Assistant Commissioner of Income-tax, V. Hindustan Antibiotics Ltd., Pune

ITA 539/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1658 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT HALDER
• Assessee Lawyers: ASHOK N KOTHARY
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO. 539 /PN/20 16 / ASSESSMENT YEAR : 20 0 8 - 0 9 THE ASST. COMMISSIONER OF INCOME TAX , CIRCLE 9 , PUNE . / APPELLANT VS. M/S.HINDUSTAN ANTIBIOTICS LTD., BOMBAY PUNE HIGHWAY, PIMPRI, PUNE 411018 . / RESPONDENT PAN: AAACH5155L / APPELLANT BY : SHRI ABHIJIT HALDER / RESPONDENT BY : SHRI ASHOK N. KOTHARY / DATE OF HEARING : 12 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 1 2 . 0 7 .201 6 / ORDER / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST ORDER OF C I T (A) - 9 , PUNE , DATED 28 . 1 2 .20 15 RELATING TO ASSESSMENT YEAR 200 8 - 0 9 AGAINST ORDER PASSED UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT) . ITA NO . 539 /PN/20 16 M/S. HINDUSTAN ANTIBIOTICS LTD. 2 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW THE CIT(A) ERRED IN DELETING THE DISALLOWANCE FOR POWER AND FUEL EXPENSES MADE BY THE A.O. FOR BEING NON - RELATED TO BUSINESS, BY HOLDING THAT NO DISALLOWANCE CAN BE MADE IN THE CASE OF THE ASSESSEE - COMPANY SIMPLY BECAUSE THE PERQUISITE VALUE HAS NOT BEEN TAXED IN THE HANDS OF THE EMPLOYEES. . 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSU E RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2002 - 03 TO 2005 - 06 & 2007 - 08, ORDER DATED 10.03.20 1 6. 4 . BRIEFLY, THE FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD CLA IMED SUM OF RS. 438 . 23 LAKHS TOWARDS POWER EXPENSES. THE ASSESSING OFFICER NOTED THAT THE SAID AMOUNT WAS INCLUSIVE OF EXPENDITURE PERTAINING TO THE RESIDENTIAL COLONY OF RS. 7 4 . 13 LAKHS . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID EXPENDITURE INCU RRED BY THE ASSESSEE WAS NOT DIRECTLY RELATED TO THE BUSINESS ACTIVITY AND SINCE THERE WAS NO EVIDENCE TO SUGGEST THAT THE SAID FACILITY WAS BEING TAXED IN THE HANDS OF BEN EFICIARIES IN THE FORM OF PERKS, ETC., THEREFORE THE SAID EXPENDITURE WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5 . THE CIT(A) WAS OF THE VIEW T HAT NON - INCLUSION OF THE VALUE OF PERQUISITE S IN THE INCOME OF THE EMPLOYEES WOULD NOT BE GROUND FOR DISALLOWANCE OF EXPENDITURE IN THE HANDS OF THE COMPANY. IN CASE THE AMOUNT HAD NOT BEEN TAXED IN THE HANDS OF EMPLOYEES OF THE COMPANY AS PERQUISITE, NECESSARY ACTION HAD TO BE TAKEN FOR BRINGING THE SAME IN TAX NET. HOWEVER, NO DISALLOWANCE COULD BE MADE IN THE CASE OF ASSESSEE COMPANY SIMPLY BECAUSE THE PERQUISITE VALUE HAD NO T BEEN ITA NO . 539 /PN/20 16 M/S. HINDUSTAN ANTIBIOTICS LTD. 3 TAXED IN THE HANDS OF EMPLOYEES. THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE AS THE SAID EXPENDITURE WAS IN THE FORM OF SUBSIDY TO THE EMPLOYEES AND HENCE, WAS ALLOWABLE IN THE HANDS OF ASSESSEE. 6 . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT (A) IN THIS REGARD. 7 . WE FIND THAT SIMILAR ISSUE OF ALLOWABILITY OF POWER AND FUEL EXPENSES AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2002 - 03 TO 2005 - 06 & 2007 - 08 IN ITA NOS. 751 TO 753/PN/2008, 367/PN/2009 AND 2433/PN/ 2012 . TH E TRIBUNAL VIDE CONSOLIDATED ORDER DATED 10.03.2016 HAS HELD AS UNDER: - 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ASPECT OF THE ISSUE IS THE DETERMINATION OF LOSS IN THE HANDS OF ASSESSEE, WHICH IN TURN, HAS BEEN ADJUSTED AGAINST THE BROUGHT FORWARD LOSSES, WHICH AT THE CLOSE OF THE YEAR ARE ALSO FURTHER AVAILABLE TO THE ASSESSEE FOR ADJUSTMENT. SECONDLY, WE FIND MERIT IN THE CLAIM OF THE ASSESSEE VIS - - VIS THE DEDUCTION ON ACCOUNT OF POWER FIND MERIT IN THE CLAIM OF THE ASSESSEE VIS - - VIS THE DEDUCTION ON ACCOUNT OF POWER EXPENSES. THE RESIDEN TIAL COLONY ESTABLISHED BY THE ASSESSEE COMPANY HAS BEEN PROVIDED TO ITS EMPLOYEES AND IT IS INCUMBENT UPON THE ASSESSEE TO PROVIDE POWER FACILITIES TO THE SAID AREA. ON ONE HAND, THE RESIDENTIAL COLONY COMPRISES FIRST THE RESIDENTIAL ACCOMMODATION PROVID ED TO THE EMPLOYEES AND IT IS THE CASE OF ASSESSEE BEFORE US THAT IN CASE ANY EXPENDITURE IS INCURRED VIS - - VIS RESIDENTIAL QUARTERS OF THE EMPLOYEES, THE SAME IS RECOVERED FROM THEM. EVEN IN CASE THE SAME IS NOT RECOVERED FROM THEM, DOES NOT MERIT THE DI SALLOWANCE MADE IN THE HANDS OF ASSESSEE. FURTHER, PART OF POWER AND FUEL EXPENSES WERE INCURRED ON PROVIDING LIGHTS TO THE RESIDENTIAL COLONY AND ALSO TO THE COMMON FACILITIES PROVIDED BY THE ASSESSEE TO ITS EMPLOYEES, WHICH WAS THE OBLIGATION OF THE ASS ESSEE COMPANY AND HENCE, EXPENDITURE INCURRED TOWARDS DISCHARGE OF SAID OBLIGATION IS BUSINESS EXPENDITURE OF THE ASSESSEE COMPANY AND IS DULY ALLOWABLE IN THE HANDS OF ASSESSEE. FURTHER, THE EXPENDITURE RELATABLE TO RESIDENTIAL QUARTERS IS NO DOUBT TO BE RECOVERED FROM THE EMPLOYEES OR IS TO BE INCLUDED AS PERK IN THE HANDS OF EMPLOYEES OF THE ASSESSEE COMPANY, BUT MERELY BECAUSE NO SUCH EXERCISE WAS CARRIED ON, DOES NOT MERIT THE DISALLOWANCE OF EXPENDITURE IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE UPHO LD THE ORDER OF CIT(A) IN THIS REGARD AND DISMISS THE GROUND OF APPEAL RELATING TO POWER AND FUEL EXPENSES RAISED BY THE REVENUE. ITA NO . 539 /PN/20 16 M/S. HINDUSTAN ANTIBIOTICS LTD. 4 8 . THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL AND F OLLOWING THE SAME PARITY OF REASONING, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE . 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 2 TH DAY JULY , 201 6 . SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 1 2 TH JULY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - 9 , PUNE ; 4. / THE PR. C I T - 5 , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE