NEXUS ELECTRO STEEL LTD., CHENNAI V. ITO CORPORATE WARD 4(2), CHENNAI

ITA 3127/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1934 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 16-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R ANITHA IRS
• Keywords: Revenue expenditure; TDS
• Section: 143(3); 37(1); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , , [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ] ./I.T.A. NO.3127/CHNY/2018 ! / ASSESSMENT YEAR : 2009-10 M/S. NEXUS ELECTRO STEEL LIMITED, NO.201, BLOCK C, SHIVALAYA, 16, ETHIRAJ SALAI, EGMORE, CHENNAI 600 008. VS. THE INCOME TAX OFFICER, CORPORATE WARD 4(2) CHENNAI 600 034. [PAN AABCN 4224H] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SHRI. B. RAMAKRISHNAN, FCA &' '# $ % /RESPONDENT BY : MS. R. ANITHA, IRS, JCIT. ( ) $ * /DATE OF HEARING : 28-08-2019 +,! $ * /DATE OF PRONOUNCEMENT : 04-09-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-8 , CHENNAI (CIT(A) FOR SHORT) DATED 19.09.2018 FOR THE ASS ESSMENT YEAR (AY) 2009-10. ITA NO. 3127/2018 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. FOR THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENSES CL AIMED U/S 37(1) OF THE ACT OF RS. 33,63,374/-. FOR THESE GROUNDS AND SUCH OTHER GROUNDS THAT MAY B E ADDUCED BEFORE OR DURING THE HEARING OF THE APPEAL, IT IS PRAYED THAT THE HONBLE TRIBUNAL MAY BE PLEASED TO D ELETE THE PENALTY LEVIED OR PASS SUCH OTHER ORDERS AS THE HONBLE TRIBUNAL MAY DEEM FIT. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT NAMELY NEXUS ELECTRO STEEL LIMITED. I S A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING TRANSFORME RS. THE RETURN OF INCOME FOR THE AY 2009-10 WAS FILED ON 20.08.2010 A DMITTING LOSS OF RS.8,07,40,149/-. AGAINST THE SAID RETURN OF INCOME , THE ASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER, CORPORAT E WARD 4(2) CHENNAI (HEREINAFTER CALLED AO) VIDE ORDER DATED 31.03.2015 PASSED U/S. 143(3) R/W S. 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT TOTAL LOSS OF F4,31,21,241/- . WHILE DOING SO, THE AO MADE DISALLOWANCE ON PAYMENT OF INTEREST IN FOREIGN CUR RENCY OF F1,17,10,257/-, DEFAULT IN PAYMENT OF TDS F2,23,19, 358/-, CAPITAL ITA NO. 3127/2018 :- 3 -: EXPENDITURE OF F33,63,374/- AND EPF/ ESI PAYMENT NO T MADE WITHIN THE DUE DATE U/S.36(1) (VA) OF THE ACT F1,72,530/-. 4. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEAL W AS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDE R DELETED THE ADDITIONS ON ACCOUNT OF PAYMENT OF INTEREST IN F OREIGN CURRENCY OF F1,17,10,257/-, PAYMENT OF TDS F2,23,19,358/-, PA YMENT OF EPF/ ESI F1,72,530/-, AND SUSTAINED THE CAPITAL EXPEND ITURE OF F33,63,374/-. THUS, THE APPEAL FILED BY THE ASSESSE E CAME TO BE PARTLY ALLOWED BY THE LD. CIT(A). 5. AGGRIEVED BY THAT PART OF THE LD. CIT(A) ORDER, WHI CH IS AGAINST ASSESSEE-COMPANY, THE ASSESSEE COMPANY IS IN APPEAL BEFORE US. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL IS SQUAREL Y COVERED AGAINST THE ASSESSEE IN ASSESSEES OWN CASE IN ITA NO.1420/ MDS/2013, FOR ASSESSMENT YEAR 2008-09, WHEREIN IT WAS HELD AS FOL LOWS:- 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE L D. CIT(APPEALS), IN HIS ORDER HAS OBSERVED THAT THE AS SESSEE HAS CLAIMED IT AS MERELY EXTENDING THEIR MANUFACTURING CAPACITY IN RESPECT OF ALREADY EXISTING OF THE PRODUCT, WHICH I S BEING MANUFACTURED BY THE ASSESSEE. IT HAS SET UP NEW UNI T AT KASNE, THANE DISTRICT OF MAHARASHTRA FOR MANUFACTURING OF SAME LINE OF PRODUCTS. EVEN THOUGH THE NEW FACTORIES CAN BE CONS IDERED AS SEPARATE UNIT, IT IS NOTHING BUT EXTENSION OF THE E XISTING BUSINESS ITA NO. 3127/2018 :- 4 -: UNITS. WITH THE ABOVE OBSERVATION AND BY FOLLOWING THE DECISION IN THE CASE OF CIT V. RANE (MADRAS) LTD. (SUPRA), THE LD. CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM O F THE ASSESSEE. IN THIS CASE, THE ASSESSING OFFICER HAS GIVEN A SPECIF IC FINDING THAT THE ASSESSEE HAS DEVELOPED A NEW UNIT AT BOMBAY AND THE EXPENDITURE INCURRED WAS IN CONNECTION WITH NEW UNIT. THIS IS N OTHING ON RECORD THAT THE EXPENDITURE INCURRED BY THE ASSESSE E WAS IN CONNECTION WITH THE EXTENSION OF EXISTING UNIT. EVE N BEFORE US, NO MATERIAL WAS PLACED ON RECORD TO SHOW THAT THE EXPE NDITURE INCURRED BY THE ASSESSEE WAS FOR THE PURPOSE OF EXT ENSION OF THE EXISTING BUSINESS OF THE ASSESSEE. SO FAR AS CASE L AW RELIED ON BY THE LD. CIT(APPEALS) IS CONCERNED, THE HONBLE MADR AS HIGH COURT HAS HELD THAT THE EXPENDITURE INCURRED IN SETTING U P NEW FACTORY VIS- -VIS EXTENSION OF EXISTING UNIT, EXPENDITURE CAN B E CONSIDERED AS REVENUE EXPENDITURE. IN THIS CASE, THERE IS NOTHING ON RECORD THAT THE NEW UNIT SET UP AT BOMBAY WAS AN EXTENSION OF B USINESS OF THE ASSESSEE. THEREFORE, FOR THE ABOVE REASONS, THE ORD ER PASSED BY THE LD. CIT(APPEALS) IS REVERSED ON THIS ISSUE AND THE GROUND RAISED BY THE REVENUE IS ALLOWED. RESPECTFULLY, FOLLOWING THE ABOVE DECISION OF THE C O-ORDINATE BENCH OF THE TRIBUNAL, WE DISMISS THE APPEAL FILED BY THE AS SESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS DISMISSED. ORDER PRONOUNCED ON 4TH DAY OF SEPTEMBER, 2019, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER - ) / CHENNAI . / DATED: 4TH SEPTEMBER, 2019 KV $ &*01 21!* / COPY TO: 1 . '# / APPELLANT 3. ( 3* () / CIT(A) 5. 16 &*7 / DR 2. &' '# / RESPONDENT 4. ( 3* / CIT 6. 8 9) / GF