DCIT Corporate Circle 1(2), CHENNAI V. Bay Container Terminal Pvt. Ltd., CHENNAI

ITA 2898/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9267 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 12-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABIJIT RAKSHIT
• Keywords: Depreciation; Revenue expenditure; Capital expenditure; Set aside
• Section: 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , !' , # $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R ' ./ ITA NOS.1909, 1910 & 2898/CHNY/2018 !% /ASSESSMENT YEARS: 2013-14, 2014-15 & 2015-16 DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), CHENNAI. VS. M/S. BAY CONTAINER TERMINALS PVT. LTD., NO.18, SWAMI SIVANANDA SALAI, CHENNAI 600 005. [PAN: AAACB 3622L] ( & /APPELLANT) ( '(& /RESPONDENT) & ) * / APPELLANT BY : SHRI ABIJIT RAKSHIT, JCIT ' (& ) * /RESPONDENT BY : NONE + ! ) ,# /DATE OF HEARING : 20.06.2019 -.% ) ,# / DATE OF PRONOUNCEMENT : 20.06.2019 / / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE REVENUE FILED THESE APPEALS AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI (HE REINAFTER CALLED AS CIT(A)) IN ITA NOS.486 & 487/CIT(A)-1/2016-17 DAT ED 30.03.2018 AND THE ORDER OF LD. CIT(A)-1, CHENNAI IN ITA NO.197/CI T(A)-1/2017-18 DATED 18.07.2018 FOR THE ASSESSMENT YEARS (AYS) 2013-14, 2014-15 & 2015- 16, RESPECTIVELY. ITA NOS.1909, 1910 & 2898/CHNY/2018 :- 2 -: 2. M/S. BAY CONTAINER TERMINALS PVT. LTD., THE ASSE SSEE, IS ENGAGED IN THE BUSINESS OF STORAGE, HANDLING AND REPAIRS OF MARINE CONTAINERS. IN THE ASSESSMENTS MADE FOR THE AY 2013-14, 2014-15 & 2015-16, THE ASSESSEE CLAIMED CERTAIN SUM TOWARDS PLOT MAINTENAN CE AND DEVELOPMENT CHARGES. THE ASSESSING OFFICER (AO) TR EATED IT AS A CAPITAL EXPENDITURE AND ALLOWED DEPRECIATION @ 5% AND ADDED THE BALANCE SUM IN THE RESPECTIVE ASSESSMENTS. AGGRIEVED AGAINST T HOSE ORDERS, THE ASSESSEE FILED APPEALS BEFORE CIT(A). THE LD. CIT( A) FOLLOWING THE EARLIER YEARS ORDERS HELD THAT THESE EXPENDITURES A S REVENUE IN NATURE. AGGRIEVED AGAINST THOSE ORDERS, THE REVENUE FILED C OMMON GROUNDS OF APPEAL FOR AYS 2013-14, 2014-15 AS UNDER: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO L AW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANCE OF PLOT DEVELOPMENT EXPENDITURE TO THE TUNE OF RS.1,25,27,384/- FOR AY 2013-14 & RS.88,57,307/- FO R AY 2014-15. 2.1 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH E FACT THAT THE EXPENSES WERE MAINLY INCURRED FOR PURCHASE OF SUNDR Y REPAIR MATERIALS, PURCHASE OF RUBBISH FOR FILLING AND YARD LEVELING, CLEARING AND WATERING CHARGES. THOUGH THE EXPENSES WERE INCU RRED PERIODICALLY, IN TOTALITY, IT GIVES ENDURING BENEFI T TO THE ASSESSEE AND HENCE THE SAME SHOULD BE TREATED A CAPITAL EXPENDIT URE. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE REVENUES GROUNDS OF APPEAL IN ITA NO.2898/C HNY/2018 FOR AY 2015-16 ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. ITA NOS.1909, 1910 & 2898/CHNY/2018 :- 3 -: 2. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANC E OF PLOT DEVELOPMENT EXPENDITURE OF RS.1,17,45,134/- TREATIN G IT REVENUE EXPENDITURE. 3. THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE IMPUGNED EXPENSES WERE MAINLY INCURRED FOR PURCHASE OF SUNDRY REPAIR MATERIALS, PURCHASE OF RUBBISH FOR FILLING A ND YEAR LEVELING, CLEARING AND WATER CHARGES WHICH WERE USED IN CREAT ING AN ENDURING BENEFIT TO THE ASSESSEE THEREBY MAKING THE EXPENDIT URE CAPITAL IN NATURE. 4. THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THOUGH THE EXPENDITURES IN QUESTION WERE OF PERIOD NATURE, THE BENEFIT THEY ACCRUED TO THE ASSESSEE WAS ONE OF AN ENDURING NATU RE AND HENCE THE EXPENDITURE ASSUMED THE COLOUR OF CAPITAL EXPEN DITURE AND HENCE NOT ALLOWABLE. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE AC RESTORED. 4. THOUGH THE LD. DEPARTMENTAL REPRESENTATIVE PRESE NTED THE CASES ON THE LINES OF GROUNDS OF APPEAL, SUPRA, SUBMITTED THAT AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE FILED AN APPEAL IN ITA NO.1260/CHNY/2015 FOR AY 2010-11 AND THE REVENUE FILED APPEALS IN ITA NO.642/CHNY/2016 FOR AY 2011-12 & ITA NO.2614/CHNY/2017 FOR AY 2012- 13, BEFORE THE HON'BLE ITAT, WHICH DISPOSED THEM IN THE ORDER IN I TA NOS. 1214/CHNY/2015,642/CHNY/2016 & 2614/CHNY/2017 DATED 04.03.2019 ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE. 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. SINCE, IT IS REPETITIVE ISSUE A ND THE ISSUE IS DECIDED BY THE HON'BLE ITAT IN ASSESSEES FAVOUR, IN THE EARLIE R YEARS, SUPRA, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER : ITA NOS.1909, 1910 & 2898/CHNY/2018 :- 4 -: 4. NOW, WE SHALL TAKE UP THE ASSESSEES APPEAL IN ITA NO.1260/CHNY/2015 FOR ASSESSMENT YEAR (AY) 2010-11. 5 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEE CHALLENGES THE ADDITION ON ACC OUNT OF DISALLOWANCE OF PLOT DEVELOPMENT EXPENDITURE HOLDIN G TO BE CAPITAL AND ALLOWED DEPRECIATION @ 5%. IT IS CONTENDED THA T THE EXPENDITURE WAS INCURRED ON LEASE HOLD LAND AND THE EXPENDITURE IS REVENUE IN NATURE AND THE AO AS WELL AS LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THE EXPENDITURE AS CAPITAL IN NATURE. FR OM THE PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE DETAILS FILED, IT APPEARS THAT THE LOWER AUTHORITIES HAD NOT EXAMINED WHETHER THE EXPE NDITURE HAS RESULTED INTO CREATION OF ASSET NOR LOOKED INTO THE NATURE OF THE EXPENDITURE THEREFORE, IN THE ABSENCE OF THIS MATER IAL EVIDENCE ON RECORD, WE REMIT BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH CONSIDERATION FOR THE PURPOSE OF EXAMINING THE EVID ENCE IN SUPPORT OF CLAIM AND DECIDES THE ISSUE ACCORDINGLY IN ACCOR DANCE WITH LAW. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. REVENUES APPEAL IN ITA NO.1214/CHNY/2015 FOR AY 20 10-11 : 7. THE APPEAL OF THE REVENUE DOES NOT SURVIVE BEFORE U S AS THE HONBLE HIGH COURT VIDE PARA 9 OF THE ORDER HAD DIS POSED OF THE MATTER BY CONFIRMING THE ACTION OF THE TRIBUNAL REM ANDING THE MATTER TO THE FILE OF AO. 8. IN THE RESULT, THE APPEAL OF THE REVENUE HAD BEC OME INFRUCTUOUS AND DISMISSED AS SUCH. REVENUES APPEALS IN ITA NOS.642/CHNY/2016 FOR AY 2 011-12 & 2614/CHNY/2017 FOR AY 2012-13 : 9. THESE ARE THE APPEALS FILED BY THE REVENUE CONTESTI NG THAT THE LD. CIT(A) OUGHT NOT HAVE ALLOWED THE PLOT REVE NUE EXPENDITURE AS REVENUE EXPENDITURE. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS MADE BY THE APPELLANT HELD THAT THE EXPENDITURE WAS INCURRED ONLY TOWARDS MAINTENANCE / UPKEEP OF THE YARD HELD THAT THESE EXPENSES ARE ONLY IN THE NATURE OF REVENUE EXPENSES SUCH AS COST OF MATERIALS AND SUNDRY REPAIRS AND COST OF YARD LEVELING ETC. A ND ALSO CONSIDERING THE FACT THAT THESE EXPENDITURE CAME TO BE ALLOWED BY THE LD. CIT(A) FOR AY 2005-06 & 2008-09 REVENUE EXP ENDITURE. ON PERUSAL OF THE LD. CIT(A) ORDER, WE DO NOT FIND ANY INFIRMITY IN THE REASONING OF THE LD. CIT(A) IN ALLOWING THE SAME AS REVENUE EXPENDITURE. IN THE CIRCUMSTANCES, WE DO FIND ANY M ERIT IN THE APPEALS FILED BY THE REVENUE. 10. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ITA NOS.1909, 1910 & 2898/CHNY/2018 :- 5 -: 6. FROM THE ABOVE, IT IS CLEAR THAT THIS TRIBUNAL O N DUE EXAMINATION, HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR. THEREFO RE, RESPECTFULLY FOLLOWING THE ABOVE DECISION, ALL THESE REVENUES A PPEALS ARE DISMISSED. 7. IN THE RESULT, ALL THE THREE APPEALS FILED BY THE R EVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2019 IN CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) # /ACCOUNTANT MEMBER /CHENNAI, 0' /DATED: 20 TH JUNE, 2019 . EDN, SR. P.S / ) ',12 32%, /COPY TO: 1. & /APPELLANT 2. '(& /RESPONDENT 3. + 4, ( )/CIT(A) 4. + 4, /CIT 5. 2!56 ', /DR 6. 67 8 /GF