DCIT, New Delhi V. M/s. Salora Retail Ventures Ltd., New Delhi

ITA 3944/DEL/2014

• Counselvise Citation: 394420114 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 31-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N MEHTA
• Keywords: Revenue expenditure; Reassessment proceedings
• Section: 37

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC - 2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3944 /DEL/201 4 A.Y. : 200 8 - 0 9 DCIT, CIRCLE - 7 (1), VS. M/S S ALORA RETAIL VENTURES LTD. ROOM NO. 238A, 2 ND FLOOR, D - 13/4, OKHLA INDUSTRIAL AREA, CR BUILDING, I.P. ESTATE, PHASE - II, NEW DELHI 20 NEW DELHI (PAN : AAACF4916H) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SUJIT KUMAR, SR. DR ASSESSEE BY : SH. P.N. MEHTA, CA DATE O F HEARING : 31 - 0 8 - 2015 DATE OF ORDER : 0 1 - 0 9 - 2015 O R D E R PER H.S. SIDHU, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - X, NEW DELHI DATED 30 . 4 .201 4 PERTAINING TO ASSESSMENT YEAR 200 8 - 0 9 . 2. T HE GROUNDS OF APPEAL READ AS UNDER: - I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF B USINESS EXPENDITURE. 2 II) THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING LOSS OF RS. 1,05,51,518/ - ON 29.9.2008. IN THIS CASE, REASSESSMENT PROCEEDINGS U/S. 147/143(3) WAS COMPLETED BY THE AO AT A LOSS OF RS. 93,070/ - BY DISALLOWING THE EXCESS CLAIM OF PREOPERATIVE EXPENSES IN THE RETURN OF INCOME AMOUNTING TO RS. 1,0 0,98,926/ - VIDE ORDER DATED 28.1.201 3 PASSED U/S. 147/143(3) OF THE INCOME TAX ACT, 1961. 4 . AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 30 . 4 .2014 ALLOWED THE APPEAL OF THE ASSESS EE. 5. AGAINST THE ABOVE MENTIONED IMPUGNED ORDER DATED 30 . 4 .2014, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 6.1 ON THE OTHER HAND, LD. CO UNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND REQUESTED THAT THE SAME MAY BE UPHELD. 7 . I HAVE HEARD BOTH THE PARTIES AND PERUSED T HE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. I FIND THAT THE ASSESSEE CHALLENGED TH E DISALLOWANCE IN DISPUTE MADE BY THE A.O. IN TH E ASSESSMENT ORDER. IT IS OBSERVED THAT THE AO'S ACTION IS PURELY BASED ON NOT APPRECIATING THE FULL FACTS OF THE CASE. IT IS A SIMPLE CASE OF 'WINDOW DRESSING' OF FINANCIAL ACCOUNTS OF THE COMPANY BY CHART ERED ACCOUNTANTS WITHOUT GIVING ANY EFFECT IN THE TOTAL INCOME OF THE 3 APPELLANT AS REFLECTED IN THE COMPUTATION OF INCOME. IT IS OBSERVED THAT TOTAL EXPENSES WERE INCURRED BY THE A SSESSEE UNDER THE HEADS PERSONNEL EXPENSES AND ADMINISTRATIVE EXPENSES. THESE EXPENSES BEING REVENUE IN NATURE WERE FULLY ALLOWABLE. HOWEVER, THE ASSESSEE HAS AMORTISED THEM AND CLAIMED L/5TH OF SUCH EXPENSES IN THE, PROFIT & LOSS ACCOUNT. BY DOING SO, INSTEAD OF SHOWING HEAVY LOSSES, THE FINANCIAL RESULTS REFLECTED LESSER LOSSES . IN THE COMPUTATION OF INCOME, HOWEVER,. THE A SSESSEE HAS CLAIMED BALANCE EXPENSES OF THEREBY INCREASING THE LOSSES BY THE SAME AMOUNT. IT IS OBSERVED THAT THESE EXPENSES WERE WHOLLY AND EXCLUSIVELY INCURRED FOR THE BUSINESS PURPOSE OF THE APPELLANT AS NO ADVERSE COMMENTS HAD BEEN MADE BY THE AO IN THIS REGARD. FURTHER, THEIR NATURE IS DEFINITELY A REVENUE EXPENDITURE WHICH IS WHOLLY ALLOWABLE U/S 37 OF THE ACT. THERE IS NO CONCEPT OF 'DEF ERRED REVENUE EXPENDITURE UNDER THE I. T. ACT. THE APPELLANT HAD RELIED UPON THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF RAJENDRA KURNAR BACHHAWAT V. CIT 276 ITR 567 AND IN THIS REGARD. JURISDICTIONAL HON'BLE COURT OF DELHI IN THE CASE OF CI TI FINANCIAL CONSUMER FINANCE LTD. V. CIT IN ITA NO.1820/201 AND ACIT V. GLOBAL HEALTH LINE PVT LTD. 19 ITR 298 HAS ALSO AFFIRMED THE SAME VIEW. 7.1 IN VIEW OF THE DISCUSSION HEREINABOVE, THE AO'S OBSERVATION THAT THE APPELLANT HAS CLAIMED EXCESS EXPENSES IN ITS RETURN OF INCOME HAS NO BASIS. AS AN ABUNDANCE PRECAUTION, THE A SSESSEE WAS ASKED TO PRODUCE ITS INCOME TAX RETURN FOR NEXT THREE ASSESSMENT YEARS. PERUSAL OF THESE RETURNS SHOW THAT THE APPELLANT HAS ADDED BACK IN ITS RETURN OF INCOME (IN COMPUTA TION OF INCOME) ON ACCOUNT OF PRE - OPERATIVE EXPENSES WRITTEN OFF AS THE SAME WAS REFLECTED IN THE BOOKS OF ACCOUNTS AS WELL AS IN THE PROFIT & LOSS ACCOUNT. THUS, THE A SSESSEE HAS NEITHER CLAIMED EXPENSES IN EXCESS DURING THE YE AR NOR IN THE 4 SUBSEQUENT YEA RS. S INCE THE A SSESSEE S CLAIM DID NOT RESULT IN EXCESS CLAIM OF EXPENDITURE, THE ADDITION IN DISPUTE M ADE BY THE A. O . IS NOT JUSTIFIED AND HENCE LD. CIT(A) HAS RIGHTLY DIRECTED TO DELETE THE SAME. 7 . 2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT AS AFORESAID, I DO NOT SEE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE LD. CIT(A), HENCE, I UPHOLD THE SAME AND DISMISS THE APPEAL FILED BY THE REVENUE. 8 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. O RDER PRONOUNCED IN THE OPEN CO URT ON 0 1 / 9 /201 5 . S D / - [ H.S. SIDHU ] JUDICIAL MEMBER DATE: 0 1 / 9 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES