I.T.O Wd - 1(2),kolkata, Kolkata V. M/s S.K.J.Coke Industries Ltd., Kolkata

ITA 464/KOL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9324 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 11-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: BISWESWAR GHOSH
• Keywords: Earning of tax free income; Corroborative evidences; Revenue expenditure; Capital expenditure; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKAT A BENCH C, KOLKATA [BEFORE SHRI J. SUDHAKAR REDDY, HONBLE ACCOUNTAN T MEMBER & SMT. MADHUMITA ROY, HONBLE JUDICIAL MEMBER] [THROUGH VIRTUAL COURT] ITA NO. 464/KOL/2019 ASSESSMENT YEAR: 2012-13 ITO, WARD 1(2), KOLKATA...... ..........................APPELLANT P-7, CHOWRINGHEE SQUARE, R. NO. 18, 4 TH FLOOR, KOLKATA 700 069. M/S. SKJ COKE INDUSTRIES LTD....................... ................................................... ...............RESPONDENT 1/1A, BIPLABI ANKUL CHANDRA STREET, 5F, ELECTRONIC CENTRE (PRINCEP STRET), KOLKATA 700 072. APPEARANCES BY: SHRI SUPRIYO PAL, JCIT APPEARING ON BEHALF OF THE REV ENUE SHRI BISWESWAR GHOSH, AR APPEARING ON BEHALF OF THE ASS ESSEE DATE OF CONCLUDING THE HEARING : AUGUST 10, 2020 DATE OF PRONOUNCING THE ORDER : AUGUST 14 , 2020 ORDER PER MADHUMITA ROY, JM THE INSTANT APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 19.12.2018 PASSED BY THE LD . CIT(A)- 1, KOLKATA, ARISING OUT OF THE ORDER DATED 23.03.2015 PASSED BY THE LD. DCIT, CIRCLE -1(2), KOLKATA, ITNS-51 U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR A.Y . 2012-13 WITH THE FOLLOWING GROUNDS: 1. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING PAYMENT OF CONSULTANCY CHARGE AMOUNTING TO RS. 2,60,300/- CONTRADICTING THE A.O.S STAND ON CAPITA L EXPENDITURE AND ALLOWING IT AS REVENUE EXPENDITURE. 2. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON REPAIR OF MACHINE RY OF RS. 42,40,472/- 2 ITA NO. 464/KOL/ 2019 ASSESSMENT YEAR 2012-13 M/S. SKJ COKE INDUSTRIES LTD. CONTRADICTING THE A.OS STAND ON CAPITAL EXPENDITUR E AND ALLOWING IT AS REVENUE EXPENDITURE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF ON DISALLOWANCE OF RS. 1,4 4,399,109/- U/S 14A R.W.RULE 8D(III) OF THE I. T. ACT, 1961 WHILE NOT CONSIDERIN G THE CBDTS CIRCULAR NO. 5/2014 DATED 11/02/2014 IN ITS PROPER PERSPECTIVE A ND SPIRIT. 4. THE APPELLANT CRAVES THE LEAVE TO MAKE ANY ADDIT ION, ALTERATION, MODIFICATION ETC. OF THE GROUNDS EITHER BEFORE THE APPELLATE PROCEEDINGS, OR IN THE COURSE OF APPELLATE PROCEEDINGS. GROUND NO. 1 3. THIS GROUND RELATES TO ADDITION ON CONSULTANCY C HARGES AMOUNTING TO RS. 2,60,300/-. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE PAID CO NSULTANCY CHARGES FOR INTERIOR DESIGNING, DRAWING ETC. FOR RENOVATION OF OFFICE PREMISES. SUCH EXPENSES THOUGH CLAIMED AS REVENUE, THE LD. AS SESSING OFFICER CONSIDERED THE SAME AS CAPITAL EXPENDITURE. ACCORDI NG TO HIM, THE CURRENT REPAIRS CONNOTE EXPENDITURE FOR THE PURPOSE OF PRESERVING OR MAINTAINING AN ALREADY EXISTING ASSETS AND NOT FOR RENEWAL OR RESTORATION. FURTHER THAT THE SAID EXPENDITURE GIVE S A NEW OR DIFFERENT ADVANTAGE AND HENCE IT IS NOT REPAIRS BUT A CAPITAL EXPENDITURE. HE, THEREFORE, ADDED THE SAME TO THE TOTAL INCOME OF TH E ASSESSEE. IN APPEAL, THE SAME WAS REVERSED BY THE LD. CIT(A). 4. THE CASE OF THE ASSESSEE BEFORE US IS THIS THAT SUCH AN EXPENDITURE IS REVENUE IN NATURE. THE LD. AR AT THE TIME OF HEARING TO THE MATTER RELIED UPON THE DECISION PASSED BY THE S PECIAL BENCH OF 3 ITA NO. 464/KOL/ 2019 ASSESSMENT YEAR 2012-13 M/S. SKJ COKE INDUSTRIES LTD. TRIBUNAL, MUMBAI IN THE MATTER OF DCIT VS KALYANPUR CEMENT LTD. PASSED BY THE COORDINATE BENCH. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER PASSED BY THE LD. AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES. WE HAVE ALSO PERUSED THE RELEVANT MATERIAL S AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE LD. CIT(A) . IT APPEARS THAT THE LD. CIT(A) CONSIDERED SUCH CONSULTANCY CHARGES FOR INTERIOR DESIGNING, DRAWING ETC FOR RENOVATION OF OFFICE PRE MISES AS REVENUE IN NATURE, PARTICULARLY, RELY UPON THE JUDGEMENT PASS ED BY THE SPECIAL BENCH IN THE MATTER OF JCIT VS MUKUND LTD. REPORTED IN (2007) 291 ITR (AT) 249 (MUMBAI) (SB) AND ALSO SUB-SECTION (1A ) OF SECTION 32. IT IS A FACT THAT SUCH REPAIR HAS NO ENDURING BENE FIT, WHICH HAS NEITHER BROUGHT INTO EXISTENCE NOR OBTAINED A NEW OR DIFFER ENT ADVANTAGE AND AS SUCH THE SAME IS NOTHING BUT CURRENT REPAIRS AS ALREADY DECIDED IN AN IDENTICAL MATTER IN THE CASE OF DCIT VS KALYANPU R CEMENT LTD. AS RELIED UPON THE LD. AR. THEREFORE, SUCH CONSULTANCY CHARGES FOR THE INTERIOR DESIGNING, DRAWING ETC. FOR RENOVATION OF OFFICE PREMISES HAS BEEN RIGHTLY DEALT WITH BY THE LD. CIT(A), IN OUR CONSIDERED OPINION, WITHOUT ANY AMBIGUITY SO AS TO WARRANT ANY INTERFER ENCE. THE ORDER IS, THUS, PASSED IN THE AFFIRMATIVE I.E. IN FAVOUR OF T HE ASSESSEE AND AGAINST REVENUE. THIS GROUND OF APPEAL PREFERRED BY THE REVENUE IS DISMISSED. GROUND NO. 2 6. THIS GROUND RELATES TO DELETION OF ADDITION ON R EPAIR OF MACHINERY TO THE TUNE OF RS. 42,40,472/-. DURING TH E COURSE OF 4 ITA NO. 464/KOL/ 2019 ASSESSMENT YEAR 2012-13 M/S. SKJ COKE INDUSTRIES LTD. ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSES SEE INCURRED EXPENDITURE TO THE TUNE OF RS. 42,40,472/- FOR REPA IR OF COKE OVEN. THE SAME WAS NOT CONSIDERED AS CURRENT REPAIRS AND ADDE D TO THE TOTAL INCOME OF THE ASSESSEE CONSIDERING IT CAPITAL IN NA TURE. IN APPEAL, THE LD. CIT(A) DELETED SUCH ADDITION, HENCE REVENUE IS BEFORE US. 7. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT S UCH REPAIR HAS NO ENDURING BENEFIT AND NEITHER DIFFERENT ADVANTAGE IS BEING OBTAINED UPON REPAIRING OF THE SAME AND, THEREFORE, IT IS A CURRENT REPAIR AND ALLOWABLE EXPENSES. HE, FURTHER, RELIED UPON THE JU DGEMENT PASSED BY THE COORDINATE BENCH IN THE MATTER OF DCIT VS KALYA NPUR CEMENT LTD. (SUPRA). ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER PASSED BY THE LD. AO. HE, FURTHER, SUBMITTED THAT SINCE TH E ASSESSEE HAS NOT FURNISHED A COPY OF BILLS OF THE SAID EXPENSES TO E XAMINE THE NATURE OF EXPENSES, THE LD. AO DECIDED THE ISSUE AGAINST THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES. WE HAVE ALSO PERUSED THE RELEVANT MATERIAL S AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE LD. CIT(A) . IT APPEARS FROM THE RECORDS THAT ON THE BASIS OF THIS STATEMENT MAD E BY THE ASSESSEE THAT THE OVEN ARE PLANT & MACHINERY AND DUE TO C ONTINUOUS BURNING. THESE OVENS ARE DAMAGED WHICH ARE REPAIRED AT AN INTERVAL OF 3 TO 4 YEARS, THE LD. ASSESSING OFFICER FORMED AN OPINION THAT THE ASSESSEE- COMPANY REPLACED THE OVEN BY NEW ONE IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCES SUBMITTED BY THE ASSESSEE S O AS TO DECIDE THE SAME OTHERWISE. ACCORDING TO HIM, CURRENT REPAIRS C ONNOTE AN 5 ITA NO. 464/KOL/ 2019 ASSESSMENT YEAR 2012-13 M/S. SKJ COKE INDUSTRIES LTD. EXPENDITURE FOR THE PURPOSE OF PRESERVING OR MAINT AINING AN ALREADY EXISTING ASSET AND NOT FOR RENEWAL OR RESTORATION. SINCE THE EXPENDITURE GIVES A NEW AND DIFFERENT ADVANTAGE, TH E SAME CANNOT BE SAID TO BE A CAPITAL EXPENDITURE AND THUS DISALLOWE D. IT APPEARS FROM THE RECORD THAT SOME EXPENDITURE IS THOUGH BIG SUCH REPAIR HAS NO ENDURING BENEFIT NEITHER ANY DIF FERENT ADVANTAGE IS BEING PROVIDED TO THE ASSESSEE BY SUCH REPAIRING WO RKS. HENCE, RELYING UPON THE RATIO LAID DOWN BY THE COORDINATE BENCH IN THE MATTER OF DCIT- VS.- KALYANPUR CEMENT LTD., WE FIND NO AMBIGUITY IN THE MATTER PASSED BY THE LD. CIT(A) IN DECIDING THE SAID EXPENDITURE AS CAPITAL IN NATURE SO AS TO WARRANT INFERENCE. HE NCE, THIS APPEAL IS FOUND TO BE DEVOID OF ANY MERIT AND THUS DISMISSED. GROUND NO. 3 9. THIS GROUND RELATES TO DELETION OF ADDITION OF R S. 1,44,39,109/- U/S 14A READ WITH RULE 8D(3) OF THE ACT. AT THE VER Y OUTSET OF THE PROCEEDING, THE LEARNED COUNSEL APPEARING FOR THE A SSESSEE SUBMITTED BEFORE US THAT NO EXEMPT INCOME WAS EARNE D BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE DID NOT CLAIM ANY EXEMPT INCOME AS APPARENT FROM THE RETURN OF INCOME AND, THEREFORE, THE QUESTION OF DISALLOWANCE DOES NOT AR ISE. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER PASSED BY TH E ASSESSING OFFICER. ACCORDING TO HIM, RELYING UPON THE CBDT CI RCULAR NO. 5/2014 DATED 11.02.2014, THE LD. AO RIGHTLY CALCULATED THE ADMINISTRATIVE EXPENDITURE U/S 14A READ WITH RULE 8D(3) OF THE ACT . 6 ITA NO. 464/KOL/ 2019 ASSESSMENT YEAR 2012-13 M/S. SKJ COKE INDUSTRIES LTD. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES. WE HAVE ALSO PERUSED THE RELEVANT MATERIAL S AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE LD. CIT(A) . THE LD. AO WHILE MAKING THE ADDITION OBSERVED THAT NO EXPENDITURE TO MAINTAIN THE PORT FOLIO HAS BEEN OFFERED FOR DISALLOWANCE IN THE RETURN AND THUS RELYING UPON THE JUDGEMENT PASSED BY THE CHENNAI BE NCH OF TRIBUNAL AND THE CBDT CIRCULAR NO. 5/2014 MADE ADDITION AGAI NST THE ASSESSEE. BUT IT APPEARS FROM THE RECORD THAT THE EXPENDITURE MADE BY THE ASSESSEE DURING THE YEAR WAS OUT OF RESERVE AND SURPLUS. MORESO, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCO ME IN THE YEAR UNDER CONSIDERATION. HOWEVER, IT FURTHER APPEARS FR OM THE ORDER IMPUGNED BEFORE US THAT THE LD. CIT(A) DISTINGUISHE D THE MATTER FROM THE JUDGEMENT PASSED BY THE CHENNAI BENCH OF TRIBUN AL IN THE CASE OF SPIC HAS RELIED UPON BY THE LD. CIT(A). MORE SO, TH E CBDT CIRCULAR IS NOT HAVING ANY BINDING EFFECT ON THE APPELLATE ORDE R OR ITO AS ALSO OBSERVED BY THE LD. ASSESSING OFFICER. IT IS RELEVA NT TO MAINTAIN THAT THE FACT THAT THE ASSESSEE HAS INVESTED THE AMOUNT IN SHARES OF ANOTHER PRIVATE COMPANY FROM ITS OWN RESOURCES AND NOT FROM ANY BORROWED FUNDS WAS ALSO CONSIDERED BY THE LD. CIT(A ) WHILE DELETING THE ADDITION MADE U/S 14A OF THE ACT. IN OUR CONSID ERED OPINION, SINCE THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION AND PARTICULARLY WHEN THE INVES TMENT IN SHARES OF ANOTHER COMPANY WAS MADE BY THE ASSESSEE FROM IT S OWN FUND, THE QUESTION OF DISALLOWANCE U/S 14A DOES NOT AND CANNO T ARISE. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND DELETING THE SAID ADDITION MADE BY THE LD. AO. HENC E THE GROUND OF 7 ITA NO. 464/KOL/ 2019 ASSESSMENT YEAR 2012-13 M/S. SKJ COKE INDUSTRIES LTD. APPEAL PREFERRED BY THE REVENUE IS FOUND TO BE DEVO ID OF ANY MERIT AND THUS DISMISSED. 11. IN THE RESULT, THE APPEAL PREFERRED BY THE REVE NUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2020. SD/- SD/- (J. SUDHAKAR REDDY) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 14 /08/2020 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. M/S. SKJ COKE INDUSTRIES LTD., 1/1A, BIPLABI ANKUL CHANDRA STREET, 5F, ELECTRONIC CENTRE (PRINCEP STREET), KOL KATA 700 069. 2. ITO, WARD 1(2), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA