Adani Logistics Ltd. ( Formerly known as Inland Conware Pvt. Ltd.), Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 2274/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5892 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 31-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Rule of consistency; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.2274/AHD/2015 / ASSTT. YEAR: 2011-2012 ADANI LOGISTICS LTD. (FORMERLY KNOWN AS INLAND CONWARE P.LTD.) ADANI HOUSE NR. MITHAKHALI SIX ROADS NAVRANGPURA AHMEDABAD 380 009. VS DCIT, CIR.1 AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI P.M. MEHTA, AR REVENUE BY : SHRI PRASOON KABRA, SR.DR / DATE OF HEARING : 24/01/2018 / DATE OF PRONOUNCEMENT: 21/03/2018 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-1, AHMEDABAD DATED 3.6.2015 PASSED FOR THE ASSTT.YEAR 2011-12. 2. IN THE FIRST GROUND OF APPEAL, GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION AT RS.20 ,67,444/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 23.9.2011 DECLARING TOTAL LOSS AT RS.21,73,29,99 3/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) WAS ISSUED BY THE AO. ON SCRUTINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT ITA NO.2274/AHD/2015 2 TAX AUDITORS IN FORM NO.3CD AT COLUMN NO.17 STATED THAT APPELLANT HAS DEBITED PROFESSIONAL FEE FOR LAND OF RS.20,48,000/- AND OTHER PROFESSIONAL FEES OF RS.19,444/- IN THE PROFIT & LOSS ACCOUNT, WHICH ARE CAPITAL NATURE. THE ASSESSEE HAS CLAIMED WHILE FILING RETURN THIS EXPEN DITURE AS REVENUE. THE LD.AO DID NOT ACCEPT THIS STAND OF THE ASSESSEE AND RELIED UPON THE TAX AUDIT REPORT AND TREATED IT AS A CAPITAL EXPENDITURE. AP PEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE CASE OF THE ASSESSEE IS THAT IT IS ENGAGED IN THE BUSINESS IN PROVIDING LOGISTIC SERVICES FOR THE PURPOSE OF C ARRYING BUSINESS ON THE LAND ACQUIRED IN EARLIER YEARS, IT HAS INCURRED PROFESSI ONAL CHARGES FOR WORK LIKE DOCUMENTATION, APPROVAL PERTAINING TO CHANGES OF LA ND USE FROM OFFICE OF TOWN AND COUNTRY PLANNING ETC. THE LD.CIT(A) ON AN ANALYSIS OF THESE DETAILS RECORDED A FINDING THAT THE ASSESSEE FAILED TO ESTABLISH THAT LAND ON WHICH THE ABOVE EXPENDITURE WAS INCURRED WAS TO BE USED FOR BUSINESS PURPOSE. ACCORDING TO THE LD.CIT(A) ANY EXPENDITUR E INCURRED BY AN ASSESSEE UNTIL THE ASSET BEING PUT TO USE FOR BUSINESS PURPO SE IS TO BE CAPITALIZED. AFTER CONSIDERING THE FINDING OF THE LD.CIT(A) WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO DEMONSTRATE AS TO HOW THESE EXPENDITURE A RE OF REVENUE IN NATURE. THE ASSESSEE HAS NOT USED THE ABOVE LAND FOR THE PU RPOSE OF BUSINESS IN THIS YEAR. WE DO NOT FIND ANY ERROR IN THE FINDING OF L D.CIT(A), HENCE, THIS GROUND OF APPEAL IS REJECTED. 5. IN GROUND NO.2, GRIEVANCE OF THE ASSESSEE IS THA T THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.5,47,438/-. 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD T HAT THE ASSESSEE FAILED TO ITA NO.2274/AHD/2015 3 MAKE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND E SI WITHIN THE DUE DATE PROVIDED IN THESE ACTS. AFTER PERUSAL OF THE ORDER OF LD.CIT(A), WE ARE OF THE VIEW THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPN., 366 ITR 170 HAS HELD THAT IF AN A SSESSEE FAILS TO DEPOSIT EMPLOYEES CONTRIBUTION IN RELEVANT FUND WITHIN DUE DATE PROVIDED IN P.F. ACT, THEN EXPENDITURE WOULD NOT BE ALLOWED AS DEDUCTION. CONSIDERING ORDER OF THE LD.CIT(A) THIS GROUND OF APPEAL IS REJECTED. 7. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE A SSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF 2 ,61,960/-. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S CLAIMED DEDUCTION OF RS.2,61,960/- UNDER SECTION 35D OF THE ACT. THE LD .AO WHILE MAKING DISALLOWANCE OBSERVED THAT EXPENDITURE WAS INCURRED FOR INCREASE IN AUTHORIZED SHARE CAPITAL. THE LD.AO FURTHER PUT RE LIANCE UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN INSECTICIDES LTD., 250 ITR 338 WHERE IS HELD THAT EXPENSES INCUR RED FOR INCREASING THE AUTHORIZED SHARE CAPITAL ARE NOT COVERED BY THE PRO VISIONS OF SECTION 35D(2) OF THE ACT AND THUS, THE SAME ARE NOT ALLOWABLE UND ER SECTION 35D OF THE ACT. ON APPEAL, THE LD.CIT(A) UPHELD THE DISALLOWANCE. 9. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THIS IS THE FIFTH YEAR OF CLAIM. IN THE EARLIER FOUR YEARS, EXPENDITURE H AS BEEN ALLOWED. THE ASSESSEE AMORTIZED EXPENDITURE FOR FIVE YEARS AND C LAIMED ONE-FIFTH EACH. THE LD.CIT(A) HAS NOT DISPUTED THIS FACT ALSO. THE LD. DR ON THE OTHER HAND CONTENDED THAT SINCE CLAIM IS NOT ADMISSIBLE INHERE NTLY, IT CANNOT BE ALLOWED TO THE ASSESSEE ON THE BASIS THAT IN EARLIER YEAR I T WAS GRANTED. 10. ON DUE CONSIDERATION OF THE ABOVE FACTS OF THE CASE, WE ARE OF THE VIEW THAT SINCE THE AMORTIZED EXPENDITURE WAS ALLOWED IN THE EARLIER FOUR YEARS, IT ITA NO.2274/AHD/2015 4 SHOULD BE ALLOWED IN THE SUBSEQUENT YEARS ALSO. TH E AO DID NOT DISPUTE ITS ALLOWANCE FOR EARLIER FOUR YEARS. THEREFORE, ON THE PRINCIPLE OF CONSISTENCY, IT SHOULD NOT BE DISALLOWED IN THE LAST YEAR. WE ALL OW THIS GROUND OF APPEAL AND DELETE DISALLOWANCE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 21 ST MARCH, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER