ACME STHAPATI LTD, MUMBAI V. ASST CIT CEN CIR 9, MUMBAI

ITA 437/MUM/2014

• Counselvise Citation: 43719914 RSA 2014
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 20-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B P K
• Keywords: Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 437/MUM/2014 (ASSESSMENT YEAR: 2010-11) M/S. ACME STHAPATI LTD. ACIT, CIRCLE - 9 ACME GHAR, GROUND FLOOR 19, K.D. ROAD, VILE PARLE (W) MUMBAI 400056 VS. OLD CGO BLEG. ANNEX M.K. ROAD, MUMBAI 400020 PAN - AABCA6870G APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI B.P.K. PANDA DATE OF HEARING: 27.05.2014 DATE OF PRONOUNCEMENT: 27.05.2014 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSE SSEE COMPANY AND IT PERTAINS TO A.Y. 2010-11. 2. DISALLOWANCE OF A SUM OF ` 2,50,000/-, CLAIMED AS REVENUE EXPENDITURE BUT TREATED BY THE AO AS CAPITAL EXPENDITURE, IS TH E SUBJECT MATTER OF DISPUTE BEFORE THE TRIBUNAL. 3. THE CASE WAS FIRST POSTED FOR HEARING ON 05.03.2014 AND ADJOURNED TO 16.04.2014 AT THE REQUEST OF THE ASSESSEE AND THERE AFTER IT WAS ADJOURNED FROM TIME TO TIME AND FINALLY POSTED FOR HEARING ON 27.05.2014. HOWEVER, ON THIS DATE NONE APPEARED ON BEHALF OF THE ASSESSEE. I, THEREFORE, PROCEED TO DISPOSE OF THE APPEAL EXPARTE, QUA THE ASSESSEE. 4. I HAVE HEARD THE LEARNED D.R. AND CAREFULLY PERUSED THE RECORD. THE ASSESSEE COMPANY IS ADMITTEDLY IN THE BUSINESS OF P ROVIDING CONSULTANCY SERVICES. IT IS ALSO NOT IN DISPUTE THAT THE ASSESS EE INCURRED AN EXPENDITURE OF ` 2.5 LAKHS TO DEFEND ITS CASE BEFORE THE HON'BLE BOM BAY HIGH COURT IN RELATION TO A DISPUTE WITH REGARD TO PROPERTY RIGHT S. THE COMPANY GAVE ITA NO. 437/MUM/2014 M/S. ACME STHAPATI LTD. 2 ADVANCE OF ` 1 LAKH TO MRS. INDIRA HARESH PATIL AS THERE WAS A D ISPUTE WITH REGARD TO THE RIGHTS OF THE PROPERTY. THE ASSESSEE INCURRED AN EXPENDITURE OF ` 2,50,000/- BEING LEGAL AND PROFESSIONAL FEES PAID T O M/S. I.R. JOSHI, ADVOCATES. THE CASE OF THE ASSESSEE WAS THAT THE AM OUNT WAS PAID FOR DRAFTING AND PREPARING ARBITRATION PETITION AND IN RELATION TO THE RIGHTS IN THE PROPERTY LOCATED AT ANDHERI, I.E. THE PROPERTY FOR WHICH THE ASSESSEE PAID AN ADVANCE OF ` 1 LAKH. THE ASSESSEE CLAIMED IT AS REVENUE EXPENDIT URE WHEREAS THE AO OBSERVED THAT THE COMPANY IS NOT IN THE BUSINESS OF PROPERTY DEVELOPMENT AND EVEN THE ADVANCE MADE IS N OT PART OF WORK-IN- PROGRESS AND HENCE IT CANNOT BE TREATED AS AN EXPEN DITURE INCURRED UNDER SECTION 37(1) OF THE ACT. IN OTHER WORDS, HE TREATE D THE EXPENDITURE AS CAPITAL IN NATURE. 5. BEFORE THE CIT(A) IT WAS CONTENDED THAT THE ASSESSE E INCURRED THIS EXPENDITURE IN THE ORDINARY COURSE OF THE BUSINESS ACTIVITY AND, THEREFORE, THE SAME HAS TO BE TREATED AS REVENUE IN NATURE. 6. THE LEARNED CIT(A) REJECTED THE CONTENTION OF THE A SSESSEE BY OBSERVING AS UNDER: - 4.5 THE EXPENDITURE ON DISPUTE RELATING TO DEVELOP MENT OF LAND IS CAPITAL IN NATURE. NEITHER THE OBJECTS OF BUSINESS NOR ACTUAL ACTIVITY OF THE APPELLANT SHOWS DEVELOPMENT OF LAND AS BUSINESS OF THE APPELLANT. I DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE AS SESSING OFFICER IN DISALLOWING THE EXPENSES AS CAPITAL EXPENSES. 7. FURTHER AGGRIEVED, ASSESSEE COMPANY IS IN APPEAL BE FORE THE TRIBUNAL. EVEN AT THIS STAGE NO MATERIAL, WHATSOEVER, WAS BRO UGHT ON RECORD TO SUPPORT ITS CONTENTION THAT THE IMPUGNED LAND WAS P URCHASED IN THE NORMAL COURSE OF ITS BUSINESS ACTIVITY. UNDER THESE CIRCUM STANCES I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A) AND, TH EREFORE, THE APPEAL FILED BY THE ASSESSEE COMPANY IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MAY, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 27 TH MAY, 2014 ITA NO. 437/MUM/2014 M/S. ACME STHAPATI LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 37, MUMBAI 4. THE CIT CENTRAL-1, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.