M/s Haryana State Minor Irrigation & Tubewell Corporation Ltd., Panchkula V. The Dy Commissioner of Income Tax, Panchkula

ITA 431/CHANDI/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3781 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 26-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 431/CHD/2016 ASSESSMENT YEAR: 2012-13 M/S HARYANA STATE MINOR IRRIGATION & VS. THE DCIT, CIRCLE, TUBEWELL CORPORATION LIMITED, PANCHKULA PANCHKULA PAN NO.AABFH8314F (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. TEJ MOHAN SINGH, ADV. DEPARTMENT BY : SH. SUSHIL KUMAR, CIT DR DATE OF HEARING : 06.10.2016 DATE OF PRONOUNCEMENT : 07.11.2016 ORDER PER ANNAPURNA GUPTA, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-2, GURGAON DATED 15.2.2016. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE A CTION OF THE ASSESSING OFFICER WHEREBY HE HAS STATED THAT NO EXPENDITURE IS TO BE ALLOWED AS BUSINESS EXPENDITUR E AFTER THE CLOSURE OF THE BUSINESS AND THEREBY BRING ING TO TAX THE ENTIRE RECEIPTS OF RS.2,34,42,801/- WHICH I S ARBITRARY AND UNJUSTIFIED. 2 2. THAT THE ENTIRE EXPENDITURE ON ACCOUNT OF PAY AND ALLOWANCES WHICH INCLUDES SALARIES, TA, MEDICAL, RETRENCHMENT COMPENSATION, GRATUITY AND LEAVE ENCASHMENT, LEAVE SALARY AND PENSION CONTRIBUTION, ADVERTISEMENT EXPENSE, BANK CHARGES, ELECTRICITY AN D WATER CHARGES, LEGAL CHARGES, REPAIR AND MAINTENANC E OF VEHICLES, TELEPHONE, POSTAGE AND TELEGRAPH, PRINTIN G AND STATIONARY, RENT ,RATE. ETC. TOTALLING RS.4.24,47,5 17/- AS CLAIMED IS ALLOWABLE AS SUCH AND NO DISALLOWANCE IS CALLED FOR AND AS SUCH DISALLOWING THE SAME IS ARBI TRARY AND UNJUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) H AS FURTHER ERRED IN UPHOLDING THE DISALLOWANCE OF INT EREST CLAIMED AT RS. 10,16,03,500/- WHICH IS ARBITRARY AN D UNJUSTIFIED. 4. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEA LS) HAS FURTHER ERRED IN UPHOLDING THE DISALLOWAN CE OF DEPRECIATION CLAIMED AT RS.6,518/- WHICH IS ARBITRA RY AND UNJUSTIFIED. 5. THAT WITHOUT PREJUDICE TO THE ABOVE, EVEN IF IT IS HELD THAT NO EXPENDITURE IS TO BE ALLOWED AS ALLEGED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE EXPENDITU RE OUGHT TO HAVE BEEN HELD ALLOWABLE UNDER SECTION 57 OF THE ACT TO HE SET OFF AGAINST INTEREST INCOME. 2. BRIEFLY, THE FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME. DURING ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAD CLOSED ITS BUSINESS OPERATION W.E.F. 30.7.2002 WITH THE APPROVAL OF THE APPROPRIATE AUTHORITY. 3 FURTHER THAT DURING THE YEAR UNDER CONSIDERATION, H AD DEBITED THE FOLLOWING EXPENSES TO ITS PROFIT AND LOSS ACCOUNT:- SALES & WAGES RS. 4,24,47,517/- INTEREST RS. 10,16,03,500/- DEPRECIATION RS. 6,519/- TOTAL RS. 14,40,57,536 /- 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ABOVE EXPENSES MADE BE DIS ALLOWED AS NO BUSINESS ACTIVITY WAS CARRIED OUT DURING THE YEAR. THE ASSES SEE SUBMITTED THAT IT HAD NO OBJECTION TO THE DISALLOWANCE OF EXPENSES PERTAI NING TO SALARY AND WAGES WHICH WAS DISALLOWED BY THE ASSESSING OFFICER . AS FAR AS INTEREST CLAIM AMOUNTING TO RS. 10,16,03,500/-, THE ASSESSEE STATED THAT IT WAS PROVISION CREATED ON ACCOUNT OF INTEREST PAYABLE TO THE GOVERNMENT ON LOAN RAISED AND WAS THUS ALLOWABLE. THE ASSESSING OFFIC ER DISALLOWED THE SAME SINCE NO BUSINESS WAS CARRIED OUT BY THE ASSESSEE A ND ALSO FOR THE REASON THAT THE SAME HAD NOT BEEN PAID. SIMILARLY, DEPRECI ATION AMOUNTING TO RS. 6,519/- WAS DISALLOWED IN THE ABSENCE OF ANY BUSINE SS ACTIVITY CARRIED OUT BY THE ASSESSEE. THUS, ENTIRE EXPENSES AMOUNTING T O RS. 14,40,57,536/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSES SEE. DURING APPELLATE PROCEEDINGS, THE ASSESSEE CONCEDED THAT THE ISSUE W AS COVERED AGAINST IT BY THE ORDER OF THE ITAT IN ITS OWN CASE FOR ASSESSMEN T YEAR 2009-10 FOLLOWING WHICH THE LD. CIT(A) UPHELD THE DISALLOWA NCE MADE. AGGRIEVED BY THE SAME, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 4 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE CONCEDED THAT THE ISSUE WAS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE IT AT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10. 5. WE HAVE GONE THROUGH THE ORDER IN THE CASE OF TH E ASSESSEE FOR ASSESSMENT YEAR 2009-10 IN ITA NO. 740/CHD/2014 AND FIND THAT IDENTICAL ISSUE HAD CAME UP FOR CONSIDERATION BEFORE THE TRIB UNAL WHICH WAS DECIDED AGAINST THE ASSESSEE FOLLOWING THE DECISION IN THE CASE OF M/S HARYANA STATE SMALL INDUSTRIES & EXPORT CORPORATION LTD, CH ANDIGARH VS. THE ADDL. CIT IN ITA NO. 898/CHD/2009 AS UNDER:- FOLLOWING THE ABOVE WE DECIDE THE ISSUE REGARDING DISALLOWANCE OF EXPENDITURE AND INTEREST AGAINST THE ASSESSEE. HOWEVER WE FIND FORCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE THAT AS FAR AS INCOME FROM HOUSE PROPERTY IS CONCERNED SAME SHOULD HAVE BEEN ASSESSED AS INCOME FROM HOUSE PROPERTY AND CORRESPONDING 30% STATUTORY DEDUCTION SHOULD HAVE BEEN ALLOWED. THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT AO TO ASSESSED THE HOUSE PROPERTY INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CORRESPONDING DEDUCTION SHOULD HAVE BEEN GIVEN. 6. IN VIEW OF THE ABOVE, WE DECIDE THE ISSUE REGARD ING DISALLOWANCE OF EXPENDITURE, INTEREST AND DEPRECIATION AGAINST THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :7 TH NOVEMBER, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6