Shree Benzophen Industries Ltd., Baroda V. The Income Tax Officer, Ward-4(1), Baroda

ITA 3028/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0037 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 18-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Assessee Lawyers: M K PATEL
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.3028/AHD/2013 / ASSTT. YEAR: 2010-2011 SHREE BENZOPHEN INDUSTRIES LTD. 84-A, VISHWAS COLONY R.C. DUTT ROAD ALKAPURI, BARODA. VS ITO, WARD - 4(1) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL, AR REVENUE BY : SHRI ANTONY PARIATH, SR.DR / DATE OF HEARING : 10/11/2016 / DATE OF PRONOUNCEMENT: 11/11/2016 $%/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF LD.CIT(A)-III, BARODA DATED 24.10.2013 PASSED FOR T HE ASSTT.YEAR 2010-11. 2. FIRST GROUND OF APPEAL TAKEN BY THE ASSESSEE IS GENERAL IN NATURE AND NO ARGUMENTS WERE ADVANCED BY THE LD.COUNSEL FOR THE A SSESSEE, HENCE IT IS REJECTED. 3. IN THE SECOND GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.3,09,889/-. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-CO MPANY HAD AVAILED LOAN FROM PERSONS COVERED UNDER SECTION 40A(2)(B) OF THE INCOME TAX ACT, 1961. IT HAS PAID INTEREST OF RS.18,59,334/- TO THESE PER SONS AT THE RATE OF 15%. ACCORDING TO THE AO, RATE OF BANK INTEREST WAS ROUG HLY AT 12.5%, AND ITA NO.3028/AHD/2013 2 THEREFORE, THE ASSESSEE HAD PAID EXCESS INTEREST PA YMENT. LD.AO, ACCORDINGLY, MADE ADDITION OF RS.3,09,889/-. APPEAL TO THE LD.CI T(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. BEFORE ME, IT WAS CONTENDED THAT IN THE ASSTT.YE AR 2008-09, SIMILAR DISALLOWANCE WAS MADE, BUT IT WAS DELETED BY THE TR IBUNAL IN ITA NO.1384/AHD/2014. THE ASSESSEE HAS PLACED ON RECOR D COPY OF THE TRIBUNALS ORDER. THE LD.DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE LD.CIT(A). 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES OF THE CASE, I AM OF THE VIEW THAT THE LD.REVENUE AUTHORITIES HAVE ERRED IN MAKING THE DISALLOWANCE. THE ASSESSEE HAS POINTED OUT THAT IT WAS SUFFERING SUBSTANTIAL LOSS IN EARLIER YEARS. NO FINANCIAL INSTITUTION WA S READY TO GIVE MONEY. THEREFORE, THE ASSESSEE HAS BORROWED FUNDS FROM PER SONS COVERED UNDER SECTION 40A(2)(B). THE ASSESSEE HAS NOT PAID INTER EST FOR 14 YEARS TO THESE PERSONS. A LITTLE HIGHER RATE OF INTEREST CANNOT B E UNJUSTIFIED IN SUCH CIRCUMSTANCES, MORE SO, THE ASSESSEE WAS NOT REQUIR ED TO FURNISH ANY SURETIES, SECURITIES IN ORDER TO AVAIL THIS TYPE OF LOAN. TH E LD.AO FAILED TO TAKE NOTE OF THIS ASPECT WHILE COMPARING THE RATES. I ALLOW THI S GROUND OF APPEAL AND DELETE DISALLOWANCE. 7. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF T HE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2,70,653/-. IT EMERGES OUT FROM RECORD THAT THE ASSESSEE HAS INCUR RED A SUM OF RS.3,63,268/- ON ACCOUNT OF REPAIRS AND MAINTENANCE. OUT OF THAT , RS.2,70,653/- WAS ALLOCATED TOWARDS RECONSTRUCTION OF COMPOUND WALL A ND LAYING OF FLOOR. THE LD.AO HAS TREATED IT AS CAPITAL EXPENDITURE. HIS C ONCLUSION MET APPROVAL OF THE LD.CIT(A). ITA NO.3028/AHD/2013 3 8. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IN MY OPINION, THE LD.REVENUE AU THORITIES HAVE FAILED TO APPRECIATE FACTS IN RIGHT PERSPECTIVE. THE ASSESSE E HAS NOT BROUGHT ANY ASSETS INTO EXISTENCE. IT HAS RE-ERECTED WALL WHICH WERE ALREADY IN EXISTENCE. SUCH TYPE OF REPAIRS OF BOUNDARY WALL WOULD FALL WITHIN THE AMBIT OF REPAIRS AND MAINTENANCE, AND THEREFORE, THE EXPENDITURE INCURRE D ON SUCH REPAIRS SHOULD BE ALLOWED AS REVENUE EXPENDITURE. ACCORDINGLY, I ALLOW THIS GROUND AND DELETE DISALLOWANCE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 11 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 11/11/2016