D.C.I.T., Circle-10, Kolkata, Kolkata V. M/s Vesuvious India Ltd., Kolkata

ITA 2624/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4098 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 20-10-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 18-11-2013
• Court: TRIBUNAL
• Department Lawyers: VIJAYENDRA KUMAR
• Assessee Lawyers: HARISH AGARWAL ACA
• Section: 143(3)

Judgement Text

I.T.A. NO. 2624/KOL./2013 ASSESSMENT YEAR: 2001-2002 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER I.T.A. NO. 2624/KOL/ 2013 ASSESSMENT YEAR: 2001-2002 DEPUTY COMMISSIONER OF INCOME TAX,................. ....................APPELLANT CIRCLE-10, KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 3 RD FLOOR, KOLKATA-700 069 -VS.- M/S. VESUVIOUS INDIA LIMITED,...................... .........................RESPONDENT P-104, TARATALA ROAD, KOLKATA-700 088 [PAN: AAACV 8995 Q] APPEARANCES BY: SHRI VIJAYENDRA KUMAR, JCIT, D.R., FOR THE DEPARTMENT SHRI HARISH AGARWAL, ACA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : NOVEMBER 24, 2016 DATE OF PRONOUNCING THE ORDER : DECEMBER 14, 2016 O R D E R PER SHRI P.M. JAGTAP, A.M .: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA D ATED 27.08.2013 FOR THE ASSESSMENT YEAR 2001-02. 2. IN GROUND NO. 1, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF EXPENDITURE I NCURRED ON TOOLING IN THE YEAR OF PURCHASE AS THE SAME WAS ALSO CONSUMED IN THAT YEAR. I.T.A. NO. 2624/KOL./2013 ASSESSMENT YEAR: 2001-2002 PAGE 2 OF 4 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF REFRAC TORIES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 30.10.2001 DECLARING TOTAL INCOME OF RS.8,28,33,105/-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 31.03.2004 , THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF EXPENDITURE IN CURRED ON PURCHASE OF TOOLING AMOUNTING TO RS.1,79,20,000/- WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT SUCH DEDUCTION SHOULD HA VE BEEN CLAIMED BY THE ASSESSEE ON THE BASIS OF AMORTIZATION OVER A PE RIOD OF 36 MONTHS AS PER THE METHOD OF ACCOUNTING REGULARLY FOLLOWED IN THE EARLIER YEARS. THEREAFTER THE MATTER AFTER CERTAIN ROUND OF LITIGA TION, CAME FOR CONSIDERATION OF THE LD. CIT(APPEALS) AND WHILE ALL OWING THE APPEAL OF THE ASSESSEE ON THIS ISSUE VIDE HIS IMPUGNED ORDER, HE DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION ON ACCOUNT OF EXPEND ITURE INCURRED ON TOOLING IN THE YEAR OF PURCHASE AS THE SAME WAS CON SUMED IN THAT YEAR. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS VERY FAIRLY AND FRANKLY CONCEDED THAT THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE HAS NO MERIT AND THE GRO UND NO. 1 RAISED BY THE REVENUE IN THIS APPEAL DESERVES TO BE ALLOWED. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. GROUND NO. 1 OF THE REVENUES APPEAL IS ACCORDINGLY ALLOWED. 5. IN GROUND NO. 2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE DISALLOWANCE OF RS.1,4 5,143/- MADE BY THE ASSESSING OFFICER OUT OF CLUB EXPENSES. 6. IN ITS RETURN OF INCOME, THE DEDUCTION OF RS.1,5 6,376/- WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF CLUB EXPENSES, WHICH WAS INCLUSIVE OF ENTRANCE FEE OF RS.11,233/- PAID BY THE ASSESSEE. I N THE ASSESSMENT ORDER I.T.A. NO. 2624/KOL./2013 ASSESSMENT YEAR: 2001-2002 PAGE 3 OF 4 ORIGINALLY COMPLETED UNDER SECTION 143(3), THE ENTI RE AMOUNT OF CLUB EXPENSES CLAIMED BY THE ASSESSEE WAS DISALLOWED BY THE ASSESSING OFFICER. 7. ON APPEAL, THE LD. CIT(APPEALS) VIDE HIS ORDER D ATED 08.01.2008 DELETED THE SAID DISALLOWANCE. WHILE GIVING EFFECT TO THE SAID ORDER OF THE LD. CIT(APPEALS), THE ASSESSING OFFICER, HOWEVER, A LLOWED THE CLUB EXPENSES ONLY TO THE EXTENT OF RS.11,233/-. THE ASS ESSEE, THEREFORE, AGAIN PREFERRED AN APPEAL BEFORE THE LD. CIT(APPEALS), WH O VIDE HIS IMPUGNED ORDER DIRECTED THE ASSESSING OFFICER TO ALLOW EVEN THE BALANCE EXPENDITURE OF RS.1,45,143/- ON THE GROUND THAT THE ENTIRE CLUB EXPENSES OF RS.1,56,376/- HAD ALREADY BEEN ALLOWED BY HIS PR EDECESSOR VIDE HIS APPELLATE ORDER DATED 08.01.2008. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY P OINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE ENTIRE CLUB EXPENSES OF RS.1,56,376/- WERE ALREADY ALLOWED BY THE LD. CIT(APPEALS) VIDE HIS AP PELLATE ORDER DATED 08.01.2008 AND THERE WAS NO JUSTIFICATION ON THE PA RT OF THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR SUCH EXPENSES ONLY TO THE EXTENT OF RS.11,233/- WHILE GIVING EFFECT TO THE SA ID ORDER OF THE LD. CIT(APPEALS). WE, THEREFORE, FIND NO INFIRMITY IN T HE ORDER OF THE LD. CIT(APPEAL) DIRECTING THE ASSESSING OFFICER TO ALLO W THE BALANCE CLUB EXPENSES OF RS.1,45,143/- AND UPHOLDING THE SAME ON THIS ISSUE, WE DISMISS GROUND NO. 2 OF THE REVENUES APPEAL. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 14, 2016. SD/- SD/- (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 14 TH DAY OF DECEMBER, 2016 ORDER PRONOUNCED BY SD/- SD/- (S.S.V. RAVI) (P.M. JAGTAP) J.M. A.M. I.T.A. NO. 2624/KOL./2013 ASSESSMENT YEAR: 2001-2002 PAGE 4 OF 4 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10, KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 3 RD FLOOR, KOLKATA-700 069 (2) M/S. VESUVIOUS INDIA LIMITED, P-104, TARATALA ROAD, KOLKATA-700 088 (3) COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKA TA, (4) COMMISSIONER OF INCOME TAX- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.