LD.DR OF THE REVENUE THAT IF ANY LOSSES WERE ALLOWE D FOR CARRY FORWARD IN ANY EARLIER YEAR, THE SAME WILL BE AVAILABLE FOR SET OFF IN SUB SEQUENT YEAR ALSO TO THE EXTENT IT WAS NOT SET OFF IN THE PRESENT YEAR AND, IF THE PRESCRIBED PERIOD OF 8 YEAS HAS NOT EXPIRED. UNDER THESE FACTS, WE FEEL THAT THIS GROUND OF THE ASSESS EE DESERVES TO BE REJECTED AS NO SPECIFIC DIRECTION IS REQUIRED. I.T.A. NO.2245/DEL./2007 (A.Y. : 2003-04) 9 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTY ALLOWED. 25. ORDER PRONOUNCED IN OPEN COURT ON 11.09.2009. (D.R. SINGH ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: SEPT. 11, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-VIII, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT