Energy Link(India) Ltd., Gandhinagar V. The Addl.CIT.,GNR Range, Gandhinagar

ITA 511/AHD/2012

• Counselvise Citation: 51120514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: NIKITA BRAHMBHATT
• Keywords: Business income
• Section: 28

Judgement Text

, , , , SMC, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, SMC BENCH . .. . . .. . , ! ! ! ! BEFORE SHRI G.C. GUPTA, VICE-PRESIDENT ITA NO.511/AHD/2012 [ASSTT.YEAR : 2008-2009] ENERGY LINK (INDIA) LTD. PLOT NO.101, PART-III GIDC ESTATE, SECTOR 28 GANDHIANGAR 382 028. PAN : AAACE 9317 M /VS. ACIT, GANDHINAGAR RANGE GANDHIANGAR. ( (( (#$ #$ #$ #$ / APPELLANT) ( (( (%&#$ %&#$ %&#$ %&#$ / RESPONDENT) '() * + !/ ASSESSEE BY : NIKITA BRAHMBHATT -. * + !/ REVENUE BY : SHRI D.K. MISHRA, SR.DR ./ * )01/ DATE OF HEARING : 13 TH DECEMBER, 2013 234 * )01/ DATE OF PRONOUNCEMENT : 03-02-2014 !5 / O R D E R THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE ORDER OF THE CIT(A), GANDHINAG AR DATED 1.12.2011. 2. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UND ER: 1. THAT THE LD.CIT(A) ON FACTS AND IN LAW HAS ERRE D IN NOT ALLOWING THE EXPENSES OF RS.54,671/- HOLDING THAT T HE ASSESSEE HAS NOT COMMENCED THE BUSINESS. 2. THAT THE LD.CIT(A) HAS ERRED IN HOLDING INTE4RES T RECEIPT AS INCOME UNDER THE HEAD OTHER SOURCES, AS THE SAME IS RECEIVED ON MARGIN MONEY DEPOSIT MADE IN THE COURSE OF BUSINESS . ITA NO.511/AHD/2012 3. WITHOUT PREJUDICE TO THE ABOVE, EVEN IF BUSINESS HAS NOT COMMENCED, CIT(A) SHOULD HAVE ALLOWED ALL THE ADMIN ISTRATIVE EXPENSES INCURRED TO MAINTAIN THE CORPORATE ENTITY. 4. WITHOUT PREJUDICE TO ABOVE GROUNDS, ALTERNATIVEL Y THE EXPENSES OF RS.54,671/- SHOULD BE ALLOWED AS PRELIM INARY EXPENSES AS THE EXPENSES INCURRED ARE NEITHER CAPITAL NOR PE RSONAL IN NATURE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE EXPENSES OF ` 54,671/- WAS DISALLOWED BY THE AO ON THE ONLY GROUN D THAT THE ASSESSEE HAS NOT COMMENCED ITS BUSINESS. SHE SUBMITTED THAT THE ASSESSEE HAS IN FACT STARTED ITS BUSINESS IN THE EARLIER YEARS ITSE LF, WHEREIN THE ADVANCE AMOUNT FOR PURCHASE OF LAND RIGHTS WERE PAID BY THE ASSESSEE. SHE SUBMITTED THAT THE ASSESSEE HAD PAID ` 3.5 CRORES IN THE EARLIER FINANCIAL YEAR 2006-07 AND THE SAME HAS BEEN SHOWN AS ADVANC E FOR LAND IN THE SCHEDULE FORMING PART OF THE FINANCIAL STATEMENT, D ULY AUDITED BY THE CHARTERED ACCOUNTANT. SHE REFERRED TO DIRECTORS R EPORT WHEREIN THE BUSINESS PLAN HAS BEEN DETAILED. SHE SUBMITTED THA T IN THE NEXT YEAR, THE ASSESSEE HAS SOLD ITS RIGHTS IN THE SAME LAND AND T HE SAME HAS BEEN DECLARED AS BUSINESS INCOME, AND THE ASSESSED AS SU CH BY THE DEPARTMENT. SHE RELIED ON THE DECISION IN THE CASE OF UE DEVELO PMENT INDIA (P) LTD. VS. ACIT, 35 TAXMANN.COM 607 (BANGALORE-TRIB.). T HE LEARNED DR OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). HE SUBMITTED THAT THE ASSESSEE NEVER RECEIVED THE POSSESSION OF THE LAND IN QUESTION, AND THEREFORE, HAS NOT STARTED ITS BUSINESS AT ALL. HE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. VS COMMISSIONER OF INCOME-TAX, 227 ITR 172 (SC) IN SUPPORT OF THE CASE OF THE REVENUE. ITA NO.511/AHD/2012 4. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO. THE ONLY REASON OF THE REVENUE AUTHORITIES FOR NOT ALLOWING THE CLAIM OF THE ASSESSEE FOR THE ADMINISTRATIVE EXPENS ES OF ` 54,671/- WAS THAT THE ASSESSEE HAS NOT COMMENCED ITS BUSINESS DU RING THE YEAR. I FIND THAT THE ASSESSEE HAS ALREADY STARTED ITS BUSINESS ACTIVITY BY PAYING ADVANCE FOR LAND OF ` 3.5 CRORES AND THE SAME HAS BEEN SHOWN IN THE BALANCE SHEET OF THE EARLIER FINANCIAL YEAR 2006-07 IN THE SCHEDULE FORMING PART OF THE FINANCIAL STATEMENT. FOR THE R ELEVANT PERIOD ENDING 31.3.2008 ADVANCE FOR LAND HAS BEEN SHOWN AT ` 7,74,80,000/- IN THE STATEMENT OF ACCOUNT BY THE ASSESSEE. IN THE IMMED IATELY SUCCEEDING ASSESSMENT YEAR, THE ASSESSEE HAS CLAIMED THAT IT H AS SOLD ITS RIGHTS IN THE LAND AND THE INCOME WAS SHOWN UNDER THE HEAD BUSIN ESS INCOME AND WAS ASSESSED AS SUCH BY THE DEPARTMENT. THE REVEN UE COULD NOT CONTROVERT THE SUBMISSIONS OF THE ASSESSEE. THE BU SINESS PLAN HAS BEEN DETAILED IN THE DIRECTORS REPORT AND COPY THEREOF HAS BEEN FILED IN THE COMPILATION BEFORE THE TRIBUNAL. I FIND THAT MEREL Y BECAUSE THE ASSESSEE HAS NOT RECEIVED THE POSSESSION OF THE LAND, IT CAN NOT BE SAID THAT THE ASSESSEE HAS NOT COMMENCED ITS BUSINESS. THE REVE NUE HAS ASSESSED THE GAIN ARISING OUT OF THE TRANSACTION OF THE SAME LAN D UNDER THE HEAD BUSINESS INCOME, AND ON THE OTHER HAND, HAS NOT A LLOWED SMALL ADMINISTRATIVE EXPENSES INCURRED DURING THE RELEVAN T PERIOD, HOLDING THEM AS NOT ALLOWABLE. THIS APPROACH OF THE REVENUE IS NOT SUSTAINABLE IN LAW, AND ACCORDINGLY, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE, AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- ( . .. . . .. . /G.C. GUPTA) /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT