The ACIT, Circle-4, Ahmedabad V. Gujarat State Road Transport Corpn. Ltd., Ahmedabad

ITA 2260/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0272 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-10-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 26-10-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH
• Keywords: Depreciation; Capital expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGARWAL, A.M.) I.T.A. NO. 2260/AHD./2006 ASSESSMENT YEAR : 2002-2003 ASSISTANT COMMISSIONER OF INCOME TAX, -VS.- GUJARA T STATE ROAD TRANSPORT CORPN., AHMEDABAD CIRCLE-4, AHMEDABAD (P.A. NO. AAACG 5587 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR, CI T (D.R.) RESPONDENT BY : SHRI D.K. PARIKH O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER :- THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) -VIII, AHMEDABAD DATED 03-08-2006 FOR THE ASSESSMENT YEAR 2002-03. 2. GROUND NO. 1 OF THIS APPEAL IS AS UNDER :- THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ER RED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.4,47,02,32 1/- MADE ON ACCOUNT OF CLAIM OF RECONDITIONING OF BUSES, ASSEMBLING AND PA RTS ON THE GROUND THAT THE REPAIRS CONSTITUTED THE CHARACTER OF REVENUE U/ S. 31 OF THE ACT AND FURTHER DIRECTED TO WITHDRAW DEPRECIATION OF RS.55, 87,790/-. 3. THE FACTS RELATING TO CONTROVERSY INVOLVED IN TH IS GROUND OF APPEAL ARE THAT THE A.O. DISALLOWED RS.4,47,02,321/- BEING EXPENSES TOWARDS RECONDITIONING OF BUSES, ASSEMBLING AND PARTS HOLDING THAT IT IS CAPITAL EXPENDITURE. BEFOR E THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE CONTENDED THAT NO NEW BU SES WERE BROUGHT OUT OF THE ABOVE DEBIT AND THE SAID EXPENDITURE WAS INCURRED ONLY IN RECONDITI ONING THE OLD BUSES TO MAKE THEM PLIABLE ON ROADS. FOR THIS PROPOSITION, RELIANCE WAS ALSO PLAC ED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- MAHALAXMI REPORTED I N 66 ITR (SC) AND IT WAS CLAIMED THAT THIS EXPENDITURE IS ALLOWABLE UNDER SECTION 31 OF THE IN COME TAX ACT, 1961. 2 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT I N THE EARLIER YEARS, THIS EXPENDITURE WAS ALLOWED AS REPAIRS UNDER SECTION 31 OF THE INCOME T AX ACT, 1961. NO NEW ASSET OR SPECIAL ADVANTAGE OF ENDURING NATURE WAS BROUGHT INTO EXIST ENCE EXCEPT BRINGING THE OLD BUSES BACK TO THEIR ORIGINAL RUNNING CONDITION. IN VIEW OF THIS, THE A.O. IS DIRECTED TO DELETE THE DISALLOWANCE AND WITHDRAW THE DEPRECIATION, IF ANY ALLOWED, IN T HIS REGARD. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, BOTH THE SIDES CONCEDED THAT SIMILAR DISALLOWANCE WAS MADE IN ITA NOS. 22, 1871, 2794 & 3429/AHD./2002 FOR THE AS SESSMENT YEARS 1995-96, 1997-98, 1990- 91 AND 1991-92 RESPECTIVELY. ITAT, C BENCH, AHMED ABAD VIDE ORDER DATE 12.11.2008, UPHELD THE ACTION OF LEARNED COMMISSIONER OF INCOME TAX(AP PEALS) DIRECTING THE A.O. TO ALLOW THE EXPENDITURE INCURRED AS REPAIR UNDER SECTION 31 OF THE INCOME TAX ACT. THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER IS IN CONFORMITY WITH THE VIEW TAKEN BY THIS TRIBUNAL (SUPRA). THEREFORE, RES PECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS, WE UPHOLD THE ACTION OF A.O. THIS GROUND OF APPEAL IS REJECTED. 6. GROUNDS NO. 2 & 3 OF THIS APPEAL ARE AS UNDER :_ 2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO DELETE THE DISALLO WANCE OF RS.1,00,000/- IN RESPECT OF CLAIM OF GUEST HOUSE EXPENSES, IGNORI NG THE HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF BRITANNIA IND . LTD. REPORTED AT 278 ITR 546 (SC). 3. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF DE PRECIATION AMOUNTING TO RS.2,85,497/- ON NEW ADDITIONS TO BUILDINGS AND FUR NITURE. 7. AT THE TIME OF HEARING, BOTH THE SIDES CONCEDED THAT BOTH THE ISSUES INVOLVED IN THIS APPEAL ARE COVERED IN FAVOUR OF REVENUE BY THE DECI SION OF THE TRIBUNAL IN EARLIER YEARS. THE GUEST HOUSE EXPENSES AND DEPRECIATION ON BUILDING A ND FURNITURE OF GUEST HOUSE ARE NOT ALLOWABLE EXPENSES AS PER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD. REPORTED IN 278 ITR 546. WE, THEREFORE, RESPEC TFULLY FOLLOWING THE DECISION OF THE TRIBUNAL 3 DATED 12.11.2008 IN ASSESSEES OWN CASE IN EARLIER YEARS IN ITA NOS. 22, 1871, 2794 & 3429/AHD./2002 FOR THE ASSESSMENT YEARS 1995-96, 19 97-98, 1990-91 AND 1991-92 RESPECTIVELY, REVERSE THE ORDER OF A.O. THIS WOULD MEAN THAT ADDI TION OF RS.1,00,000/- AND RS.3,85,497/- WAS RIGHTLY DISALLOWED BY THE A.O. THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS, BOTH THE GROUNDS OF REVE NUE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE COURT ON 16.10.2009 SD/- SD/- (D.C. AGARWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 / 10 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) GUJARAT STATE ROAD TRANSPORT CORPORATION, VHAN VYAV AHAR BHAVAN, ASTOIDA, AHMEDABAD. (2) ACIT CIRCLE-4, 1 ST FLOOR, NAVJEEVAN BUILDING, B/H, GUJARAT VIDHYAPITH , ASHRAM ROAD, AHMEDABAD. 3) CIT(A)- ,AHMEDABAD (4) CIT- ,AHMEDA BAD.(5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMED ABAD LAHA/SR.P.S.