DCIT, New Delhi V. M/s Bharat Gears Ltd., New Delhi

ITA 5033/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7549 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-12-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KAUR
• Assessee Lawyers: M K MADAN
• Keywords: Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A , NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.5033 /DEL/2013 ASSESSMENT YEAR : 2010-11 DCIT, CC-11, VS. M/S. BHARAT GEARS LTD., NEW DELHI 1009, SURYA KIRAN BUILDING, 19, K.G. MARG, CONNAUGHT PLACE, NEW DELHI GIR / PAN:AAACB4860G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B KAUR, SR. DR RESPONDENT BY : SHRI M.K. MADAN, CA ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LD. CIT(A) DATED 17.05.2013. THE ONLY GROUND RAISED BY THE RE VENUE IS THE ACTION OF LD. CIT(A) BY WHICH HE HAD DELETED THE ADDITION OF RS.14,42,584/- WHICH WAS MADE BY A.O. ON ACCOUNT OF DISALLOWANCE OF EXPE NDITURE INCURRED ON RECONDITIONING OF PLANT AND MACHINERY. THE A.O. HA D DISALLOWED THE SAME BY TREATING THE SAME AS CAPITAL EXPENDITURE. THE R ELEVANT FINDINGS OF A.O. ARE CONTAINED IN PARAS 3.1 AND 3.2 OF THE ASSESSME NT ORDER. AGGRIEVED, THE ASSESSEE FIELD APPEAL BEFORE LD. CIT(A) WHO DELETED THE DISALLOWANCE BY HOLDING AS UNDER: 1 : 3. DETERMINATION: 3.L THE AO HAS HELD, THE EXPENDITURE INCURRED ON R EPAIRS TO PLANT AND MACHINERY AMOUNTING TO RS. 14,42,584/-, AS CAPI TAL EXPENDITURE ITA N.5033./DEL/2013 2 FOLLOWING THE ASSESSMENT ORDERS FOR EARLIER YEARS I N APPELLANT'S OWN CASE WITH A SPECIFIC 'MENTION TO THE ORDER OF THE A Y. 1994-95. SIMILAR ADDITION WAS MADE IN ASSESSEE'S OWN CASE FOR A.Y. 2 009-10 WHICH HAS BEEN DELETED BY ME VIDE ORDER DATED 18/0212012 IN A PPEAL NO. 27/11/12. THE FACTS NARRATED BY THE AO IN THE ASSES SMENT ORDER ARE NO DIFFERENT FROM WHAT HAS BEEN MENTIONED BY THE AO IN THE SAID ASSESSMENT ORDER FOR A.Y. 2009-10. SIMILAR ADDITION S MADE BY THE AO FOR OTHER A. Y S (ON THE GROUND THAT IT AT UPHELD T HE DISALLOWANCE MADE FOR A.Y. 1994-95) HAVE BEEN DELETED EITHER BY ITAT OR HON'BLE HIGH COURT OF DELHI AND HAVE REACHED FINALITY (SUBJ ECT TO DEPARTMENT LATEST DECISION FOR A. Y. 2005-06 AND 2006-07). FAC TS BEING SAME, FOLLOWING MY ORDER OF A.Y. 2009-10 IN THE ASSESSEE' S OWN CASE AS ABOVE, THE DISALLOWANCE MADE OF RS.13,34,390/- (NET OF DEPRECIATION ALLOWED ON THE CAPITAL EXPENDITURE @15%) IS HEREBY DELETED. 2. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 3. AT THE OUTSET, THE LD. A.R. SUBMITTED THAT THE I SSUE IS DULY COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2009-10 WHEREIN SIMILAR ADD ITIONS WERE ALLOWED AND IN THIS RESPECT, HE INVITED OUR ATTENTION TO TH E ORDER OF TRIBUNAL DATED 18.07.2014 AND FILED A COPY THEREOF. 4. LD. D.R. ON THE OTHER HAND RELIED UPON THE ORDER OF THE A.O. 5. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE IN THE CASE OF ASSESSEE ITSELF VIDE TRIBUNAL ORDER DATED 18.07.2014. THE RELEVANT FINDING OF THE TRIBUNAL ARE RECORDED IN PA RA 17-20, WHICH FOR THE SAME OF CONVENIENCE, ARE REPRODUCED BELOW: 17. LD. AR ON THE OTHER HAND HEAVILY RELYING UPON THE IMPUGNED ORDER AND THE FACTUAL POSITION THAT APART FROM 1994 -95 WHEREIN THE MACHINE WAS LYING UNFIT FOR PRODUCTION AND BY THE R ECONDITIONING CARRIED OUT THE OLD MACHINERY WAS MADE FIT FOR PROD UCTION AS SUCH SINCE THE MACHINE LYING UNFIT WAS NOT IN USE. THE TRIBUNAL AND THE COURT HELD THE EXPENDITURE TO MAKE IT FIT WAS TO BE TAKEN AS CAPITAL ITA N.5033./DEL/2013 3 EXPENDITURE. REFERRING TO THE FACTS OF THE PRESENT CASE IT WAS ARGUED THAT EXPENDITURE IS CATEGORICALLY AND PATENTLY REVE NUE EXPENDITURE AND THE MACHINES WERE NOT LYING IDLE AND UNFIT FOR PRODUCTION AND IN FACT THE EXPENDITURE PERTAINING ONLY TO THEIR REPAI RS. ACCORDINGLY THE EXPENDITURE IT WAS ARGUED HAS RIGHTLY BEEN HELD BY THE CIT(A) AS ALLOWABLE EXPENDITURE FOR REPAIR. 18. THE APPEAL WAS FIXED FOR CLARIFICATION AS QUA T HE EVIDENCE OF EXPENDITURE THE RESPECTIVE STAND WAS FOUND TO HAVE NOT BEEN ADDRESSED. HOWEVER ON THE DATE OF HEARING THE LD. A R TOOK THE STAND THAT THE EVIDENCE HAS NOT BEEN DOUBLED BY THE AO, C ONSEQUENTLY THE DEPARTMENT HAS NOT QUESTIONED THIS, AS THE AO HAS T REATED THE EXPENDITURE AS CAPITAL EXPENDITURE RELYING ON THE V IEW TAKEN IN 1994- 95 AND SINCE THE ISSUE UNDER CHALLENGE WAS WHETHER THE EXPENDITURE WAS CAPITAL OR REVENUE THE FACTUM OFF 'EXPENDITURE HAVING BEEN INCURRED HAS NEVER BEEN IN ANY DOUBT. THE SAID POSI TION WAS CONCURRED-WITH BY THE LD. CIT DR. 19. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. ON A CAREFUL CONSIDERATION THEREOF, WE F IND THAT THERE IS NO SIMILARITY ESTABLISHED BY THE REVENUE WITH THE FACT S TAKEN INTO CONSIDERATION BY THE TRIBUNAL AND THE HON'BLE HIGH COURT IN 1994-95 A.YEAR. NOTHING HAS BEEN PLACED BEFORE US TO SHOW T HAT THE MACHINES WERE LYING IDLE OR HAD BECOME UNFIT FOR PRODUCTION AND IN FACT NO ARGUMENT IN THAT LINE HAS BEEN ADVANCED BY THE REVE NUE. ACCORDINGLY IN THE AFORE-MENTIONED PECULIAR FACTS AND CIRCUMSTA NCES OF THE CASE WHICH WE HAVE BROUGHT OUT IN DETAIL IN THE EARLIER PART OF THIS ORDER, WE ARE OF THE VIEW THAT THE ARGUMENTS OF THE REVENU E HAVE NO MERIT. BEING SATISFIED BY THE REASONING AND FINDING ARRIVE D AT IN THE IMPUGNED ORDER, THE DEPARTMENTAL GROUND IS DISMISSE D. 20. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. WE FIND THAT EXPENDITURE INCURRED BY ASSESSEE IN RECONDITIONING OF OLD PLANT AND MACHINERY IS SIMILAR AND, THEREFORE, RESP ECTFULLY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CAS E, WE HOLD THAT EXPENSES ITA N.5033./DEL/2013 4 INCURRED ON SUCH RECONDITIONING ARE REVENUE IN NATU RE AND, THEREFORE, WE UPHOLD THE ACTION OF LD. CIT(A). 7. IN VIEW OF ABOVE, APPEAL FILED BY THE REVENUE IS DISMISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH DEC., 2014. SD./- SD./- ( DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 12 TH DEC., 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNA TION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FO R PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER