MSEB HOLDING CO. LTD, MUMBAI V. DCIT CIR 10(1), MUMBAI

ITA 3999/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7094 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 13-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K K VED
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN , HON'BLE ACCOUNTANT MEMBER ITA NO . 3999 /MUM/2016 (A.Y : 2011 - 12 ) M/S. MSEB HOLDING CO. LTD HONGKONG BANK BUILDING M.G. ROAD, MUMBAI 400 001 PAN NO : AAECM 2934 Q V . THE DY.CIT, CIRCLE 10( 1) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) ITA NO. 3492 /MUM/2016 (A.Y: 2011 - 12) ACIT, 1(2)(2) ROOM NO. 535, 5 TH FLOOR , AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 V. M/S. MSEB HOLDING CO. LTD 4 TH FLOOR, HONGKONG BANK BUILDING , M.G. ROAD, FORT, MUMBAI 400 001 PAN NO : AAECM 2934 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. VED DEPARTMENT BY : SHRI RAJESH YADAV DATE OF HEARING : 10 . 04.2018 DATE OF PRONOUNCEMENT : 22 .06 .2018 2 ITA NO.3999 & 3492/MUM/2016 (A.Y: 2011 - 12) M/S. MSEB HOLDING CO. LTD O R D E R PER C.N. PRASAD (JM) 1. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 22 MUMBAI DATED 16.02.2016 F OR THE ASSESSMENT YEAR 2011 - 12. 2. THE ONLY GROUND IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF INTEREST AND FINANCE EXPENSES. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN IDENTICAL GROUND HAS BEEN DECIDED AGAINST THE ASSESSEE IN ASSESSEES OWN CASE BY THE TRIBUNAL FOR THE ASSESSMENT YEARS 2006 - 07 TO 2010 - 11. COPY OF THE ORDER IS PLACED ON RECORD. 4. WE HAVE PERUSED THE COMMON ORDER OF THE COORDINATE BENCH FOR ASSESSMENT YEARS 2006 - 07 TO 2010 - 11 DATED 21.04.2017 AND IN ITA.NO. 7725/ MUM/ 2011 FOR ASSESSMENT YEAR 2006 - 07, WE FIND THAT THE ISSUE OF ALLOWABILITY OF INTEREST EXPENDITUR E ON LOAN LIABILITY U/S. 36(1)( III ) OF THE ACT HAS BEEN DECIDED AGAINST THE ASSESSEE HOLDING THAT ASSESSEE IS NOT ENTITLED FOR DEDUCTION. RESPECTFULLY FOLLOWING THE SAME, THE GROUND RAISED BY THE ASSESSEE IS REJECTED. 3 ITA NO.3999 & 3492/MUM/2016 (A.Y: 2011 - 12) M/S. MSEB HOLDING CO. LTD 5. COMING TO REVENUES APPEAL , THE FIRST ISSUE IS THAT LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF EXPENDITURE ON DAY TO DAY MAINTENANCE AND REPAIRS TO KEEP TH E COMPANY RUNNING ITS BUSINESS. 6. LD. DR SUBMITTED THAT , ASSESSING OFFICER W HILE COMPLETING THE ASSESSMENT DISALLOWED REPAIRS AND MAINTENANCE, ADMINISTRATI VE AND GENERAL EXPENSES, SIN CE ASSESSEE HAS NOT EARNED ANY INCOME UNDER THE HE AD INCOME FROM BUSINESS DURING THE YEAR . LD. DR SUBMITTED THAT , LD.CIT(A) HOWEVER ALLOWED THE EXPENSES INCURRED TOWARDS REPAIRS AND MAINTENANCE, ADMINI STRATIVE AND GENERAL EXPEN SES CONSIDERING THE SUBMISSIONS OF THE ASSESSEE . 7. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE EXPENSES WERE INCURRED FOR DAY TO DAY MAINTENANCE AND TO KEEP THE COMPANY RUNNING. THEREFORE, THE EXPENSES HAVE TO BE ALLOWED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE BEFORE THE LD.CIT(A) SUBMITTED THAT ALLOWANCE CONTEMPLATED U/S. 37(1) WAS NOT NECESSARILY AN ALLOWANCE FOR AMOUNTS EXPENDED TO INCREASE PROFITS ONLY SO LONG AS IT WAS FOR THE PURPOSE OF THE BUSINESS. IT WAS JUDICIALLY ACCEPTED THAT IT WAS ALSO NOT NECESSARY THAT PROFITS SHOULD BE EARNED BY EACH AND EVERY EXPENDITURE. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: - 4 ITA NO.3999 & 3492/MUM/2016 (A.Y: 2011 - 12) M/S. MSEB HOLDING CO. LTD (I) CIT V. RAJENDRA PRASAD MOODY [115 ITR 419 (SC .)] (II) R.B. BANSILAL ABIRCHAND SPG. & WVG. MILLS V. CIT [81 ITR 34 (BOM.) (FB)] (III) F. E. DINSHAW LTD. V. CIT [36 ITR 114 (BOM.)] (IV) DELHI CLOTH & GENERAL MILLS CO. LTD. V. CIT [85 ITR (DELHI)] (V) CIT V. DALMIA CEMENT LTD. [254 ITR 377] (VI) CIT V. NAVSARI COTTON AND SILK MILLS LTD. [135 ITR 546] (VII) RAVI MARKETING (P) LTD. V. CIT [280 ITR 519 ] (VIII) CIT V. MALAYALAM PLANTATIONS LTD. [ 53 ITR 140 ] 9. ASSESSEE FURTHER SUBMITTED THAT IN VIEW OF THE FOREGOING AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CA SE AND THE LAW ON THE SUBJECT, THE EXPENDITURE INCURRED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS ALLOWABLE WHILE COMPUTING ITS TOTAL INCOME FOR THE YEAR AS IT WAS NOT NECESSARY THAT PROF ITS SHOULD BE EARNED BY EACH AND EVERY EXPENDITURE. CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE THE LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE AND WE SEE NO INFIRMITY IN THE DECISION OF THE LD.CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE. HENCE , THIS GROUND IS DISMISSED. 10. COMING TO NEXT GROUND OF APPEAL I.E. WHETHER LD.CIT(A) WAS CORRECT IN ALLOWING THE SET OFF OF BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION WITHOUT CONSIDERING THE PROVISIONS OF SECTION 72A(4)(B) OF THE ACT DO NOT PROVIDE FOR CARR Y FORWARD OF LOSSES I N CASE OF ANY PROVISIONAL APPORTIONM ENT OF ASSETS OF THE DE MERGED COMPANY. 11. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE BY THE TRIBUNAL FOR THE ASSESS MENT YEARS 2006 - 07 TO 2010 - 11. 5 ITA NO.3999 & 3492/MUM/2016 (A.Y: 2011 - 12) M/S. MSEB HOLDING CO. LTD 12. WE HAVE PERUSED THE COMMON ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006 - 07 TO 2010 - 11 AND FIND THAT THE TRIBUNAL IN ITA.NO. 7830/ MUM/ 2011 FOR THE ASSESSMENT YEAR 2006 - 07 DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE GROUND OF REVENUE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE AS WELL AS THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 22 ND JUNE , 2018 . SD/ - SD/ - ( N. K. PRADHAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 22 / 06 / 2018 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM