INLAND STONE INDIA PVT. LTD., NEW DELHI V. DCIT, CIRCLE- 12(2), NEW DELHI

ITA 4216/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5312 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 27-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.4216/DEL/2017 ASSESSMENT YEAR: 2012-2013 INLAND STONE INDIA PVT. LTD., E-1217-18, RIICO INDUSTRIAL AREA, BHIWADI, ALWAR, RAJASTHAN. VS. DCIT, CIRCLE-12(2), NEW DELHI. TAN/PAN: AAACI9390L (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AKASH GARG, ADV. & SHRI SHAANTANU JAIN, ADV. RESPONDENT BY: SHRI GAURAV DUDEJA, SR.D.R. DATE OF HEARING: 10 12 2020 DATE OF PRONOUNCEMENT: 05 02 2021 O R D E R PER AMIT SHUKLA, JM THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 27.04.2017, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXV, NEW DELH I FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2012-13. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- BECAUSE THE ACTION IS BEING CHALLENGE ON THE FACTS & LAW, FOR DISALLOWING SECURITY EXPENSES INCURRED ON FACTORY A MOUNTING TO RS. 3,86,549/. ALTERNATIVELY & WITHOUT PREJUDICE TO ABOVE, I.T.A. NO.4216/DEL/2017 2 ASSESSEE DISPUTES THE NON CAPITALIZATION OF SECURIT Y EXPENSES TO FACTORY BUILDING. 2. BECAUSE THE ACTION IS BEING CHALLENGE ON THE FA CTS & LAW, FOR DISALLOWING ELECTRICITY EXPENSES INCURRED ON FA CTORY AMOUNTING TO RS. 6,13,715/. ALTERNATIVELY & WITHOUT PREJUDICE TO ABOVE, ASSESSEE DISPUTES THE NON CAPITALIZATION OF ELECTRI CITY EXPENSES TO FACTORY BUILDING. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF MOSAIC AND STONE TILES. DURING THE YEAR THE ASSESSE E HAD ONLY SHOWN EXPENDITURE OF RS.3,86,549/- ON SECURITY EXPE NSES; AND RS.6,13,705/- ON ELECTRICITY EXPENSES, AGGREGAT ING TO RS.10,00,264/- INCURRED ON FACTORY PREMISES. THE AO NOTED THAT THE ASSESSEE HAD SOLD ITS FACTORY PREMISES (UN IT-2) ON 07.05.2012 FOR A SUM OF RS.8 CRORES FOR WHICH ASSES SEE HAD RECEIVED ADVANCE IN CHEQUES FROM JANUARY, 2012 TO M AY, 2012. THUS, WHEN FACTORY WAS SOLD OUT, WHICH MEANS THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS, THEREFOR E, THESE EXPENSES CANNOT BE ALLOWED AS BUSINESS EXPENDITURE. 3. LD. CIT (A) HAS ALSO CONFIRMED THE ADDITION, HOL DING THAT THE ASSESSEE HAD ALREADY TAKEN A DECISION TO SELL T HE FACTORY FOR WHICH IT HAS ALSO RECEIVED CERTAIN ADVANCES IN THE RELEVANT FINANCIAL YEAR 201112, THEREFORE, THE ASSESSEE WAS NO LONGER THE OWNER OF THE FACTORY AND COULD NOT HAVE CARRIED OUT ANY BUSINESS ACTIVITIES FROM THERE. THE CLAIM OF SECURI TY AND ELECTRICITY EXPENSES IS THUS NOT LEGALLY TENABLE. I.T.A. NO.4216/DEL/2017 3 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE DID SOLD THE PROPERTY/ FACT ORY, BUT THE SALE DEED WAS EXECUTED IN THE NEXT FINANCIAL YE AR, 2012- 13, I.E., IN MAY, 2012. SINCE, ASSESSEE WAS HAVING STOCKS IN THE FACTORY AND, THEREFORE, SECURITY OF THESE STOCK S KEPT IN FACTORY IT WAS IMPERATIVE TO SECURE THE STOCKS AND THE CONSEQUENTLY ELECTRICITY EXPENSES OF THE FACTORY PR EMISES TILL IT WAS SOLD. MOREOVER, THESE EXPENDITURES PERTAIN TO A SSESSMENT YEAR 201213, I.E., FINANCIAL YEAR 201112 AND THE PROPERTY WAS SOLD IN THE FINANCIAL YEAR 2012-13. HENCE, IT C ANNOT BE HELD THAT ASSESSEE HAD NOT INCURRED ANY EXPENDITURE DURING THE RELEVANT FINANCIAL YEAR WHEN ALL THE BILLS AND VOUCHERS WERE FILED BEFORE THE AUTHORITIES BELOW. 5. ON THE OTHER HAND, LEARNED DR HAS STRONGLY RELIE D UPON THE ORDER OF THE AO AND LD. CIT (A). 6. AFTER CONSIDERING THAT RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AS WELL AS SUBMISSIONS MADE BY THE PARTIES, WE FIND THAT THE ASSESSEE WAS IN THE BUSINESS OF MANUFACTURING AND TRADING OF MOSAIC AND STONE TILES . ON ITS FACTORY PREMISES (UNIT-2) WHICH WAS PART OF ITS BUS INESS ASSET AND BUSINESS ACTIVITY, IT HAD DEBITED EXPENDITURE O F SECURITY EXPENSES AND ELECTRICITY EXPENSES FOR SUMS AGGREGAT ING TO RS.10,00,264/-. THIS EXPENDITURE HAS BEEN CLAIMED I N THE FINANCIAL YEAR 2011 12. THE ASSESSING OFFICER AND LD. CIT (A) HAVE DISALLOWED THE SAID CLAIM OF EXPENSES ON T HE GROUND THAT THE FACTORY WAS SOLD ON 07.05.2012 AND ASSESSE E HAD RECEIVED CERTAIN ADVANCES IN THE MONTH OF JANUARY A ND I.T.A. NO.4216/DEL/2017 4 FEBRUARY, 2012. HOWEVER, THE SALE DEED WAS EXECUTED IN THE FINANCIAL YEAR 2012-13 AND HENCE, IT CANNOT BE SAID THAT THESE EXPENDITURE WERE NOT INCURRED IN F.Y. 201112 . EVEN THOUGH ASSESSEE MAY NOT HAVE FULL-FLEDGED OPERATION S FROM THE SAID FACTORY, BUT IF THE FACTORY WAS UNDER THE CONTROL OF THE ASSESSEE AND CERTAIN STOCKS WERE LYING, THEN ELECTR ICITY AND SECURITY EXPENSES CANNOT BE HELD TO BE FOR NON-BUSI NESS PURPOSE, BECAUSE DURING THE YEAR THE FACTORY PREMIS ES WAS WITH THE ASSESSEE. ACCORDINGLY, THE SECURITY EXPEND ITURE OF RS.3,86,549/- AND ELECTRICITY EXPENSES OF RS.6,13,7 15/- WHICH ARE DULY SUPPORTED BY RELEVANT BILLS AND VOUC HERS ARE ALLOWED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2021 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 05/02/2021 PKK: