ASSISTANT COMMISSIONER OF INCOME TAX 15(2)(2), MUMBAI V. PRASOL CHEMICALS LIMITED, MUMBAI

ITA 4574/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3324 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 23-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R SINDHU
• Assessee Lawyers: Y P TRIVEDI; USHA DALAL A RS
• Keywords: Capital asset; Depreciation; Revised return; Revenue expenditure; Capital expenditure

Judgement Text

P A G E | 1 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI G.MANJUNATHA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4574/MUM/2017 (ASSESSMENT YEAR: 2009 - 10 ) ASST. COMMISSIONER OF INCOME TAX - 15(2)(2), ROOM NO. 357, 3 RD FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020 VS. M/S PRASOL CHEMICALS LIMITED PRASOL HOUSE, PLOT NO. A - 17/2/3 TTC INDUSTRIAL AREA, KHAIR, MIDC NEW MUMBAI - 400 710 PAN AACCM3831M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R. SINDHU , D.R RESPONDENT BY: SHRI Y.P. TRIVEDI & MS. USHA DALAL, A.RS DATE OF HEARING: 05 .02.2019 DATE OF PRONOUNCEMENT: 0 8 .02.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 24, MUMBAI, DATED 29.03.2017 WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3)(II) OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T. ACT), DATED 13 .12.2011. THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION TOWARDS THE CAPITALIZATION OF INTEREST AND TREATING IT AS A REVENUE EXPENDITURE AND HOLDING THAT NO PART OF INTEREST OUGHT TO HAVE BEEN CAPITALIZED, IGNORING THE FACT THAT THE LOANS P A G E | 2 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. WERE BORROWED FOR CAPITAL ASSETS WHI CH ARE NOT PUT TO USE AND HENCE, THE INTEREST ON SUCH LOANS SHOULD BE CAPITALIZED AND SHALL NOT BE ALLOWED AS A DEDUCTION AS PER PROVISION OF SECTION 36(1)(III) OF THE INCOME TAX ACT . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ER RED IN HOLDING THAT EXPENDITURE INCURRED BY THE ASSESSEE COMPANY FORGETTING THE EXPRESS FEEDER LINE WAS REVENUE EXPENDITURE INCURRED FOR THE PURPOSE OF SMOOTH RUNNING OF THE BUSINESS, IGNORING THAT IT WAS A ONETIME PAYMENT WHICH RESULTED IN ENDURING BENEFI T AND HAS ENHANCED THE ASSESSEE'S AP PARATUS OF GENERATION OF INCOME . 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE DIRECTIONS BE SET ASIDE AND THAT THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER, ANY OF THE AFORESAID GROUNDS OR ADD A NEW GROUND, OF APPEAL, WHICH MAY BE NECESSARY, AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN TH E BUSINESS OF MANUFACTURING, TRADING, IMPORTING AND EXPORTING OF ALL KINDS OF ORGANIC AND I NORGANIC CHEMICALS, SOLVENTS, ALKALIS, ACIDS ETC. HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 12.09.2009, DECLARING TOTAL INCOME AT RS.3,83,91,600/ - . THEREAFTER , THE ASSESSEE HAD FILED A REVISED RETURN OF INCOME ON 13.07.2010 DECLARING TOTAL INCOME AT RS.2,83,95,200/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC.143(1) OF THE I.T. ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSE E WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O OBSERVED THAT THERE WAS AN OPENING CAPITAL WORK IN PROGRESS OF RS.9,18,58,828/ - AND CLOSING CAPITAL WORK - IN - PROGRESS AS ON 31.03.2009 OF RS . 66,43,689/ - . ON A PERUSAL OF THE RECORDS IT WAS NOTICED BY THE A.O THAT THERE WERE SEVERAL TERM LOANS TAKEN BY THE P A G E | 3 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. ASSESSEE WHICH WERE OUTSTANDING DURING THE YEAR. IN RESPONSE TO THE QUERY RAISED BY THE A.O AS TO WHETHER THE INTEREST PERTAINING TO THE CA PITAL WIP HAD BEEN CAPITALIZED, IT WAS STATED BY THE ASSESSEE THAT MOST OF THE CAPITAL WIP OUT OF THE OPENING BALANCE WAS CAPITALIZED IN THE EARLIER YEAR, BUT NO INTEREST WAS CAPITALI Z ED DURING THE YEAR UNDER CONSIDERATION I.E A.Y. 2009 - 10. THE ASSESSES EX PLANATION FOR NOT CAPITALIZING THE INTEREST DURING THE YEAR UNDER CONSIDERATION UNLIKE THE EARLIER YEAR WAS THAT DURING THE YEAR UNDER CONSIDERATION IT HAD UTILIZED THE FUNDS FROM THE INTERNAL ACCRUALS FOR THE PURPOSE OF CAPITAL WIP AND NOT OUT OF THE BORR OWED INTEREST BEARING FUNDS. HOWEVER, THE A.O IN THE ABSENCE OF ANY SUPPORTING DOCUMENT WHICH WOULD SUBSTANTIATE THE AFORESAID CLAIM OF THE ASSESSEE WAS THUS NOT PERSUADED TO ACCEPT THE SAME . THE ASSESSEE IN ORDER TO DRIVE HOME ITS CLAIM THAT NO PART OF TH E LOAN FUNDS WERE UTILIZED FOR THE PURPOSE OF CAPITAL WIP TOOK SUPPORT OF THE FACT THAT IT HAD SUFFICIENT OWN FUNDS DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE A.O DID NOT FIND FAVOUR WITH THE AFORESAID CLAIM OF THE ASSESSEE AND DISALLOWED THE PROPOR TIONATE INTEREST EXPENDITURE THAT WAS CHARGED BY THE BANK ON THE BORROWED FUNDS ADVANCED TO THE ASSESSEE @ 11.25% AND WORKED OUT THE CORRESPONDING AMOUNT OF INTEREST EXPENDITURE AT RS.15,39,959/ - . ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O AFTER R ELATING THE AFORESAID INTEREST EXPENDITURE OF RS. 15,39,959/ - TO THE CAPITAL WIP CAPITALIZED THE SAME AND AFTER ALLOW ING DEPRECIATION O N SUCH CAPITALIZED INTEREST CONFINED THE D ISALLOWANCE OF INTEREST EXPENDITURE AT RS.13,81,617/ - [I.E RS.15,39,959/ - ( - ) RS.1,58 ,342/ - ] . APART THEREFROM, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD DURING THE YEAR CLAIMED AN AMOUNT OF RS. 51,85,972/ - INCURRED TOWARDS POWER LINE EXPENSES AS A REVENUE EXPENDITURE UNDER THE HEAD P OWER, W ATER & F UEL. ON A PERUSAL OF THE R ECORDS , IT WAS OBSERVED BY THE A.O THAT THE AFORESAID AMOUNT OF EXPENDITURE COMPRISED OF AN P A G E | 4 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. AMOUNT OF RS.47,85,972/ - WHICH WAS DEBITED TO POWER, WATER, FUEL ACCOUNT BY CREDITING AND REDUCING THE SAME FROM CAPITAL WIP - ELECTRICAL INSTRUMENTS OUT OF THE O P ENING CAPITAL WIP , WHILE FOR THE BALANCE AMOUNT OF RS.4 LAC WAS INCURRED DURING THE YEAR. IT WAS OBSERVED BY THE A.O THAT THE AFORE SAID EXPEN SE WAS INCURRED FOR AVAILING THE C OMMON DEDICATED FEEDER/ EXPRESS FEEDER BY THE ASSESSEE AND TWO OTHER NEIGHBOURIN G COMPANIES FOR GETTING THE PERMISSION FOR THE ABOVE FACILITIES FR OM MSEB , AND FOR LAYING OF THE SAID EXPRESS FEEDER. IN SUM AND SUBSTANCE, IT WAS OBSERVED BY THE A.O THAT THE AFORESAID EXPENSES WERE INCURRED BY THE ASSESSEE FOR OBTAINING THE PERMISSION FO R 22KV EXPRESS FEEDER. THE A.O BEING OF THE VIEW THAT THE AFOREMENTIONED EXPENDITURE OF RS.51,85,972/ - CLAIMED BY THE ASSESSEE UNDER THE HEAD POWER LINE EXPENSES WAS IN THE NATURE OF A CAPITAL EXPENDITURE, THUS DISALLOWED THE SAME. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE WAS PERSUADED TO SUBSCRIBE TO THE SAME AND ALLOWED THE APPEAL. IT WAS OBSERVED BY THE CIT(A) THAT AS THE ASSES SEE HAD GENERATED A CASH PROFIT OF RS.7,86,77,330/ - DURING THE YEAR UNDER CONSIDERATION AND WAS THUS HAVING SUFFICIENT OWN FUNDS AVAILABLE WITH IT, HENCE NO DISALLOWANCE OF THE INTEREST EXPENDITURE IN RESPECT OF THE CLOSING CAPITAL WIP OF RS. 66,43,000/ - W AS LIABLE TO BE MADE UNDER SEC. 36(1)(III) OF THE I.T. ACT. INSOFAR, THE DISALLOWANCE OF RS. 51,85,972/ - THAT WAS MADE BY THE A.O IN RESPECT OF THE POWER LINE EXPENSES INCURRED BY THE ASSESSEE FOR LAYING OF A 22KV DEDICATED FEEDER/EXPRESS FEEDER JOINTLY WI TH TWO OTHER NEIGHBOURING COMPANIES WAS CONCERNED, IT WAS OBSERVED BY THE CIT(A) THAT AS THE EXPRESS FEEDER WAS INSTALLED ON THE LAND BELONGING TO MAHARASHTRA STATE ELECTRICITY AUTHORITY, HENCE NEITHER ANY CAPITAL ASSET WAS CREATED NOR OWNERSHIP OF ANY SUC H CAPITAL ASSET ACCRUED TO THE ASSESSEE. IN SUM P A G E | 5 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. AND SUBSTANCE, IT WAS OBSERVED BY THE CIT(A) THAT AS THE OWNERSHIP OF THE EXPRESS FEEDER WAS VESTED WITH THE MSEDCL AS IT WAS INSTALLED/ERECTED ON THE PROPERTY BELONGING TO THE STATE GOVERNMENT AUTHORITY, HEN CE THE SAME COULD NOT BE HELD TO BE THE CAPITAL ASSET OF THE ASSESSEE. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE CIT(A) BEING OF THE VIEW THAT AS THE AFORESAID EXPENDITURE WAS INCURRED BY THE ASSESSEE FOR AVAIL ING UNINTERRUPTED POWER SUPPLY WHICH WAS CRUCIAL FOR THE PURPOSE OF ITS BUSINESS, HENCE THE SAME WAS FULLY ALLOWABLE AS A REVENUE EXPENDITURE. 5. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D .R) ASSAILED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE LAT T ER HAD ERRED IN DISLODGING THE WELL REASONED ORDER PASSED BY THE A.O IN CONTEXT OF THE AFORESAID TWO ADDITIONS/DISALLOWANCES WHICH WERE MADE BY HIM AFTER NECESSARY DELIBERATIONS. IT WAS SUBMI TTED BY THE LD. D.R THAT AS THE ASSESSEE BY INCURRING AN EXPENDITURE OF RS. 51,85,972/ - TOWARDS POWER LINE EXPENSES HAD ACQUIRED AN ENDURING BENEFIT, THUS THE SAME WAS RIGHTLY HELD BY THE A.O AS A CAPITAL EXPENDITURE. INSOFAR, THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 13,81,617/ - UNDER SEC.36(1)(III) IN RESPECT OF CAPITAL WIP WAS CONCERNED, IT WAS SUBMITTED BY THE LD. D.R THAT THE INTEREST ON THE BORROWED FUNDS WHICH WERE DEPLOYED IN CAPITAL WIP W ERE RIGHTLY DISALLOWED BY THE A.O UNDER SEC. 36(1)(III) AND NO INFIRMITY DID EMERGE FROM THE ORDER OF THE A.O IN THE SAID CONTEXT. 6. PER CONTRA, THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE RELIED UPON THE ORDER OF THE CIT(A). IT WAS SUBMITTED BY THE LD. A.R THAT AS THE ASSESSEE HAD SUBSTANTIAL OWN FUND S , THEREFORE, THE CIT(A) RIGHTLY APPRECIATING THE SAID FACTUAL POSITION HAD DELETED THE DISALLOWANCE OF RS. 13,81,617/ - MADE BY THE A.O UNDER SEC.36(1)(III) OF P A G E | 6 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. THE I.T. ACT. INSOFAR, THE DISALLOWANCE OF POWER LINE EXPENSES OF RS. 51,85,9 72/ - BY THE A.O W AS CONCERNED, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE AFOREMENTIONED EXPENDITURE WAS INCURRED BY THE ASSESSEE FOR LAYING OF A 22KV DEDICATED FEEDER/EXPRESS FEEDER JOINTLY WITH TWO OTHER NEIGHBOURING COMPANIES FOR AVAILING UNINTERRUPTED POWER SUPPLY FROM MSEB, HENCE THE SAME HAD RIGHTLY BEEN CLAIMED AS A REVENUE EXPENDITURE. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT AS RIGHTLY APPRECIATED BY THE CIT(A) THAT THE EXPRESS FEEDER WAS INSTALLED/ERECTED ON THE PROPERTY BELONGING TO THE STA TE GOVERNMENT AUTHORITY HAD THUS BECAME THE PROPERTY OF MSEDCL, HENCE THE SAME DEHORS OWNERSHIP OF THE SAID ASSET BY THE ASSESSEE COULD NOT HAVE BEEN HELD AS A CAPITAL ASSET IN ITS HANDS. IN SUPPORT OF HIS AFORESAID CONTENTION THE LD. A.R RELIED ON THE JUD GMENT OF THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. PANBARI T. COMPANY LTD. (1985) 151 ITR 726 (P & H) AND THAT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF BHUSAN SALES LTD. VS. DCIT [ITA NO. 293 & 294/2010 (DELHI) ] . 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, AS IS DISCERNIBLE FROM THE CASH FLOW STATEMENTS REFERRED TO BY THE CIT(A) IN HIS ORDER, THE A SSESSEE DURING THE YEAR UNDER CONSIDERATION HAD GENERATED CASH PROFIT OF RS.7,86,77,330/ - WHICH WAS SUFFICIENT FOR SOURCING THE CAPITAL INVESTMENT OF RS.1,10,60,112/ - THAT WAS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. INSOFAR, THE CONTENTIO N OF THE ASSESSEE THAT AS IT HAD SUFFICIENT OWN FUNDS FOR MAKING THE INVESTMENT IN THE CAPITAL WIP , THUS NO DISALLOWANCE OF ANY INTEREST EXPENDITURE UNDER SEC.36(1)(III) WAS CALLED FOR ITS HANDS CONCERNED, WE FIND OURSELVES TO BE PRINCIPALLY IN AGREEMENT W ITH THE SAID PROPOSITION SO ADVANCED BY THE LD. A.R. HOWEVER, IN THE BACKDROP OF THE FACT THAT THE ASSESSEE IN P A G E | 7 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2008 - 09 HAD CAPITALIZED THE INTEREST EXPENDITURE THAT WAS INCURRED IN RESPECT OF THE FUNDS WHICH WERE DE PLOYED IN THE CAPITAL WIP DURING THE SAID YEAR , AND THAT THE TERM LOANS WERE GRANTED SPECIFICALLY FOR BEING UTILIZED FOR CAPITAL PURPOSES, HENCE THE EXPLANATION OF THE ASSESSEE THAT IT HAD UTILIZED THE FUNDS GENERATED FROM ITS INTERNAL ACCRUALS FOR THE PUR POSE OF CAPITAL WIP AND NOT FROM ANY LOAN DURING THE YEAR UNDER CONSIDERATION CANNOT BE ACCEPTED ON THE VERY FACE OF IT. IN OUR CONSIDERED VIEW THE CLAIM OF THE ASSESSEE THAT NO LOAN FUNDS WERE UTILIZED FOR MAKING INVESTMENT IN THE CAPITAL WIP DURING THE Y EAR REQUIRES TO BE VERIFIED BY THE A.O . I N CASE ANY PART OF THE INTEREST BEARING FUNDS RAISED BY THE ASSESSEE IS FOUND TO HAVE BEEN INVESTED IN THE CAPITAL WIP DURING THE YEAR UNDER CONSIDERATION, THEN THE CORRELATING INTEREST EXPENDITURE IN RESPECT OF THE SAME WOULD BE LIABLE TO BE DISALLOWED AS PER THE PROVISO TO SEC.36(1)(III) OF THE I.T. ACT. APART THEREFROM, IN CASE THE A.O IS UNABLE TO ESTABLISH AN INEXTRICABLE NEXUS BETWEEN THE LOAN FUNDS AND THE UTILIZATION OF THE SAME TOWARDS CAPITAL WIP DURING THE YEAR, THEN KEEPING IN VIEW THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. HDFC BANK LTD. (2014) 366 ITR 505 (BOM) AND CIT VS. RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM) ON ACCOUNT OF AVAILABI LITY OF SUFFICIENT OWN FUNDS WITH THE ASSESSEE IN THE FORM OF CASH PROFIT GENERATED DURING THE YEAR UNDER CONSIDERATION , NO DISALLOWANCE SHALL BE MADE UNDER SEC.36 (1)(III) IN THE HANDS OF THE ASSESSEE . 8. WE SHALL NOW ADVERT TO THE DISALLOWANCE BY THE AO OF THE CLAIM OF POWER LINE EXPENSES OF RS. 51,85,972/ - AS WAS CLAIMED BY THE ASSESSEE. ON APPEAL , THE AFORESAID DISALLOWANCE WAS DELETED BY THE CIT(A). WE FIND THAT THE ASSESSEE HAD DURING THE YEAR INCURRED AN AMOUNT OF RS.51,85,972/ - FOR LAYING OF A 22KV DEDICATED FEEDER/EXPRESS FEEDER JOINTLY WITH TWO NEIGHBOURING COMPANIES VIZ. (I) P A G E | 8 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. M/S PUSHPAMAN FORGING; AND (II) COLOUR ROOF (INDIA) LTD. FOR AVAILING UNINTERRUPTED POWER SUPPLY FROM MSEB. THE A.O BEING OF THE VIEW THAT THE MAKING OF THE AFORESAID ONE - TIM E PAYMENT F OR GETTING ENHANCED ELECTRICAL FEEDER HAD RESULTED INTO AN ENDURING BENEFIT TO THE ASSESSEE, HENCE THE SAME WAS CLEARLY IN THE NATURE OF A CAPITAL EXPENDITURE , THUS DISALLOWED THE CLAIM OF THE SAME AS A REVENUE EXPENDITURE BY THE ASSESSEE. 9. W E HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE AFORESAID VIEW TAKEN BY THE A.O. IN OUR CONSIDERED VIEW , THE ASSESSEE HAD INCURRED THE AFOREMENTIONED EXPENDITURE ALONG WITH THE OTHER T WO NEIGHBOURING CONCERN S FOR INSTALLATION OF A DEDICATED FEEDER/EXPRESS FEEDER ON THE LAND BELONGING TO MAHARASHTRA STATE ELECTRICITY AUTHORITY. ON A PERUSAL OF THE RECORDS , IT STANDS REVEALED THAT THE SAID EXPRESS FEEDER WHICH WAS INSTALLED/ERECTED ON THE PROPERTY BELONGING TO THE STATE GOVERNMENT AUTHORITY HAD THUS BECAME THE PROPERTY OF MSEDCL. IN SUM AND SUBSTANCE, THE AFOREMENTIONED EXPENDITURE INCURRED BY THE ASSESSEE HAD NOT BROUGHT INTO EXISTENCE ANY TANGIBLE OR INTANGIBLE ASSET THE OWNERSHIP OF WHI CH STOOD VESTED WITH THE ASSESSEE. RATHER, THE LAYING OF SUCH FEEDER LINE BY THE ASSESSEE JOINTLY WITH THE OTHER TWO NEIGHBOURING CONCERN S HAD ONLY FACILITATED AVAILING OF UNINTERRUPTED POWER SUPPLY WHICH WAS CRUCIAL FOR THE PURPOSE OF BUSINESS OF THE ASSE SSEE. WE THUS BEING OF A STRONG CONVICTION THAT AS THE INCURRING OF THE AFOREMENTIONED EXPENDITURE HAD NOT RESULTED INTO CREATION OF ANY TANGIBLE OR INTANGIBLE ASSET IN THE HANDS OF THE ASSESSEE, HENCE THE A.O WAS IN ERROR IN CHARACTERISING THE SAME AS A C APITAL EXPENDITURE. APART THEREFROM, AS THE SAID EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE SMOOTH RUNNING OF THE BUSINESS OF THE ASSESSEE , THUS THE SAME WAS FULLY ALLOWABLE AS A REVENUE EXPENDITURE. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDG MENT OF P A G E | 9 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. PANBARI T. COMPANY LTD. (1985) 151 ITR 726 (P&H) . IN THE AFOREMENTIONED CASE THE HONBLE HIGH COURT HAD OBSERVED THAT THE CHARGES WHICH WERE PAID BY THE ASSESSEE TO ASSAM ELECTRICITY BOARD FOR LAYING SERVICE LINES FOR AUGMENTING THE PRODUCTIVITY OF ITS BUSINESS WERE TO BE ALLOWED AS A REVENUE EXPENDITURE , AS THE OWNERSHIP OF THE SAID SERVICE LINES WAS NOT VESTED WITH THE ASSESSEE. IN OUR CONSIDERED VIEW , AS IN THE CASE BEFORE US THE A SSESSEE HAD INCURRED THE AFORESAID EXPENDITURE OF RS.51,85,972/ - FOR FACILITATING UNINTERRUPTED POWER SUPPLY WHICH WAS CRUCIAL FOR THE PURPOSE OF ITS BUSINESS AND NOT FOR CREATION OF ANY TANGIBLE OR INTANGIBLE ASSET, HENCE THE SAME WAS RIGHTLY HELD BY THE CIT(A) AS AN ALLOWABLE REVENUE EXPENDITURE. WE THUS NOT FINDING ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN CONTEXT OF THE AFORESAID ISSUE, THUS UPHOLD THE SAME TO THE SAID EXTENT. 10 . THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN COURT ON 0 8 . 02.2019 S D / - S D / - ( G. MANJUNATHA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 0 8 . 0 2 . 2 0 1 9 PS. ROHIT P A G E | 10 ITA NO. 4574/MUM/2017 A.Y. 2009 - 10 ASST. COMMISSIONER OF INCOME TAX - 15(2)(2) VS. M/S PRASOL CHEMICALS LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI