M/s. Shah & Sanghavi Comunication, Dhrangadhra V. The Income Tax Officer, Ward-3, Surendranagar

ITA 513/RJT/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94051 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 12-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Keywords: Reopening of assessment; Capital asset; Capital expenditure
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.513/RJT/2013 / ASSTT. YEAR: 2006-07 M/S.SHAH & SANGHAVI COMMUNICATION C/O. HARSHADBHAI BH. SHAH CLUB ROAD, DHANGADHRA. VS ITO, WARD-(3) SURENDRANAGAR. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI D.M. RINDANI, CA REVENUE BY : SHRI AVINASH KUMAR, AR / DATE OF HEARING : 20/05/2015 / DATE OF PRONOUNCEMENT: 22/05/2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-XVI, AHMED ABAD DATED 28.10.2013 FOR THE ASSTT.YEAR 2006-07. 2. THE GROUND NO.1 OF THE APPEAL READS AS UNDER: 1. LTD.CIT(A) ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT. 3. AT THE TIME OF HEARING, NO ARGUMENTS WERE MADE B Y THE AR OF THE ASSESSEE ON THIS GROUND OF APPEAL, AND THEREFORE, T HE SAME IS DISMISSED FOR WANT OF PROSECUTION. 4. THE GROUND NO.2 OF THE APPEAL READS AS UNDER: 2. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,00,000/- PAID AS SIGNING EXPENSES AS CAPITAL E XPENDITURE. ITA NO.513/RJT/2013 2 5. THE FACTS OF THE CASE ARE THAT THE AO OBSERVED T HAT THE ASSESSEE HAS DEBITED RS.3 LAKHS IN THE PROFIT & LOSS ACCOUNT TOWARDS AGREEMENT SIGNING EXPENSES PAID TO RELIANCE INDUSTRIES. THE AO OBSERVED THAT THE EXPENDITURE IS NON-RECURRING IN NATURE AND HAVING B ENEFIT OF ENDURING NATURE, AND THEREFORE, TREATED THE SAME AS CAPITAL EXPENDITURE, AND DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE. 6. ON APPEAL, THE CIT(A) OBSERVED THAT ADMISSION OF THE ASSESSEE THAT THE AMOUNT HAS BEEN PAID TO RELIANCE INDUSTRIE S FOR TRAINING ETC. SHOWS THAT THE EXPENDITURE PARTAKES CHARACTER OF CA PITAL EXPENDITURE, SINCE THE EXPENSES TOWARDS TRAINING ETC. ARE MADE F OR LONG TERM UTILITY, AND THEREFORE, ENDURING IN NATURE TO GIVE LONG TERM BENEFIT, AND BENEFITS OF TRAINING CANNOT BE REALIZED IN ONE YEAR , BUT IT IS ALWAYS AN INVESTMENT MADE IN HUMAN ASSETS WITH A LONG TERM OB JECTIVE. HE, THEREFORE, CONFIRMED THE ORDER OF THE AO AND DISMIS SED THE GROUND OF APPEAL OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE ASSESSEE HAS INCURRED EXPENSE OF RS.3 LAKHS ON TRAI NING OF STAFF WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROU ND THAT THIS EXPENDITURE IS CAPITAL IN NATURE. 8. ON APPEAL COMMISSIONER OF INCOME TAX (APPEALS) C ONFIRMED THE ACTION OF THE ASSESSING OFFICER. 9. WE FIND THAT NO NEW CAPITAL ASSET WAS ACQUIRED B Y THE ASSESSEE BY INCURRING THE EXPENDITURE IN QUESTION. SIMPLY BE CAUSE THE BENEFIT OF TRAINING OF STAFF MAY BE AVAILABLE TO THE ASSESSEE IN THE UNCERTAIN SUBSEQUENT YEARS IT CANNOT BE HELD AS CAPITAL EXPEN DITURE. IT IS NOT IN DISPUTE THAT IN THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR ITA NO.513/RJT/2013 3 THE PURPOSES OF BUSINESS. WE, THEREFORE, DELETE THE DISALLOWANCE OF RS.3.00 LAKHS AND ALLOW THIS GROUND OF APPEAL OF TH E ASSESSEE. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 22 ND MAY, 2015 AT RAJKOT. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 22/5/2015