THE DCIT C.C.22, MUMBAI V. M/S. GLOBAL AVIATION SERVICES P. LTD, MUMBAI

ITA 5292/MUM/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8119 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 21-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Depreciation; Revenue expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJENDRA SINGH, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 5292/MUM/2008 ASSESSMENT YEAR: 2004-05 DY. COMMISSIONER OF INCOME-TAX, APPELLANT CENTRAL CIRCLE NO. 22, ROOM NO. 403, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S GLOBAL AVIATION SERVICES PVT. LTD., RESPONDE NT N.K.M. INTERNATIONAL HOUSE, 6 TH FLOOR, B.M. CHINAI MARG, 178, BACKBAY RECLAMATION, MUMBAI 20. (PAN AAACG4127F) APPELLANT BY : MR. A.K. NAYAK RESPONDENT BY : NONE ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- IV, MUMBAI, PASSED ON 19/06/2008 FOR THE AS SESSMENT YEAR 2004-05. 2. THE GROUND NO. 1. A, B, & C RAISED BY THE REVENU E IN THIS APPEAL IS AGAINST THE ACTION OF THE CIT(A) IN ALLOWING ASS ESSEES CLAIM OF RS. 22,47,369/- AS REVENUE EXPENDITURE. 3. BRIEFLY THE FACTS RELATING TO RAISE THIS GROUND ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 28/10/04 DECLARI NG INCOME OF RS. 1,97,67,940/-. IT WAS NOTICED THAT IN THE COMPUTATI ON OF INCOME, THE ASSESSEE DEBITED AN AMOUNT OF RS. 22,47,369/- TO TH E PROFIT & LOSS ACCOUNT UNDER THE HEAD REPAIRS & MAINTENANCE, WHI CH WAS CLAIMED ITA NO. 5292/MUM/2008 M/S GLOBAL AVIATION SERVICES P. LTD.. 2 AS DEDUCTION. THE AO HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION AS REVENUE EXPENSES ON THE GROUND THAT TH E NATURE OF EXPENSES BEING CAPITAL AND RESULTING IN ENDURING BE NEFIT, THEREFORE, THE SAID EXPENDITURE SHOULD BE TREATED AS CAPITAL E XPENDITURE AND DEPRECIATION SHOULD BE ALLOWED ON THE SAME U/S 32 O F THE ACT. THE AO RELIED UPON THE JUDGMENT OF NEW SHRROCK SPINNING AN D MFG. CO. LTD., 30 ITR 338 (BOM.) AND THE JUDGMENT IN THE CASE OF B ALLIMAL NAVAL KISHORE AND ANOTHER V. CIT, 224 ITR 414(SC) AND DIS ALLOWED THE SAID AMOUNT OF RS. 22,47,369/- BY TREATING THE SAME AS C APITAL EXPENDITURE. AGGRIEVED BY THE ORDER OF AO, THE ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), LEARNED AR OF THE ASSESSEE S UBMITTED THAT THE EXPENDITURE HAD BEEN INCURRED ON PREMISES WHICH ARE RENTED AND ON LEASE AND THE FIXED PERIOD OF LEASE DID NOT GIVE THE ASSESSEE ANY ENDURING BENEFIT FOR THE EXPENSES INCURRED. SINCE T HE ASSESSEE DID NOT OWN THE PREMISES, THE ENTIRE EXPENDITURE INCURRED W AS BOOKED BY THE ASSESSEE AS REVENUE EXPENDITURE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) RELYING UPON VARIOUS CASE LAWS, DIRECTED THE AO TO ALLOW THE SAID AMOUNT OF RS. 22,47,369/- AS R EVENUE EXPENSES. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE ITAT. 5. NONE APPEARED BEFORE US ON BEHALF OF THE RESPON DENT-ASSESSEE. WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE L EARNED DR AND ON MERITS. 6. THE LEARNED DR BESIDES RELYING UPON THE ORDER OF THE AO SUBMITTED THAT THE CIT(A) FAILED TO TAKE COGNIZANCE OF PROVISIONS OF EXPLANATION 1 UNDER PROVISO 4 TO SECTION 32(1), WHI CH WAS RIGHTLY FOLLOWED BY THE AO. HE FURTHER SUBMITTED THAT THE C IT(A) ALSO FAILED TO APPRECIATE THE JUDICIAL DECISIONS IN THE CASE OF NE W SHRROCK SPINNING ITA NO. 5292/MUM/2008 M/S GLOBAL AVIATION SERVICES P. LTD.. 3 AND MFG. CO. LTD., 30 ITR 338 (BOM.) AND BALLIMAL N AVAL KISHORE AND ANOTHER VS. CIT, 224 ITR 414 SC). 7. AFTER HEARING THE LEARNED DR AND PERUSING THE MA TERIAL ON RECORD AS WELL AS GOING THROUGH THE ORDER OF CIT(A) , WE FIND THAT THE CIT(A) WHOLLY DECIDED THE ISSUE BY RELYING ON VARIO US JUDGMENTS WITHOUT GOING MERIT IN TO THE FACTS OF THE CASE AND WITHOUT GIVING ANY FINDING AS TO WHETHER THE EXPENDITURE INCURRED BY T HE ASSESSEE ON RENTED PREMISES IS CAPITAL OR REVENUE. WE, THEREFOR E, DEEM IT FIT AND PROPER TO REMIT THE ISSUE BACK TO THE FILE OF THE C IT(A) WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER EXAMINING THE FACT S OF THE CASE AND AFTER PROVIDING THE REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE AS WELL AS AO. WE DO SO. THUS, THIS GROUND OF APPEA L IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. THE NEXT GROUND IS IN RESPECT OF ASSESSEES CLAI M OF RS. 5,59,270/-. 9. THE AO DISALLOWED THE ASSESSEES CLAIM OF RS. 5, 59,270/- ON ACCOUNT OF INTEREST ON LOAN TAKEN FOR REPAIRS AND M AINTENANCE OF THE PREMISE. THE CIT(A) FOLLOWING THE CONCLUSIONS DRAWN IN GROUND NO. 1, DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE BY TREATING THE INTEREST ON LOAN TAKEN FOR REPAIRS AS REVENUE EXPEN SE. 10. AFTER HEARING THE LEARNED DR, WHO HAS PLACED ST RONG RELIANCE ON THE ORDER OF THE AO, WE FIND THAT THE CIT(A) DECIDE D THIS GROUND FOLLOWING GROUND NO. 1, WHICH WAS REMITTED BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE SAME AFRESH, THEREFORE, THIS GROUND IS ALSO REMITTED BACK TO THE FILE OF THE CIT (A) WITH IDENTICAL DIRECTIONS. ITA NO. 5292/MUM/2008 M/S GLOBAL AVIATION SERVICES P. LTD.. 4 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES, AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2011. SD/- SD/- (RAJENDRA SINGH) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 28 TH FEBRUARY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 23/02/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 24/02/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER