ACIT, CHENNAI V. M/s. SICAL Logistics Ltd., CHENNAI

ITA 390/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61076 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 23-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB IRS
• Assessee Lawyers: S SATHIYANAR AYANAN
• Keywords: Fair market value; Valuation report; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS.390 & 391(MDS)/2012 ASSESSMENT YEARS : 2004-05 & 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE V(1), CHENNAI. VS. M/S. SICAL LOGISTICS LTD., 73-ARMENIAN STREET, CHENNAI-600 001. PAN AAACS3789B. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P JACOB, I RS, ADDL.CIT RESPONDENT BY : SHRI S.SATHIYANARAYANAN, ADVOCATE DATE OF HEARING : 8 TH MAY, 2012 DATE OF PRONOUNCEMENT : 8 TH MAY, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THESE TWO APPEALS ARE FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEARS ARE 2004-05 AND 2006-07. THE APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE COMM ISSIONER OF INCOME-TAX(APPEALS)-VI AT CHENNAI, BOTH DATED 30-11 -2011. - - ITA NOS.390 & 391 OF 2012 2 THE APPEAL FOR THE ASSESSMENT YEAR 2004-05 ARISES O UT OF THE ORDER PASSED UNDER SECTION 154, READ WITH SECTION 2 50 OF THE INCOME-TAX ACT, 1961. THE APPEAL FOR THE ASSESSMEN T YEAR 2006-07 ARISES OUT OF THE ASSESSMENT ORDER PASSED U NDER SECTION 143(3) OF THE ACT. 2. IN THE APPEAL FOR THE ASSESSMENT YEAR 2004-05, THE GROUND RAISED BY THE REVENUE IS THAT THE COMMISSION ER OF INCOME-TAX(APPEALS) HAS ERRED IN DIRECTING THE ASSE SSING OFFICER TO ADOPT THE VALUE GIVEN BY THE REGISTERED VALUER A ND NOT THE VALUE GIVEN BY THE SUB-REGISTRAR FOR ARRIVING AT TH E FAIR MARKET VALUE OF THE PROPERTY AS ON 1-4-1981. IT IS THE CA SE OF THE REVENUE THAT THE VALUE GIVEN BY THE REGISTERED VALU ER WAS NOT BASED ON ANY SCIENTIFIC VALUATION METHOD AND WAS BA SED ONLY ON ORAL ENQUIRIES. 3. THE ISSUE HAS BEEN DECIDED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IN FAVOUR OF THE ASSESSEE, F OLLOWING THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL DATED 29 -3-2011 IN ITA NO.293(MDS)/2010, A CASE RELATING TO THE SAME A SSESSEE - - ITA NOS.390 & 391 OF 2012 3 AND RELATING TO THE SAME PROPERTY. THE REVENUE ARG UES THAT THE SAID DECISION HAS NOT BECOME FINAL, AS AN APPEAL IS PREFERRED BEFORE THE HONBLE HIGH COURT. 4. THE ABOVE MENTIONED TRIBUNAL ORDER WAS PASSED I N ASSESSEES OWN CASE AND PARTICULARLY WITH REFERENCE TO THE SAME PROPERTY AND, THEREFORE, IT IS TO BE SEEN THAT ALL THE FACTS RELATING TO VALUATION REPORTS HAVE BEEN CONSIDERED BY THE TR IBUNAL. THEREFORE, THE SAID ORDER OF THE TRIBUNAL IS BINDIN G ON THE COMMISSIONER OF INCOME-TAX(APPEALS). HIS ORDER IS, THEREFORE, TO BE UPHELD. AS ON TO-DAY, THE SAID ORDER OF THE TRIBUNAL HAS NOT BEEN DISTURBED BY THE HONBLE JURISDICTIONAL HI GH COURT. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINI ON THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) CA NNOT BE DISTURBED AND THE APPEAL FILED BY THE REVENUE IS LI ABLE TO BE DISMISSED. 5. IN THE APPEAL FOR THE ASSESSMENT YEAR 2006-07, THE FIRST GROUND RAISED BY THE REVENUE IS THAT THE COMM ISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN HOLDING THAT RULE 8D COULD NOT - - ITA NOS.390 & 391 OF 2012 4 BE APPLIED FOR THE IMPUGNED ASSESSMENT YEAR 2006-07 , AS THE OPERATION OF THAT RULE IS ONLY PROSPECTIVE WITH EFF ECT FROM THE ASSESSMENT YEAR 2008-09. IN FACT, THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS FOLLOWED THE DECISION OF THE HONB LE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTUR ING COMPANY LIMITED, 234 CTR 1. THE CASE OF THE REVENU E IS THAT THE SAID DECISION OF THE HONBLE BOMBAY HIGH COURT HAS BEEN CHALLENGED IN APPEAL BEFORE THE HONBLE SUPREME COU RT. BUT, AS ON TO-DAY, THE LAW DECLARED BY THE HONBLE BOMBAY H IGH COURT HOLDS GOOD. THEREFORE, THE ORDER OF THE COMMISSION ER OF INCOME-TAX(APPEALS) ON THIS POINT MUST SURVIVE. 6. ANOTHER GROUND RAISED BY THE REVENUE IS THAT TH E COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN HO LDING THAT THE PRE CLOSURE EXPENSES OF LOAN, SUCH AS PREMIUM A ND PENALTY, ARE ALLOWABLE AS REVENUE EXPENDITURE. THE DECISION HAS BEEN TAKEN BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IN FAVOUR OF THE ASSESSEE IN VIEW OF THE DECISION OF THE TRIBUNA L IN OVERSEAS SANMAR FINANCE LTD., 87 TTJ 556. BUT, AS RIGHTLY P OINTED OUT BY SHRI SHAJI P JACOB, THE LEARNED COMMISSIONER OF INC OME-TAX, - - ITA NOS.390 & 391 OF 2012 5 APPEARING FOR THE REVENUE, THE SPECIAL BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL (BANGALORE BENCH) IN THE CASE OF AZTEC SOFTWARE & TECHNOLOGY SERVICES LTD. VS. ACIT, 107 I TD 141, HAS TAKEN A VIEW AGAINST THE ASSESSEE AND, THEREFORE, T HE DECISION OF THE TRIBUNAL IN THE CASE OF OVERSEAS SANMAR FINANCE LTD., 87 TTJ 556, NO MORE HOLDS THE FIELD. IN VIEW OF THE A BOVE, WE HAVE TO SEE THAT THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) ON THIS ISSUE CANNOT BE UPHELD. ACCOR DINGLY, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THIS PARTICULAR ISSUE IS REVERSED AND WE HOLD THAT THE P RE CLOSURE EXPENSES OF LOAN, SUCH AS PREMIUM AND PENALTY, NEED TO BE TREATED AS CAPITAL EXPENDITURE. THIS ISSUE IS DECI DED IN FAVOUR OF THE REVENUE. 7. THE REVENUE IS PARTLY SUCCESSFUL IN ITS APPEAL FOR THE ASSESSMENT YEAR 2006-07. 8. IN RESULT, THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2004-05 IS DISMISSED AND THE APPEAL FILED FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED. - - ITA NOS.390 & 391 OF 2012 6 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 8 TH OF MAY, 2012 AT CHENNAI. SD/- SD/-S (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 8 TH MAY, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.