M/s.Indus Motor Co. P. Ltd, Calicut V. The Jt CIT, Calicut

ITA 291/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96705 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-05-2015
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: K GOPI
• Keywords: Capital expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI B.P. JAIN, AM AND GEORGE GEOR GE K., JM I.T.A. NO.291/COCH/2015 ASSESSMENT YEAR : 2010-11 M/S. INDUS MOTOR CO. PVT. LTD., INDUS HOUSE, CHAKKORATHUKULAM, CALICUT-673 005. [PAN: AAACI 4904J] VS. THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-1, KOZHIKODE. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI K. GOPI, CA REVENUE BY SHRI K.P. GOPAKUMAR, SR.DR DATE OF HEARING 15/09/2015 DATE OF PRONOUNCEMENT 16/09/2015 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE IS ARISING OUT OF THE ORDER PASSED BY THE CIT(A), KOZHIKODE DATED 05/02/2015 FOR THE ASSESSME NT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND ON LAW, THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ER RED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.98,77,113/- IN RESPECT OF EXPENDITURE INCURR ED BY THE APPELLANT FOR CONSTRUCTION OF SUPER STRUCTURE ON LEASE HOLD LANDS TREATING THE SAME AS CAPITAL EXPENDITURE. THE LEARNED CIT(A) ER RED IN DISREGARDING THE DECISION OF HON. MADRAS HIGH COUR T IN CIT VS. TVS LEAN LOGISTICS LTD. (293 ITR 432). I.T.A. NO.291/COCH/2015 2 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND ON LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN CONFIRMING DISALLOWANCE MADE BY THE ASSESSING OFFI CER AMOUNTING TO RS.10,23,668/- IN RESPECT OF EXPENDITURE INCURRED BY THE APPELLANT IN THE MODIFICATION/RENOVATION OF LEASE HOLD PREMISES TREATING THE SAME AS CAPITAL EXPENDITURE. THE LEARNED CIT(A) OUGHT TO HAVE NOTED THAT SUCH EXPENSES ARE INCURRED FOR THE PURPOSE OF PROV IDING TEMPORARY PARTITIONS, FLOORING, REFURBISHING, OTHER INTERIOR WORKS AS WELL AS OTHER CONSTRUCTION MATERIALS FOR MAKING THE PREMISES REA DY FOR FUNCTIONAL USE AND NO ASSET OR BENEFITS OF ENDURING NATURE IS ACHIEVED FROM SUCH EXPENDITURES. THE LEARNED CIT(A) ERRED IN DI SREGARDING THE DECISION OF HON. JURISDICTIONAL HIGH COURT OF KERA LA IN THE CASE OF JOY ALUKKAS INDIA PRIVATE LTD. (I.T.A. NO. 230/2013 DA TED 20/01/2014). 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON LAW, THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ER RED IN CONFIRMING DISALLOWANCE MADE BY THE ASSESSING OFFI CER IN RESPECT OF PROVISION FOR FREE SERVICES AMOUNTING TO RS.36,00, 000/-. THE LEARNED CIT(A) OUGHT TO HAVE FOUND THAT THE SAID P ROVISION REPRESENTS LIABILITY INCURRED TOWARDS COST OF FREE SERVICES FOR VEHICLES SOLD DURING THE YEAR AND HENCE IS ALLOWABLE AS AN ITEM OF EXPENDITURE INCURRED IN THE REGULAR COURSE OF THE BUSINESS OF THE ASSESSEE ALLOWABLE U/S. 37 OF THE INCOME TAX ACT, 1961. 3. AS REGARDS GROUND NOS. 1 & 2, THE LD. COUNSE L FOR THE ASSESSEE, SHRI K. GOPI, AT THE OUTSET, STATED THAT THE SAID GROUND S ARE TO BE DECIDED AGAINST THE ASSESSEE SINCE THEY ARE COVERED AGAINST THE ASSESSEE IN ASSESSEES OWN CASE BY THE ITAT, COCHIN BENCH IN I. T.A. NOS. 212, 213 &214/COCH/2014 DATED 25/07/2014 FOR THE ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10. HE RELIED UPON THE RELEVANT P ARAS 5, 8 AND 30 OF THE ORDER WHEREIN ALL THE REVENUE APPEALS WERE ALLOWED BY THE COCHIN BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE ON IDENTICAL IS SUES AS IN GROUND NOS. 1 & 2. I.T.A. NO.291/COCH/2015 3 4. ON THE OTHER HAND, THE LD. DR DID NOT OPPOSE THE SAME. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS GROUND NOS. 1 & 2 AS STATED BY TH E LD. COUNSEL FOR THE ASSESSEE, SHRI K. GOPI AND ON PERUSAL OF THE ORDER OF THE ITAT, COCHIN BENCH FOR THE ASSESSMENT YEARS 2007-08 TO 2009-10 ( SUPRA) ON IDENTICAL ISSUES, THE CASE HAS BEEN DECIDED AGAINST THE ASSES SEE FOR THE SAID YEARS AND THEREFORE, BOTH THE GROUNDS ARE DECIDED AGAINST THE ASSESSEE. ACCORDINGLY, GROUND NOS. 1 & 2 OF THE ASSESSEE ARE DISMISSED. 6. AS REGARDS GROUND NO. 3, THE BRIEF FACTS OF THE CASE AS PER ASSESSING OFFICERS ORDER IN PG. 7 ARE REPRODUCED BELOW FOR T HE SAKE OF CONVENIENCE: 8. PROVISIONS FOR FREE SERVICES: 8.1 IT IS SEEN THAT ASSESSEE HAS CLAIMED AN AMOU NT OF RS.36,00,000, BEING PROVISION FOR FREE SERVICE EXPE NSES VIDE LETTER RECEIVED ON 13.02.2013 ASSESSEE HAS CLARIFIED THAT THE AMOUNT HAS NOT BEEN DISALLOWED IN THE INCOME COMPUTATION STATE MENT VOLUNTARILY BY MISTAKE. IT SHOULD HAVE BEEN DISALL OWED AS THESE EXPENSES HAVE ALREADY BEEN BOOKED IN THE P/L ACCOUN T UNDER DIFFERENT HEADS. IN VIEW OF THIS AMOUNT OF RS.36,00 ,000 IS DISALLOWED AND ADDED TO THE TOTAL INCOME. 7. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY HOLDING THAT THE EXPENDITURE IS TO BE ALLOWED ONLY ON ACCRU AL BASIS. THE I.T.A. NO.291/COCH/2015 4 EXPENDITURE CLAIMED BY THE ASSESSEE HAS NOT YET ACC RUED AND IS ONLY A PROVISION AND THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM MADE BY THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. 9. ON A QUERY FROM THE BENCH WHETHER ACTUAL EXPENDI TURE HAS BEEN INCURRED OR EXPENDITURE HAS BEEN ACCRUED DURING THE YEAR, THE LD. AR COULD NOT OFFER ANY COGENT EXPLANATION OR REPLY TO THE BE NCH IN THIS REGARD. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE EXPENDITUR E CLAIMED BY THE ASSESSEE IS ONLY A PROVISION AND WAS NOT ACCRUED DU RING THE YEAR AND THEREFORE, CANNOT BE CLAIMED AS ALLOWABLE EXPENDITU RE U/S. 37 OF THE ACT. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF T HE CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16-09-2015. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 16TH SEPTEMBER, 2015 GJ COPY TO: I.T.A. NO.291/COCH/2015 5 1. M/S. INDUS MOTOR CO. PVT. LTD., INDUS HOUSE, CHA KKORATHUKULAM, CALICUT-673 005. 2. THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-1, K OZHIKODE. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN