DCIT 8(2), MUMBAI V. METTLER-TOLEDO INDIA P. LTD, MUMBAI

ITA 5358/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84633 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 02-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEKANAND PREMPURNA
• Assessee Lawyers: AMIT AMLANI
• Keywords: Capital asset; Depreciation; Difference of opinion; Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI D. KARUNAKAR RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 5358/MUM/2013 ASSESSMENT YEAR: 2006-07 DCIT - 8(2) R.N. 216-A, AAYAKAR BHAVAN MK ROAD, MUMBAI 400 020 VS. M/S. METTLER - TOLEDO INDIA PVT. LTD. AMAR HILL, SAKI VIHAR ROAD POWAI, MUMBAI 400 072 PAN:AABCM 0779 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT AMLANI REVENUE BY : SHRI VIVEKANAND PREMPURNA DATE OF HEARING : 0 4 . 12 . 2014 DATE OF ORDER : 19 . 1 2 .2014 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN PREFERRED BY THE RE VENUE AGAINST ORDER DATED 06.05.2013, PASSED BY THE LD.CI T-17, MUMBAI, IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) F OR THE A.Y. 2006-07, VIDE WHICH FOLLOWING GROUND HAVE BEEN RAISED. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS.20,30 ,321/- LEVIED U/S 271(1)(C) OF THE ACT WITHOUT APPRECIATION THE I MPUGNED EXPENDITURE IS CLEARLY CAPITAL IN NATURE AND HENCE, ENTITLED ONLY FOR DEPRECIATION @ 10% IN TERMS OF EXPLANATION 1 TO S 32(1) OF THE ACT WHEREAS BY SHOWING SUCH CAPITAL EXPENDITURE AS A REVENUE EXPENDITURE, THE ASSESSEE HAD CLAIMED THE E NTIRE ITA NO. 5358/MUM/2013 M/S. METTLER-TOLEDO INDIA PVT. LTD. ASSESSMENT YEAR: 2006-07 2 EXPENDITURE AS A DEDUCTION U/S 37(1) OF THE ACT, TH EREBY FURNISHING INACCURATE PARTICULARS OF INCOME AS ENVI SAGED IN SECTION 271(1)(C) OF THE ACT. 2. PENALTY U/S 271(1)(C) HAS BEEN LEVIED ON ACCOUNT OF DISALLOWANCE OF DEFERRED REVENUE EXPENDITURE OF RS.60,31,852/- O N WHICH DEPRECIATION HAS BEEN GRANTED BY TREATING THE SAME AS CAPITAL EXPENDITURE. THE ASSESSEE FOR ITS BUSINESS OF MARKE TING SALE AND SERVICE OF WEIGHING EQUIPMENTS, HAS TAKEN THE PREMISES ON L EASE IN BARODA, CALCUTTA, DELHI, CHENNAI AND MUMBAI. DETAILS OF THE SE EXPENSES INCURRED FOR THE LEASE PREMISES WERE AS UNDER:- PARTICULARS AMOUNT BARODA 5,81,062 CALCUTTA 6,94,830 DELHI 4,64,782 CHENNAI 5,49,426 MUMBAI 44,11,957 TOTAL 67,02,057 THESE EXPENDITURES WERE STATED TO HAVE BEEN INCURRE D TOWARDS FIXING OF FALSE CEILINGS, TILES, REPLACING GLASSES, PARTITION S, ELECTRICAL WIRING, INTERNAL WIRE REPLACEMENT ETC. THE ASSESSEE HAS TREATED THE SAID EXPENDITURE TO BE DEFERRED FOR THREE YEARS IN THE BOOKS OF ACCOUNT AS THE LEASE AGREEMENT FOR THE PREMISES WAS FOR THE PERIOD OF TH REE YEARS. THE ASSESSING OFFICER DISALLOWED THE DEFERRED REVENUE E XPENSES ON THE GROUND THAT THEY ARE CAPITAL IN NATURE ON WHICH DEP RECIATION @ 10% TO BE ALLOWED. 3. DURING THE COURSE OF THE PENALTY PROCEEDINGS, TH E ASSESSEE SUBMITTED DETAILED REPLY, STATING THAT THESE EXPENS ES ARE IN FACT REVENUE IN NATURE AND IS ALLOWABLE EXPENDITURE U/S 37(1), B ECAUSE NO NEW CAPITAL ITA NO. 5358/MUM/2013 M/S. METTLER-TOLEDO INDIA PVT. LTD. ASSESSMENT YEAR: 2006-07 3 ASSET HAS BEEN ACQUIRED OR ANY ENDURING BENEFIT HAS ARISEN TO THE ASSESSEE. HOWEVER, THE LEARNED ASSESSING OFFICER RE JECTED THE ASSESSEES CONTENTION ON THE GROUND THAT THE ADDITION HAS BEEN CONFIRMED BY THE LD.CIT(A) IN THE QUANTUM PROCEEDINGS AND THEREFORE, PENALTY IS LEVIABLE. ACCORDINGLY, HE LEVIED PENALTY OF RS.20,30,321/- ON BOTH THE CHARGES, THAT IS, CONCEALMENT OF INCOME AND SUBMITTING OF IN ACCURATE PARTICULARS OF INCOME. 4. BEFORE THE LD.CIT(A), THE ASSESSEE AFTER EXPLAIN ING THE FACTS OF THE CASE AND DETAIL EXPLANATION FILED BEFORE THE AO, RE LIED UPON CATENA OF CASE LAWS, WHICH HAVE BEEN REPRODUCED BY THE LD.CIT (A) FORM PAGES 2 TO 11 OF THE APPELLATE ORDER. THE LD.CIT(A) AFTER C ONSIDERING THE ASSESSEES SUBMISSION, HELD THAT THE ASSESSEE HAS F URNISHED ALL THE RELEVANT PARTICULARS AND THE CLAIM HAS BEEN DISALLO WED BY THE AO ONLY ON THE GROUND THAT IS REVENUE EXPENDITURE. IN SUCH CAS ES, IT IS MERELY A CASE OF DIFFERENCE OF OPINION AND THEREFORE NO PENA LTY CAN BE LEVIED. RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 HE DELETED THE PENALTY. 5. BEFORE US THE LD. DR SUBMITTED THAT THE EXPENDIT URE IS INCURRED BY THE ASSESSEE IS CAPITAL IN NATURE, WHICH HAS BEEN U PHELD BY THE LD.CIT(A) IN THE QUANTUM PROCEEDINGS AND THEREFORE, PENALTY HAS RIGHTLY BEEN LEVIED .IN SUPPORT OF HIS CONTENTION, HE RELIE D UPON THE DECISIONS OF DELHI HIGH COURT IN THE CASE CIT VS. ZOOM COMMUNICATIONS PVT. LTD. 233 CTR (DEL) 465 . 6. ON THE OTHER HAND, LEARNED COUNSEL SUBMITTED THA T THE ASSESSEE HAS DULY SHOWN THE PARTICULARS OF EXPENDITURE AND A LSO GAVE THE REASONS, WHY SUCH AN EXPENDITURE WAS TREATED AS DEF ERRED REVENUE EXPENDITURE. THEREFORE, THERE CANNOT BE A CASE OF C ONCEALMENT OF ITA NO. 5358/MUM/2013 M/S. METTLER-TOLEDO INDIA PVT. LTD. ASSESSMENT YEAR: 2006-07 4 INCOME OR FURNISHING OF INACCURATE PARTICULARS. JUS T BECAUSE THE ASSESSEES CLAIM WITH REGARD TO A PARTICULAR EXPEND ITURE HAS BEEN TREATED AS CAPITAL EXPENDITURE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS. THE ASSESSEE HAS TAKEN THE PREMISES AT VARIOUS PLACES ON LEASE FOR A PERIOD OF THREE YEARS. THE RENOVATION WAS CARRIED OUT ON SUCH PREMISES FOR THE PURPOSE OF OPERATING ITS OFFICE. THE EXPENSES WERE MAINLY ON A CCOUNT OF REPAIRS AND FIXING OF CERTAIN PARTITIONS, TILES, FALSE CEILING ETC. THE ASSESSEE HAS DEFERRED THESE EXPENDITURE AS REVENUE FOR THE PERIO D OF THREE YEARS, THAT IS, FOR THE DURATION OF THE LEASE PERIOD. SUCH AN EXPENDITURE DOES NOT LEAD TO CREATION OF A NEW CAPITAL ASSET OR ENDU RING BENEFIT FOR A LONG PERIOD OF TIME, AS THE PREMISES ITSELF WAS FOR A PE RIOD OF THREE YEARS. MERELY BECAUSE SUCH AN EXPENDITURE IS TREATED AS CA PITAL, IT CANNOT BE HELD THAT THE ASSESSEE IS GUILTY OF FURNISHING OF A NY INACCURATE PARTICULARS. THUS THE ORDER OF THE LD.CIT(A) DELETI NG THE PENALTY IS NOT ONLY CORRECT ON FACTS BUT ALSO IN LAW. ACCORDINGLY THE GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DECEMBER, 2014. SD/- SD/- (D.KARUNAKAR RAO) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 19.12.2014 *SRIVASTAVA ITA NO. 5358/MUM/2013 M/S. METTLER-TOLEDO INDIA PVT. LTD. ASSESSMENT YEAR: 2006-07 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.