M/s Edelmann Packaging India Pvt. Ltd., Chandigarh V. ACIT, C-4(1), Chandigarh

ITA 236/CHANDI/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0422 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 06-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI ROHIT MEHRA
• Keywords: Capital asset; Depreciation; Additional depreciation; Revenue expenditure; Set aside
• Section: 80IC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 236/CHD/2019 / ASSESSMENT YEAR : 2014-15 M/S EDLEMANN PACKAGING INDIA PRIVATE LIMITED, PLOT NO. 136, PHASE II, CHANDIGARH VS. THE ACIT, CIRCLE 4(1), CHANDIGARH ./PAN NO: AABCJ5979K / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI NEERAJ JAIN, CA ' ! / REVENUE BY : SH. SHRI ROHIT MEHRA, SR. DR # $ % /DATE OF HEARING : 12.09.2019 &'() % / DATE OF PRONOUNCEMENT : 12. 09.2019 / ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 14.12.2018 OF THE COMMISSIONER OF INCO ME TAX (APPEALS)- 2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] . 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN NOT ALLOWING DEPRECIATION AND ADDITIONAL DEPRECIATION O N RS. 1,81,41,495/- BEING THE AMOUNT OF FOREIGN EXCHANGE LOSS ON BUYER'S CREDIT FOR ACQUISITION OF PLANT & MACHINERY AS THE SAME IS CAPITAL EXPENSE IN ITA NO.236-CHD-2019- M/S EDELMANN PACKAGING INDIA PRIVATE LTD, CHANDIGAR H 2 NATURE. THE DEPRECIATION AND ADDITIONAL DEPRECIATIO N ARE STATUTORY ALLOWANCES. 2. (A) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFI RMING THE DISALLOWANCE OF RS. 3,24,556/- BEING 10% OF RS. 13,82,389/- & 18,63,178/- ON ACCOUNT OF DIWALI FEST IVAL EXPENSES AND BUSINESS PROMOTION EXPENSES RESPECTIVE LY ON ADHOC BASIS BY TREATING THE SAME AS PERSONAL IN NATURE. (B) THAT WITHOUT PREJUDICE TO ABOVE, THE APPELLANT DISPUTES THE QUANTUM OF DISALLOWANCE. 3. (A) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIR MING THE DISALLOWANCE OF RS. 3,44,542/- BEING 10% OF RS. 17,23,829/- & 17,21,593/- ON ACCOUNT OF VEHICLE EXPENSES AND DEPRECIATION ON VEHICLES RESPECTIVELY ON ADHOC BASIS BY TREATING THE SAME AS PERSONAL IN NAT URE. (B) THAT WITHOUT PREJUDICE TO ABOVE, THE APPELLANT DISPUTES THE QUANTUM OF DISALLOWANCE. 4. THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN NOT ALLOWING DEPRECIATION AND ADDITIONAL DEPRECIATION O N RS. 3,93,260/- AND RS. 80,097/- ON ACCOUNT OF PROCE SSING CHARGES ON LOAN PAID TO INDUSIND BANK AND SIEMENS FINANCIAL SERVICES RESPECTIVELY FOR ACQUISITION OF PLANT & MACHINERY AS THE SAME IS CAPITAL EXPENSE IN NATURE. THE DEPRECIATION AND ADDITIONAL DEPRECIATION ARE STATUT ORY ALLOWANCES. 5. (A) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIR MING THE DISALLOWANCE OF RS. 10,43,016/- & RS. 7,64,629/ - ON ACCOUNT OF REPAIR & MAINTENANCE OF BUILDING AND REPAIR & MAINTENANCE OF ELECTRICAL RESPECTIVELY. (B) THAT WITHOUT PREJUDICE TO ABOVE, THE APPELLAN T DISPUTES THE QUANTUM OF DISALLOWANCE. ITA NO.236-CHD-2019- M/S EDELMANN PACKAGING INDIA PRIVATE LTD, CHANDIGAR H 3 6. (A) THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN NOT ALLOWING RS. 26,53,596/- ON ACCOUNT OF LOSS ON FIX ED ASSETS. (B) THAT WITHOUT PREJUDICE TO ABOVE, THE APPELLANT DISPUTES THE QUANTUM OF DISALLOWANCE. 7. THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN NO T ALLOWING THE DEDUCTION U/S 80 IC ON OTHER INCOME. 8. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ALLOW ING THE DEDUCTION U/S 80 IC @ 100% INSTEAD OF @ 30%. 9. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 3. VIDE GROUND NO.1 THE ASSESSEE HAS AGITATED THE A CTION OF THE LOWER AUTHORITIES IN NOT ALLOWING DEPRECIATION ON THE AMO UNT WHICH WAS ADDED BY THE ASSESSING OFFICER TOWARDS THE COST OF THE CA PITAL ASSETS OF THE ASSESSEE BEING THE AMOUNT OF LOSS INCURRED BY THE A SSESSEE ON ACCOUNT OF FOREIGN EXCHANGE LOSS BY DISALLOWING THE CLAIM OF T HE ASSESSEE TOWARDS THE SAME AS REVENUE EXPENDITURE. VIDE GROUND NOS, 2 & 3, THE ASSESSEE HAS AGITATED CERTAIN DISALLOWANCES MADE BY THE LOWE R AUTHORITIES @ 10% OF THE EXPENSES CLAIMED TO HAVE BEEN INCURRED ON DI WALI FESTIVAL, BUSINESS PROMOTION EXPENSES, CAR EXPENSES, DEPRECIA TION ON VEHICLES ETC. ON ADDITION HOC BASIS. VIDE GROUND NO.4, THE A SSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN DENYING THE BENEFIT OF DEPRECIATION ON ACCOUNT OF DISALLOWANCE AND FURTHER CONSEQUENTIAL A DDITION OF LOAN PROCESSING CHARGES TOWARDS THE COST OF THE ASSETS B EING TREATED AS CAPITAL ASSETS. VIDE GROUND NO.5 THE ASSESSEE HAS AGITATED THE ACTION OF THE ITA NO.236-CHD-2019- M/S EDELMANN PACKAGING INDIA PRIVATE LTD, CHANDIGAR H 4 LOWER AUTHORITIES IN MAKING THE DISALLOWANCE OF EXP ENDITURE OUT OF THE REPAIR AND MAINTENANCE CHARGES. AS REGARDS TO THE GROUND NOS. 6 & 7, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AT THE INSTANCE OF THE ASSESSEE, HE DOES NOT PRESS GROUND NOS. 6 & 7 OF TH E APPEAL. VIDE GROUND NOS.8 THE ASSESSEE HAS AGITATED THE ACTION O F THE LOWER AUTHORITIES IN RESTRICTING THE DISALLOWANCE U/S 80I C OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') @ 30% AS AGAINST 10 0% CLAIMED BY THE ASSESSEE ON ACCOUNT OF SUBSTANTIAL EXPANSION OF UNI T. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT GROUND NOS. 1 & 4 WERE NOT TAKEN BEFORE THE LD. CIT (A). THESE GROUNDS HAVE BEEN TAKEN BEFORE THIS TRIBUNAL FOR THE FIRST TIME. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT SO FAR AS THE DISALLOWAN CE MADE BY THE ASSESSING OFFICER AND FURTHER CONFIRMED BY THE LD. CIT(A) IN RELATION TO THE ITEMS AS PLEADED IN GROUND NOS. 2 & 3 OF THE A PPEAL, THE ASSESSEE HAS FURNISHED THE REQUIRED DETAILS BEFORE THE LOWER AUTHORITIES BUT THE LOWER AUTHORITIES WITHOUT GOING INTO THE SPECIFIC D ETAILS OF EXPENDITURE, DISALLOWED 10% OF THE EXPENDITURE ON ADHOC BASIS WITHOUT GIVING ANY SPECIFIC REASONING OR POINTING OUT ANY DEFECT IN TH E ACCOUNTS OF ASSESSEE IN RESPECT OF EXPENDITURE BOOKED BY THE ASSESSEE. F URTHER THAT THE LOWER AUTHORITIES HAVE ALSO DISALLOWED ON ADHOC BASIS CER TAIN AMOUNTS OUT OF REPAIR AND MAINTENANCE OF BUILDING AND ELECTRICAL F ITTING ETC. ITA NO.236-CHD-2019- M/S EDELMANN PACKAGING INDIA PRIVATE LTD, CHANDIGAR H 5 5. SO FAR AS THE ISSUE RAISED VIDE GROUND NO.8 IS C ONCERNED, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT NOW THI S ISSUE IS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF PR.CIT, SHIMLA VS. M/S AARHAM SOFTRONICS IN CIVIL NO.1784 OF 2019 DATED 20.2.2019. HE HAS FURTHER SUBMITTED THAT THE BENEFI T OF THE SAID DECISION WAS NOT AVAILABLE BEFORE THE LD. CIT(A) AT THE TIME OF THE DECISION OF THE APPEAL. 6. THE LD. DR ON THE OTHER HAND, HAS RELIED ON THE FINDINGS OF THE CIT(A). 7. CONSIDERING THE RIVAL SUBMISSIONS OF THE PARTIES , I AM OF THE VIEW, THAT THE MATTER IS REQUIRED TO BE RESTORED TO HE FI LE OF THE CIT(A). SINCE GROUND NOS. 1 & 4 WERE NOT RAISED BEFORE THE CIT(A) AND THESE HAVE BEEN RAISED FOR THE FIRST TIME BEFORE THIS TRIBUNAL , HENCE, THE ISSUES RAISED VIDE GROUND NOS. 1 & 4, WHICH ARE LEGAL IN NATURE, ARE REQUIRED TO BE EXAMINED BY THE CIT(A). SO FAR AS THE ADHOC D ISALLOWANCES ARE CONCERNED, THE LD. CIT(A) HAS NOT GIVEN ANY SPECIFI C FINDINGS JUSTIFYING THE DISALLOWANCE OF THE EXPENDITURE, HENCE, THE ISS UE NEEDS TO BE DECIDED BY WAY OF A SPEAKING ORDER IN ACCORDANCE WI TH LAW. 8. SO FAR AS THE CLAIM OF DEDUCTION U/S 80IC OF TH E ACT ON ACCOUNT OF SUBSTANTIAL EXPANSION IS CONCERNED, THE LD. CIT(A) IS DIRECTED TO DECIDE THIS ISSUE IN ACCORDANCE WITH THE RECENT DECISION O F THE HON'BLE SUPREME COURT IN BUNCH OF CASES WITH THE LEAD CASE IN THE C ASE OF PR.CIT, ITA NO.236-CHD-2019- M/S EDELMANN PACKAGING INDIA PRIVATE LTD, CHANDIGAR H 6 SHIMLA VS. M/S AARHAM SOFTRONICS IN CIVIL NO.1784 OF 2019 DATED 20.2.2019. IN VIEW OF THIS, THE IMPUGNED ORDER OF THE CIT(A) I S HEREBY SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE CIT(A) FOR DECISION AFRESH IN ACCORDANCE WITH LAW AS PER THE DIRECTIONS GIVEN ABOVE, EXCEPT THE GROUND NOS. 6 & 7, WHICH HAVE NOT BEEN PRESSED BY THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER DICTATED AND PRONOUNCED IN THE OPEN C OURT IMMEDIATELY ON COMPLETION OF HEARING. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 12 . 09.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR