RELIANCE INTEGRATED AGRI SOLUTIONS LTD., NAVI MUMBAI V. ASST. C.I.T. CIRCLE 5(3), MUMBAI

ITA 4519/MUM/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9789 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HEM PANT
• Keywords: Revenue expenditure; Capital expenditure
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 45 1 9 /MUM/20 12 (ASSESSMENT YEAR 20 08 - 09 ) I.T.A. NO. 7422 /MUM/20 13 (ASSESSMENT YEAR 20 1 0 - 11 ) RELIANCE INTEGRATED AGARI SOLUTIONS LTD. BUILDING NO. 4, GR. FLOOR WING C, RELINACE CORPORATE PARK, THANE BELAPUR ROAD NAVI MUMBAI - 400 701. VS. DCIT/ACIT - 5(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAACU8809L ASSESSEE BY SHRI HEM PANT DEPARTMENT BY S HRI PURUSHOTTAM KUMAR DATE OF HEARING 5.5 . 201 7 DATE OF PRONOUNCEMENT 24 . 7 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED CIT(A) - 9, MUMBAI AND THEY RELATE TO A .YS. 2008 - 09 & 2010 - 11. BOTH THE APPEALS WERE HEARD TOGETHER AND HENCE THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. IN BOTH THE APPEALS, THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING TH E DISALLOWANCE OF EXPENDITURE CLAIMED BY THE ASSESSEE ON THE REASONING THAT THE ASSESSEE HAS NOT COMMENCED THE NEW PROJECT . 3. THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN AGRICULTURAL INPUTS LIKE DHANUKA WHEAT SEED, CHILLI SEED, CAULIFLO WER SEED, CORIANDER SEED ETC. IT HAS GOT FOUR OUTLETS IN MADHYA PRADESH (I) CHANDANGAON (II) UMRANALA CC, (III) UMRETH CC AND (IV) INDORE. IN A.Y. 2008 - 09, THE ASSESSEE FILED RETURN OF INCOME DECLARING A LOSS OF ` 15.71 CRORES. THE ASSESSING OFFICER RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 2 NOTICE D THAT THE ASSESSEE HAS DECLARED A LOSS OF ` 1,55,339/ - IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAS CAPITALISED EXPENDITURE TO THE TUNE OF ` 18.59 CRORES UNDER THE HEAD CAPITAL WORK IN PROGRESS IN THE BOOK OF ACCOUNT. HOWEVER, THE ASSESSEE CLAIMED THE SAME AS REVENUE EXPENDITURE IN THE INCOME TAX COMPUTATION AND OUT OF WHICH A SUM OF ` 2.89 CRORES WAS DISALLOWED BY THE ASSESSEE UNDER SECTION 40(A), 40A(7), 40A(9) AND 43B OF THE ACT. THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS LAUNCHED A NEW PROJECT FOR CARRYING ON A NEW BUSINESS AND THE SAID PROJECT IS IN THE PROCESS OF IMPLEMENTATION. ACCORDINGLY, THE ASSESSING OFFICER TOOK THE VIEW THAT THE PROJECT DEVELOPMENT EXPENSES OF ` 18.59 CRORES CANNOT B E ALLOWED AS REVENUE EXPENDITURE , FURTHER THE ASSESSING OFFICER TOOK THE VIEW THAT THE BOOK S OF ACCOUNT OF THE ASSESSEE ARE NOT RELIABLE AND ACCORDINGLY REJECTED THE SAME U/S. 142(2) OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER ESTIMATED THE TOTAL INCOME OF THE ASSESSEE BY APPLYING NET PROFIT RATE OF 10% AND COMPUTED THE TOTAL INCOME AT ` 79,479/ - . THE LEARNED CIT(A) ALSO CONFIRMED THE SAME. 4. IN A.Y.2010 - 11, THE ASSESSING OFFICER , BY FOLLOWING THE ASSESSMENT PASSED FOR A.Y. 2008 - 09 , DISALLOWED THE EXP ENDITURE CLAIMED TO THE TUNE OF ` 2.32 CRORES ON IDENTICAL REASONING . THE LEARNED CIT(A) ALSO CONFIRMED THE SAME. 5. LEARNED AR SUBMITTED THAT THE ASSESSEE HAS ALREADY COMMENCED THE BUSINESS OF TRADING IN AGRICULTURAL INPUTS AND ASSESSEE WAS ONLY IN THE P ROCESS OF EXPANDING THE VERY SAME BUSINESS. ACCORDINGLY HE SUBMITTED THAT THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE IS ALLOWABLE AS REVENUE EXPENDITURE AND THE TAX AUTHORITIES ARE NOT JUSTIFIED IN TREATING THE SAME AS EXPENDITURE INCURRED TOWARDS NEW PROJECT DEVELOPMENT. HE SUBMITTED THAT THE ENTRIES MADE IN THE BOOKS OF ACCOUNT ARE NOT DETERMINATIVE FACTOR FOR ALLOWING A EXPENDITURE, WHICH IS OTHERWISE ALLOWABLE UNDER THE INCOME TAX ACT. LEARNED AR SUBMITTED THAT IDENTICAL ISSUE H AS BEEN CONSIDERED B Y THE COORDINATE BENCH ES OF THE TRIBUNAL IN THE CASES OF GROUP CONCERN OF THE ASSESSEE NAMED RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 3 RELIANCE FOOTPRINT LTD. (ITA NO.5997/MUM/2011 DATED 23.10.2013) AND IT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE . HE SUBMITTED THAT THE DECISION RENDERED BY THE TRIBUNAL IN THE ABOVE SAID CASE HAS BEEN FOLLOWED IN OTHER CASES MENTIONED BELOW: - A) M/S. RELIANCE SUPPLY CHAIN SOLUTIONS LTD. (ITA NO. 5759/MUM/2012 DATED 27.11.2013 ) B) M/S. RELIANCE SUPPLY CHAIN SOLUTIONS LTD. (ITA NO. 6342/MUM/2013 DATED 25.3.2015 ) C) M/S. REL IANCE SUPPLY CHAIN SOLUTIONS LTD.(ITA NO. 1273/MUM/2014 DATED 13.8.2015 ) D) RELIANCE WELLNESS LTD. (ITA NO. 3444/MUM/2013 DATED 9.9.2015 ) E) RELIANCE HOME STORE LTD. (ITA NO. 5996/MUM/2011 DATED 15.10.2015) F) RELIANCE GEMS & JEWELS LTD. (ITA NO. 3 855/MUM/28.10.2015) 6. LEARNED AR FURTHER SUBMITTED THAT THE IDENTICAL CLAIM MADE BY THE ASSESSEE IN A.Y. 2009 - 10 HAS BEEN ALLOWED BY THE ASSESSING OFFICER. HOWEVER, LEARNED AR FAIRLY CONCEDED THAT THE RETURN FILED FOR A.Y. 2009 - 10 HAS NOT BEEN TAKEN UP FOR SCRUTINY. 7. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LEARNED CIT(A) HAS TAKEN THE VIEW THAT THE ASSESSEE IS IN THE PROCESS OF SETTING UP OF A NEW SOURCE OF BUSINESS BY ESTABLISHING NEW STORES. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT GENERATED THE REVENUE FROM THE NEW STORES AND HENCE EXPENDITURE CLAIMED BY THE ASSESSEE HAS BEEN RIGHTLY DISALLOWED BY BOTH THE TAX AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICED FROM THE ASSE SSMENT ORDER THAT THE TAX AUTHORITIES HA VE ACCEPTED THE FACT THAT THE ASSESSEE HAS ALREADY ENGAGED IN THE BUSINESS OF TRADING IN AGRICULTURAL INPUTS. ALL THESE EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE FOR EXPANSION OF ITS BUSINESS ACTIVITIES BY ESTABLIS HING NEW OUTLETS . WE NOTICED THAT IDENTICAL ISSUE HAS BEEN CONSIDERED IN VARIOUS GROUP CONCERNS , WHICH HAVE BEEN LISTED ABOVE BY THE COORDINATE BENCH ES OF THE TRIBUNAL AND THE CLAIM HAS BEEN FOUND ALLOWABLE BY THE TRIBUNAL. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 4 OPERATIVE PORTION OF THE ORDER PASSED IN THE CASE OF RELIANCE WELLNESS LTD. (ITA NO. 3444/MUM/2013) : - 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. WE HAVE EARLIER NOTICED THAT THE ASSESSING OFFICER HAS TAKEN THE VIEW THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE, SINCE THE ASSESSEE ITSELF HAS TREATED THE SAME AS CAPITAL EXPENDITURE. THE AO HAS ALSO TAKEN THE VIEW THAT THE EXPENDITURE WAS NOT INCURRED SUCH EXPENSES FOR ROUTINE OPERATIONS. HOWEVER, THE VIEW TA KEN BY THE ASSESSING OFFICER IS AGAINST THE PROPOSITION LAID DOWN BY THE HON B LE SUPREME COURT IN THE CASE OF KEDARNATH JUTE MANUFACTURING COMPANY LTD (SUPRA) AND TAPARIA TOOLS LTD (SUPRA), WHEREIN THE HON BLE SUPREME COURT HELD THAT THE TREATMENT GIVEN IN BOOKS OF ACCOUNT ARE NOT DETERMINATIVE OR CONCLUSIVE AND THE CLAIM OF THE ASSESSEE SHOULD BE EXAMINED ON THE TOUCHSTONE OF PROVISIONS CONTAINED IN THE ACT. THE FOLLOWING OBSERVATIONS MADE BY THE HON BLE SUPREME COURT IN THE CASE OF TAPARIA TOOLS LTD (SUPR A) ARE RELEVANT HERE: - '19. IN THE INSTANT CASE, AS NOTICED ABOVE, THE ASSESSEE DID NOT WANT SPREAD OVER OF THIS EXPENDITURE OVER A PERIOD OF FIVE YEARS AS IN THE RETURN FILED BY IT, IT HAD CLAIMED THE ENTIRE INTEREST PAID UPFRONT AS DEDUCTIBLE EXPENDITURE IN THE SAME YEAR. IN SUCH A SITUATION, WHEN THIS COURSE OF ACTION WAS PERMISSIBLE IN LAW TO THE ASSESSEE AS IT WAS IN CONSONANCE WITH THE PROVISIONS OF THE ACT WHICH PERMIT THE ASSESSEE TO CLAIM THE EXPENDITURE IN THE YEAR IN WHICH IT WAS INCURRED, MERELY BECAUSE A DIFFERENT TREATMENT WAS GIVEN IN THE BOOKS OF ACCOUNT CANNOT BE A FACTOR WHICH WOULD DEPRIVE THE ASSESSEE FROM CLAIMING THE ENTIRE EXPENDITURE AS A DEDUCTION. IT HAS BEEN HELD REPEATEDLY BY THIS COURT THAT ENTRIES IN THE BOOKS OF ACCOUNT ARE NOT DETERMINATIVE OR CONCLUSIVE AND THE MATTER IS TO BE EXAMINED ON THE TOUCHSTONE OF PROVISIONS CONTAINED IN THE ACT [SEE - KEDARNATH JUTE MFG. CO.LTD.V/S. CIT [1971] 82 ITR 363 (SC);TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. V/S CIT [1997] 227 ITR 172/93 TAXMAN 502 (SC); SUTLEJ COTTON MILLS LTD. V/S CIT [1979] 116 ITR 1 (SC) AND UNITED COMMERCIAL BANK V/S CIT [1999] 240 ITR 355/106 TAXMAN 601 (SC).' IN VIEW OF THE DECISIONS OF HON BLE SUPREME COURT, REFERRED ABOVE, THE TREATMENT GIVEN IN THE BOOKS OF ACCO UNT IS NOT RELEVANT TO EXAMINE THE CLAIM PUT FORTH BY THE ASSESSEE. 12. THE NEXT REASONING GIVEN BY THE AO IS THAT THE ASSESSEE HAS NOT INCURRED THESE EXPENSES FOR THE ROUTINE OPERATIONS. HOWEVER, THE CLAIM OF THE ASSESSEE IS THAT THESE EXPENSES WERE INCUR RED IN THE ROUTINE OPERATIONS. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS ALREADY ESTABLISHED THE BUSINESS AND HAS ALSO DECLARED SALES RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 5 REVENUE. THE ASSESSEE HAS EXPLAINED THAT IT HAS FOLLOWED THE PRACTICE OF CHARGING EXPENSES EACH ST ORE WISE AND HENCE THE EXPENSES WHICH COULD NOT BE IDENTIFIED WITH ANY PARTICULAR STORE (MAY BE OPERATIONAL STORE) WAS BOOKED UNDER THE HEAD PROJECT DEVELOPMENT EXPENDITURE . IT IS ALSO SUBMITTED THAT THE CAPITAL EXPENDITURE, I F ANY, INCURRED IN THE OPENING OF NEW STORES HAVE BEEN CAPITALIZED IN THE BOOKS. THE NATURE OF PROJECT DEVELOPMENT EXPENDITURE INCURRED BY THE ASSESSEE FOR THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2009 - 10 IS GIVEN IN PAGE 33 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE SAME IS EXTRACTED BELOW, FOR THE SAKE OF CONVENIENCE: - A PERUSAL OF THE ABOVE SAID EXPENSES, PRIMA FACIE, SHOW THAT THEY ARE REVENUE IN NATURE. HENCE, AS POINTED OUT BY HON BLE SUPREME C OURT IN THE CASE OF TAPARIA TOOLS LTD (SUPRA), W HAT IS REQUIRED TO BE SEEN IS - WHETHER THESE EXPENSES COULD BE ALLOWED AS DEDUCTION UNDER THE PROVISIONS OF THE ACT. 13. THE LD CIT(A) HAS TAKEN THE VIEW THAT THE OPENING OF NEW STORES WOULD FALL UNDER THE C ATEGORY OF 'EXTENSION OF BUSINESS' AND NOT 'EXPANSION OF BUSINESS'. THE LD CIT(A) HAS TAKEN THE VIEW THAT THE EXPENDITURE INCURRED FOR EXPANSION OF BUSINESS IS ALLOWABLE AS DEDUCTION, BUT THE EXPENDITURE INCURRED ON EXTENSION OF BUSINESS IS AKIN TO SETTING UP OF BUSINESS OR NEW SOURCE OF INCOME. ACCORDINGLY, THE LD CIT(A) HAS TAKEN THE VIEW THAT PROJECT DEVELOPMENT EXPENDITURE IS THE EXPENDITURE INCURRED BEFORE SETTING UP OF BUSINESS AND HENCE NOT ALLOWABLE AS DEDUCTION. 14. WE ARE UNABLE TO UNDERSTAND AS T O HOW THE EXTENSION OF BUSINESS IS DIFFERENT FROM EXPANSION OF BUSINESS. THE LEGAL POSITION WITH REGARD TO THE DEDUCTIBILITY OF EXPENSES INCURRED IN CONNECTION WITH SETTING UP OF NEW UNITS HAS BEEN EXPLAINED BY THE HON BLE GUJARAT HIGH COURT IN THE CASE OF ALEMBIC GLASS INDUSTRIES LTD (SUPRA) AND ALSO B Y THE HON B LE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF KOTHARI AUTO PARTS MANUFACTURERS PVT . LTD (SUPRA). THE SAID DECISION HAS BEEN DISCUSSED AS UNDER BY THE CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF M/S RELIANCE FOOTPRINT LTD (SUPRA): - '4.5 THE LD A.R ALSO REFERRED TO THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ALEMBIC GLASS INDUSTRIES LTD (103 ITR 715) WHEREIN IT HAS BEEN HELD THAT THE EXPENDITURE RELATING TO T HE UNIT OF T HE ASSESSEE AT BANGALORE WERE ALLOWABLE DESPITE THE FACT THAT UNIT OF THE ASSESSEE AT BANGALORE DID NOT START PRODUCTION AS THE NEW UNIT AT BANGALORE WAS NOTHING BUT EXPANSION OF THE EXISTING BUSINESS AND THERE WAS COMPLETE INTER - CONNECTION, INTER - LACING AND INTER - DEPENDENCE OF BOTH THE UNITS. 4.6 THE LD. AR FURTHER REFERRED TO THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. KOTHARI AUTO PARTS RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 6 MANUFACTURERS PVT . LTD (109 ITR 333). IN THE SAID CASE THE ASSESSEE COMPANY HAD STARTED SEL L ING AUTO PARTS AND INCURRED CERTAIN EXPENDITURE IN RELATION TO ACTIVITY OF MANUFACTURING OF AUTO PARTS. NOTING FROM THE MEMORANDUM OF ASSOCIATION IT WAS OBSERVED THAT THE ACTIVITY OF MANUFACTURING RELATED TO SAME BUSINESS AND MEMORANDUM OF ASSOCIATION OF THE COMPANY EMPOWERED THE COMPANY TO MANUFACTURE THE ITEMS IN WHICH IT WAS PERMITTED TO DEAL IN AND THUS THESE ARE TWO ACTIVITIES WERE TWO SEPARATE STAGES OF THE SAME BUSINESS AND THE TRIBUNAL WAS JUSTIFIED IN ALLOWING THE TOTAL EXPENDITURE AS BUSINESS EXP ENDITURE.' IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE NATURE OF BUSINESS ACTIVITIES OF ALL THE S TORES, I.E., ALREADY OPENED AND THAT ARE GOING TO BE OPENED, IS IDENTICAL IN NATURE. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS ALREADY OPERATING CER TAIN STORES AND IT WAS IN THE PROCESS OF OPENING MORE NUMBER OF STORES. HENCE, WE ARE OF THE VIEW THAT IT IS A CASE OF EXPANSION OF BUSINESS ACTIVITIES. HENCE, THE VIEW ENTERTAINED BY LD CIT(A) THAT THE OPENING OF NEW STORES GIVE RISE TO NEW SOURCES OF INC OME IS, IN OUR VIEW, NOT JUSTIFIED. 15. THE NEXT QUESTION THAT ARISES IS - WHETHER THE EXPENDITURE CLAIMED BY THE ASSESSEE IS ALLOWABLE UNDER THE ACT. THE VERY SAME QUESTION WAS EXAMINED BY THE CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF M/S RELIANCE FOOT PRINTS LTD (SUPRA). FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY THE TRIBUNAL IN THE ABOVE SAID CASE: - '6. WE HAVE HEARD BOTH PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS SHOWN A TURNOVER OF RS.4.75 CROES IN RELATION TO ITS STORES WHICH WERE MADE OPERATIONAL DURING THE YEAR AT BANGALORE AND HYDERABAD. BEFORE THE AO IT WAS THE CASE OF THE ASSESSEE THAT IT IS IN THE PROCESS OF EXPANSION OF ITS BUSINESS A ND THUS THIS EXPENDITURE HAS BEEN INCURRED IN RELATION TO EXPANSION OF ITS BUSINESS AND THUS THIS EXPENDITURE HAS BEEN INCURRED IN RELATION TO EXPANSION OF BUSINESS. IT WAS ALSO SUBMITTED THAT THE EXPENDITURE WHICH ARE IN THE NATURE OF SALARY, ELECTRICITY, AUDIT FEE ET ARE ESSENTIALLY INCURRED FOR EXPANSION OF EXISTING LINE OF BUSINESS THAT IS SETTING UP OF MORE NUMBER OF STORES/SPECIALITY STORES UNDER PLANNED FORMAT OR FOR MAINTENANCE OF ALREADY ESTABLISHED STORES. THESE SUBMISSIONS WERE MADE BEFORE THE AO AND HAVE NOT BEEN CONTROVERTED BY THE AO AND DISALLOWANCE IS MADE MAINLY ON THE GROUND THAT THE ASSESSEE CANNOT GIVE DUEL STATUS TO THESE EXPENDITURE I.E. AS 'CAPITAL' IN BOOKS OF ACCOUNTS AND AS 'REVENUE' FOR INCOME TAX PURPOSE. HOWEVER, SUCH VIEW OF THE AO CANNOT BE UPHELD IN VIEW OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF KEDARNATH JUTE MFG. COMPANY LTD (SUPRA) WHEREIN IT HAS BEEN HELD THAT THE ISSUE THAT WHETHER THE ASSESSEE IS ENTITLED T O A RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 7 PARTICULAR DEDUCTION WILL DEPEND UPON THE PROVIS IONS OF LAW RELATING THERETO AND NOT ON THE VIEW WHICH THE ASSESSEE MIGHT TAKE OF HIS RIGHTS, NOR CAN THE EXISTENCE OR ABSENCE OF ENTRIES IN HIS BOOKS OF ACCOUNT BE DECISION OR CONCLUSIVE IN THE MATTER. 6.1 FROM THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AO IT IS ALSO CLEAR THAT OPENING OF STORES AT VARIOUS PLACES WAS ONE COMPOSITE BUSINESS OF THE ASSESSEE AND IN THAT COURSE THE ASSESSEE HAD STARTED OPERATION O IS STORES AT BANGALORE AND HYDERABAD. IT WAS THE CONTENTION OF THE ASSESSEE THAT OPERATIONS OF THESE STORES AT VARIOUS LOCATIONS IS ONE COMPOSITE BUSINESS AND ONCE BUSINESS HAD BEEN STARTED THEN THE EXPENDITURE CANNOT BE LINKED ONLY TO THE STORES WHICH BECAME OPERATIONAL DURING THE YEAR UNDER CONSIDERATION. SUCH SUBMISSION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY THE AO. ALL THESE DETAILS WERE SUBMITTED BEFORE THE AO AND IT IS NOT THE CASE OF THE AO THAT ASSESSEE HAD NOT INCURRED SUCH EXPENDITURE FOR ITS BUSINESS. IN THE LETTER SUBMITTED BY THE ASSESSEE BEFORE AO IT IS CLEARLY MENTIONED THAT W HEN THE EXPENDITURE IS INCURRED FOR THE PURPOSES OF EXPANSION OF BUSINESS WHICH IS ALREADY IN EXISTENCE AND, WHICH IS IN THE NATURE OF REVENUE, THEN THE SAME IS ALLOWABLE AS REVENUE EXPENDITURE IRRESPECTIVE OF THE TREATMENT GIVEN BY THE ASSESSEE TO SUCH EX PENDITURE IN ITS BOOKS OF ACCOUNT. NO MATERIAL HAS BEEN BOUGHT ON RECORD BY THE AO TO NEGATE SUCH SUBMISSIONS MADE BY THE ASSESSEE. THESE PROPOSITIONS PUT FORTH BY THE ASSESSEE BEFORE AO ARE SUPPORTED BY THE DECISION O F THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S KOTHARI AUTO PARTS MANUFACTURERS PVT . LTD (SUPRA), AND THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S ALEMBIC GLASS IN DUSTRIES LTD (SUPRA). THEREFORE, IT HAS TO BE HELD THAT THESE EXPENDITURES INCURRED BY THE ASSESSEE AR E FOR THE PURPOSES OF EXPANSION OF ITS BUSINESS AND THOSE EXPENDITURE ARE IN THE NATURE OF REVENUE (BEING MOSTLY PAID TO EMPLOYEES). THESE ARE ALLOWABLE IN THE YEAR ITSELF AS PER RATIO OF AFOREMENTIONED DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S KOTHARI AUTO PARTS MANUFACTURES PVT . LTD (SUPRA) AND HON BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT V/S ALEMBIC GLASS INDUSTRIES LTD (SUPRA). THESE EXPENDITURES DID NOT CREATE ANY ASSET AND ALSO DID NOT PROVIDE ENDURING BENEFIT TO THE BUSINES S OF THE ASSESSEE SO AS TO SAY THAT THE EXPENDITURE WAS CAPITAL IN NATURE THEREFORE, WE HOLD THAT EXPENDITURE ARE ALLOWABLE IN THE YEAR UNDER CONSIDERATION IRRESPECTIVE OF THE FACT THAT ASSESSEE HAS GIVEN DUAL STATUS TO SUCH EXPENDITURE IN ITS BOOKS OF ACC OUNT VIS - - VIS COMPUTATION OF INCOME FILED ALONG WITH RETURN' SINCE THE FACTS ARE IDENTICAL IN NATURE, WE ARE INCLINED FOLLOW THE DECISION RENDERED IN THE CASE OF M/S RELIANCE FOOT PRINTS LTD (SUPRA). RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 8 16. IN VIEW OF THE FOREGOING DISCUSSIONS, WE SET ASIDE THE ORDERS PASSED BY LD CIT(A) IN BOTH THE YEARS UNDER CONSIDERATION AND DIRECT THE ASSESSING OFFICER TO ALLOW THE IMPUGNED EXPENDITURE IN BOTH THE YEARS. 9. WE NOTICE THAT THE CO - ORDINATE BENCHES HAVE BEEN TAKING A CONSISTENT VIEW THAT THE EXPENDITURE INCURRED ON EXPANSION OF THE BUSINESS ACTIVITIES IS REVENUE IN NATURE. THE CO - ORDINATE BENCHES HAVE ALSO TAKEN THE VIEW, BY PLACING RELIANCE ON THE DECISIONS RENDERED BY HONBLE SUPREME COURT, THAT THE ENTRIES MADE IN THE BOOKS OF ARE NOT DETERMINATIVE FA CTOR FOR DECIDING THE QUESTION AS TO WHETHER A EXPENDITURE IS ALLOWABLE OR NOT. ACCORDINGLY, CONSISTENT WITH THE VIEW TAKEN BY THE CO - ORDINATE BENCHES, WE HOLD THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO IN BOTH THE YEARS UNDER CONSIDERATION. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE EXPENDITURE IN BOTH THE YEARS. 10. THE ASSESSEE HAS ALSO CHALLENGED THE DECISION OF THE AO IN REJECTING THE BOOKS OF ACCOUNT S OF THE ASSESSEE IN AY 2008 - 09. WE NOTICE THAT THE ASSESSING OFFICER, IN THE EARLIER PART OF THE ASSESSMENT ORDER, ACCEPTS THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND IN LATER PART PREFERS TO REJECT THE SAME. WE NOTICE THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE . HENCE WE FIND NO REASON TO REJECT THE BOOKS OF ACCOUNT. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 24 . 7 .201 7. SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24 / 7 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) RELIANCE INTEGRATED AGRI SOLUTIONS LTD. 9 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI