M/s. Fluid Line, Kolhapur V. Joint Commissioner of Income-tax,

ITA 274/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9423 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 17-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAURAV BOTHAM
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 274 /P U N/201 5 / ASSESSMENT YEAR : 20 11 - 12 M/S. FLUID LINE, 98,99 AND 100, L.K. AKIWATE, INDUSTRIAL ESTATE, KOLHAPUR PAN : AAAFF5027C . / APPELLANT VS. THE JOINT COMMISSIONER OF INCOME TAX, ICHALKARANJI RANGE , ICHALKARANJI. . / RESPONDENT / APPELLANT BY : S HRI M.K. KULKARNI / RESPONDENT BY : SHRI GAURAV BOTHAM / DATE OF HEARING : 25 .0 4 . 2017 / DATE OF PRONOUNCEMENT : 17 . 0 5 .201 7 / ORDER PER SUSHMA CHOWLA, J M : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF CIT (A) - 1 & 2, KOLHAPUR DATED 2 3.01.2014 RELATING TO ASSESSMENT YEAR 20 11 - 12 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 19 61 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY THE LD.CIT(A) DISMISSING THE APPEAL OF THE ASSESSEE IS CONTRARY TO PROVISIONS OF LAW. IT IS NOT IN CONSONANCE WITH THE PROVISIONS OF S.250(6) OF THE ACT. IT BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO OF ITA NO. 274 /P U N/20 1 5 M/S. FLUID LINE 2 RS.2,87,708/ - R ELATING TO PAYMENTS MADE OF THE EMPLOYEES CONTRIBUTION SO MADE BEFORE THE FILING OF THE RETURN. THE LD.CIT(A) OUGHT TO HAVE FOLLOWED HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 206 (SC) AND JURISDICTIONAL HON BLE BOMBAY HIGH COURT JUDGMENT IN CIT VS. GHATGE PATIL TRANSPORTS LTD. (2015) 228 TAXMANN 340 (BOM.) AND ALSO HONBLE APEX COURT JUDGMENT IN CIT VS. HINDUSTAN ORGANICS CHEMICALS LTD. (2014) 366 ITR 1 (BOM.). THE DISALLOWANCE BE DELETED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO HOLDING THAT THE EXPENDITURE OF RS.28,40,708/ - WAS CAPITAL EXPENDITURE AND NOT ALLOWABLE ON REVENUE EXPENDITURE. TH E LD.CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE EXPENDITURE CLAIMED OF RS.28,40,708/ - WAS NOT OF CAPITAL EXPENDITURE BUT OF REVENUE EXPENDITURE. THE DISALLOWANCE BE DELETED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEVY OF INT EREST U/S.234A, 234B AND 234C IS NOT JUSTIFIED. 5. THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3 . GROUND OF APPEAL NO.1 IS NOT PRESSED, HENCE THE SAME IS DISMISSED AS NOT PRESSED. 4 . THE ISSUE IN GROUND OF APPEAL NO.2 IS AGAINST DISALLOWANCE MADE OF RS.2,87,708/ - UNDER SECTION 43D OF THE ACT RELATING TO THE EMPLOYEES CONTRIBUTION TO PF. THE SAID ISSUE RAISED BY THE ASSESSEE IS COVERED BY THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. ALOM EXTRU SIONS LTD. (2009) 319 ITR 206 (SC) AND JURISDICTIONAL HONBLE BOMBAY HIGH COURT JUDGMENT IN CIT VS. GHATGE PATIL TRANSPORTS LTD. (2015) 228 TAXMANN 340 (BOM.) . 5 . THE PERUSAL OF THE ASSESSMENT ORDER UNDER PARA 5.3 REFLECTS THAT THE EMPLOYEES CONTRIBUTIO N TO PF HAS BEEN PAID AFTER A SHORT DELAY OF UPTO 8 DAYS BUT BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME. FOLLOWING THE SAME PARITY OF RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. ALOM EXTRUSIONS LTD. (SUPRA) AND JURISDICTIONAL HONBL E BOMBAY HIGH COURT JUDGMENT IN CIT VS. GHATGE PATIL TRANSPORTS LTD. (SUPRA) , WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.2,87,708/ - WHERE THE EMPLOYEES CONTRIBUTION TO PF HAS BEEN MADE WITHIN ITA NO. 274 /P U N/20 1 5 M/S. FLUID LINE 3 THE DUE DATE OF FILING THE RETURN OF INCOME. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS ALLOWED. 6 . THE ISSUE IN GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE OF EXPENDITURE CLAIMED AS REVENUE IN NATURE ON ACCOUNT OF BUILDING REPAIRS TOTALLING TO RS.28,40,708/ - . 7 . BRIEFLY IN THE FACTS OF THE CASE THE ASSESSING OFFICER NOTED THAT A SUM OF RS.30,90,861/ - WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF BUILDING REPAIRS AND MAINTENANCE. THE ASSESSEE IN REPLY POINTED OUT THAT IT WAS AN ISO 9001:2008 STANDAR D CERTIFICATE HOLDER UNIT. HOWEVER, AS PER THE NORMS OF ISO 9001:2008 STANDARD, THE ASSESSEE HAD INCURRED THE EXPENSES ON BUILDING REPAIRS AND MAINTENANCE SUCH AS PLASTERING, TRIMY FLOORING, ROOFING, COLOURING ETC. THE ASSESSEE CLAIMED THAT IT HAD NOT CO NSTRUCTED ANY NEW BUILDING AND THE EXPENSES WERE PURELY IN THE NATURE OF REPAIRS AND MAINTENANCE. THE ASSESSEE FURNISHED THE DETAILS OF EXPENDITURE ALONG WITH THE BILLS RAISED AGAINST SUCH CIVIL WORKS. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD UN DERTAKEN MAJOR CIVIL WORK BY ENGAGING THE CONTRACTORS LIKE J.R. ANAGALI, R.A. ANAGALI, SIDDHI INTERIORS AND V.K. CONSTRUCTIONS ETC. FURTHER IT WAS NOTED B Y THE ASSESSING OFFICER THAT MAJOR CIVIL WORK WAS CARRIED OUT DURING THE YEAR WHICH DEFINITELY BROUGHT ENDURING BENEFIT TO THE UNIT AND WAS CAPITAL IN NATURE. RELIANCE PLACED UPON BY THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE ON VARIOUS DECISIONS WAS FOUND TO BE DISTINGUISHABLE. THE ASSESSING OFFICER AFTER ALLOWING THE DEPRECIATION AT THE ADMISSI BLE RATES CAPITALIZED THE EXPENDITURE TO THE EXTEN T OF RS.28,40,7 08/ - . 8. THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER HOLDING THAT WHERE THE ASSESSEE WOULD ENJOY THE BENEFIT OF ENDURING BENEFIT OVER A LONG PERIOD OF TIME THEN THE SAME IS OF END URING BENEFIT AND IS TO BE TREATED AS CAPITAL EXPENDITURE. ITA NO. 274 /P U N/20 1 5 M/S. FLUID LINE 4 9 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 10 . THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE PERUSAL OF THE BILLS FOR REPAIRS, RENOVATION ETC ., WOULD SHOW THAT THE NATURE OF THE EXPENDITURE WAS REPAIRS AND MAINTENANCE AND NOT BRINGING INTO EXISTENCE ANY FRESH ASSET AND HENCE THE SAME IS TO BE ALLOWED AS REVENUE E XPENSES. 1 1 . THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND REFERRED TO T HE COPIES OF THE BILLS FILED BY THE ASSESSEE IN THE PAPER BOOK AT PAGES 3 TO 89 AND POINTED OUT THAT THE PERUSAL OF THE NATURE OF EXPENDITURE ITSELF WOULD SHOW THAT MOST OF THE EXPENDITURE WAS IN RUNNING BILL ACCOUNT WHEREIN MAJOR CIVIL WORK WAS CARRIED AN D THE BENEFIT WAS OF ENDURING NATURE AND HENCE THERE IS NO MERIT IN THE PLEA OF THE ASSESSEE THAT NO ENDURING BENEFIT ENSURED TO IT. 12 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD CLAIMED REPAIRS AND RENOVATION EXPENSE S TO THE TUNE OF RS.30,90,861/ - AS REVENUE EXPENDITURE. THE COPY OF THE LEDGER IS PLACED AT PAGES 1 AND 2 OF THE PAPER BOOK. THE COPIES OF THE BILLS FOR THE SAID EXPENDITURE ARE PLACED AT PAGES 3 TO 89 OF THE PAPER BOOK. THE FIRST BILL PLACED AT PAGE 3 IS A RUNNING BILL NO.1, 2 OF V.K. CONSTRUCTIONS. THE NARRATION IN THE BILL IS FINAL WORK OF STAIR CASE AT FLUID LINE II AT L.K.AKIWATE, JAYSINGPUR. NATURE OF THE WORK CARRIED ON IS MENTIONED THEREIN. THE NEXT BILL OF V.K. CONSTRUCTIONS, I.E. RUNNING B ILL NO.1 OF MACHINE SHOP BUILDING AT THE SAME ADDRESS IS PLACED AT PAGES 13 TO 15. THE PERUSAL OF THE NARRATION IN THE SAID BILL REF LECTS RCC COLUMN, BEAM AND SLAB, ETC., LINE OUT AFTER EXCAVATION. THE SAID BILL ALSO TALKS ABOUT THE DEMOLISHING OF THE O LD TOILET AND ALSO DEMOLISHING OF MACHINE BUILDING. FURTHER IT ALSO TALKS ABOUT THE REMOVING OF THE SIDE SHOP, COLOUR COATED SHEET PARTITION . THE SAID BILL ENCLOSES MEASUREMENT SHEETS FROM PAGES 16 TO 27. THE NEXT BILL PLACED AT PAGES 28 AND ITA NO. 274 /P U N/20 1 5 M/S. FLUID LINE 5 29 OF THE P APER BOOK ALSO INDICATES NARRATION AS FINAL WORKS OF UNDERGROUND WATER TANK AND OLD SHOP REPAIR. SIMILARLY BILL PLACED AT PAGE 66 OF THE PAPER BOOK IS ALSO RUNNING BILL NO.2 OF MACHINE SHOP BUILDING FOR THE SAME PREMISES WHEREIN SIMILAR NARRATION CIVIL WORK IS MENTIONED. THE PERUSAL OF THE AFORESAID BILLS REFLECT THE NATURE OF THE WORK BEING CARRIED OUT. ANOTHER CONTRACTOR IS JAY SHRI CONSTRUCTIONS WHICH HAS ALSO CARRIED OUT SIMILAR NATURE OF JOB ON PROPERTY LIKE, PLUMBING AND GATE WORK . TH E DETAILS OF WHICH ARE PLACED AT PAGES 49 TO 51 OF THE PAPER BOOK. THE PERUSAL OF THE SAID WORKS REFLECT THE CIVIL WORK NOT TO BE IN THE NATURE OF REPAIRS AND HENCE WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD AND THE SAME IS REJECTED. THE GROUND OF APPEAL NO.3 IS THUS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 17 TH D AY OF MAY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 17 TH MAY, 201 7 . SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 & 2 , KOLHAPUR PUNE ; 4. / THE CIT - 1 & 2, KOLHAPUR ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE