HINDUSTAN HARDY SPICER LTD, MUMBAI V. ACIT 6(3), MUMBAI

ITA 4833/MUM/2009

• Counselvise Citation: 483319914 RSA 2009
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 10-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: VIPUL JOSHI
• Keywords: Depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 4833/MUM./2009 (ASSESSMENT YEAR : 2005-06 ) M/S. HINDUSTAN HARDY SPICER LTD. DHANWATY BUILDING, PLOT NO.80 DR. A.B. ROAD, WORLI MUMBAI 400 018 PAN AAACX022G .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX RANGE-6(3), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. VIPUL JOSHI REVENUE BY : MR. V.V. SHASTRI DATE OF HEARING 10.10.2011 DATE OF ORDER 21.10.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 26 TH JUNE 2009, PASSED BY THE COMMISSIONER (APPEALS)-XXVI, MUMBAI, FOR ASSESSMENT YEAR 2005-06 , ON THE FOLLOWING GROUNDS:- 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MUMBA I, ERRED IN CONFIRMING THE ADDITION TO THE CLOSING STOCK ON ACC OUNT OF MODVAT CREDIT OF RS.30,50,5761-. M/S. HINDUSTAN HARDY SPICER LTD. ITA NO. 4833/MUM./2009 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MUMBA I, ERRED IN CONFIRMING THE ADDITION OF RS.5,40,713/- (RS.6,0079 2/- MINUS RS.60,079/- DEPRECIATION ALLOWED BY THE ASSESSING O FFICER) ON MAKING OF RUBBLE WALL, FALSE CEILING, DOORS, WATER DRAINAG E SYSTEM AND ARCHITECTURAL SUPERVISION CHARGES FOR NEW OFFICE PR EMISES ETC. TREATING THESE EXPENSES AS OF CAPITAL NATURE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.14,71,141/- TREATING THE EXPENSE S ON REPAIRS AS OF CAPITAL IN NATURE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED I N CONFIRMING THE DISALLOWANCE OF RS.5,89,0341- BEING 50% OF THE REMA INING EXPENSES ON REPAIRS ON ESTIMATE BASIS. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE COMMISSIONER OF INCOMETAX (APPEALS) ERRED IN CONFIR MING THE DISALLOWANCE OF RS.14,53,000/- ON ACCOUNT OF REPAIR S TO PLANT AND MACHINERY ON THE GROUND THAT THE EXPENSES UNDER THI S HEAD HAD INCREASED SUBSTANTIALLY AS COMPARED TO THE PRECEDIN G YEAR. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF PROPELLER SHAFTS AND SPARES. IT FILED RETURN OF INCOME ON 27 TH OCTOBER 2005, DECLARING TOTAL INCOME OF ` 1,59,97,305. 3. WE HAVE HEARD LEARNED COUNSEL, MR. VIPUL SHAH, ON B EHALF OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIVE, M R. V.V. SHASTRI, ON BEHALF OF THE REVENUE. 4. GROUND NO.1, IS ON THE ADDITION UNDER SECTION 145A OF THE ACT. ADMITTEDLY, THE ISSUE IS COVERED IN FAVUOR OF THE A SSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.949/M UM./2008, ORDER DATED 26 TH AUGUST 2009, WHEREIN THE TRIBUNAL, AT PARA-6, HELD AS FOLLOWS:- 6 . AFTER HEARING THE SUBMISSIONS OF THE RIVAL PARTIES AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE MAHALAXMI GLASS WORKS PVT. LTD. CITED SUPRA, THIS GROUND OF APPEAL IS SET ASIDE TO THE FILE OF T HE A.O. TO REVALUE THE CLOSING STOCK AS WELL AS THE OPENING STOCK IN ACCOR DANCE WITH THE DIRECTIONS GIVEN BY THE BOMBAY HIGH COURT. THIS GRO UND OF APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. M/S. HINDUSTAN HARDY SPICER LTD. ITA NO. 4833/MUM./2009 3 5. IN VIEW OF THE AFORESAID DECISION OF THE TRIBUNAL I N ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05, WE SET ASIDE THE IMPUG NED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BA CK TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION IN ACCORD ANCE WITH LAW. THIS GROUND IS, THUS, ALLOWED FOR STATISTICAL PURPOSES. 6. GROUNDS NO.2 TO 5, ARE ON THE ISSUE OF ALLOWABILITY OF THE ASSESSEES CLAIM AS REVENUE EXPENDITURE OF REPAIR EXPENSES. 7. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A P ERUSAL OF THE BILLS MAKES IT CLEAR THAT THE AMOUNT WAS SPENT FOR RENOVA TION OF THE OFFICE PREMISES TAKEN ON LEASE AND THAT THESE RENOVATIONS DONE WITH AN OBJECT OF OBTAINING A CERTIFICATE OF APPROVAL FOR BVQI AUDIT WITH RESPECT TO ISO/PS 16949, ETC. THE EXPENDITURES FOR REPAIRS WERE INCUR RED BASICALLY FOR PRESERVING AND MAINTAINING THE EXISTING ASSETS AND FOR ROUTINE REPAIRS AND MAINTENANCE. IT WAS EMPHASIZED THAT SUFFICIENT PART ICULARS WERE NOT GIVEN TO THE ASSESSEE. HE PRAYED FOR RESTORING THE ISSUE BAC K TO THE FILE OF ASSESSING OFFICER FOR ADJUDICATION AFRESH. 8. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, RELYING ON THE ORDERS OF THE AUTHORITIES BELOW, SUBMITTED THAT PERUSAL OF BILLS AND VOUCHERS DISCLOSED THAT THE EXPENDITURE IN QUESTION IS IN THE CAPITAL FIELD. LEARNED DEPARTMENTAL REPRESENTATIVE, THOUGH NOT LEA VING HIS GROUND, ULTIMATELY SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER FOR ADJUDICATION AFRESH AND AFTER CONSIDERI NG THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 CITED SUPRA, WHEREIN THE TRIBUNAL HAS CONSIDERED AN IDENTICAL IS SUE. 9. IN VIEW OF THE RIVAL SUBMISSIONS, WE RESTORE THE IS SUE BACK TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION. THE ASSE SSING OFFICER IS DIRECTED TO APPLY THE PROPOSITION LAID DOWN IN PARA-15/PAGE- 9 OF THE ORDER DATED 26 TH AUGUST 2009, PASSED BY THE TRIBUNAL IN ASSESSEES O WN CASE FOR ASSESSMENT YEAR 2004-05. THESE GROUNDS ARE, THUS, ALLOWED FOR STATISTICAL PURPOSES. M/S. HINDUSTAN HARDY SPICER LTD. ITA NO. 4833/MUM./2009 4 10. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 21 ST OCTOBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, H BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI