Prince Alloys P.Ltd, Palakkad V. Addl.CIT, Palakkad

ITA 556/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61355 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 20-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: C R VARISH
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

1 ITA NO.556/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 556/COCH/2010 (ASSESSMENT YEAR 2006-07) PRINCE ALLOYS (P) LTD VS ADDL.C.I.T., PALAKKAD RA NGE 9/78, ANNAPURAMKADU PALAKKAD KINASSERY PO, PALAKKAD PAN : AABCP3680K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.R. VARISH RESPONDENT BY : S.R. SENAPATI DATE OF HEARING : 27-03-2012 DATE OF PRONOUNCEMENT : 03-04-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCHI DATED 18 -08-2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF SERVICE CONNECTION CHARGES PAID TO KERALA ELECTRICITY BOARD ON THE GROUND THAT IT IS A CAPITAL EXPENDITURE. 2 ITA NO.556/COCH/2010 3. SHRI C.R. HARISH, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE PAID CHARGES TO KERALA ELECTRICITY BOARD FO R OBTAINING ELECTRICITY SERVICE CONNECTION AND CLAIMED THE SAME AS REVENUE EXPENDIT URE. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THE SERVICE CONNECTION CHARGE IS CAPITAL EXPENDITURE. REFERRING TO THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06, THE LD.REPRESENTATIVE SUBMITTED THAT ON IDENTICAL CIRCU MSTANCES, THIS TRIBUNAL BY FOLLOWING THE JUDGMENT OF THE GUJARAT HIGH COURT IN SARABHAI M CHEMICALS PVT LTD VS C.I.T. (1981) 127 ITR 71 (GUJ) FOUND THAT THE PAY MENT MADE TO ELECTRICITY BOARD FOR GETTING THE ELECTRICITY CONNECTION IS ONLY A RE VENUE EXPENDITURE. 4. ON THE CONTRARY, THE LD.DR, SHRI S.R. SENAPATI S UBMITTED THAT BY OBTAINING THE ELECTRICITY CONNECTION THE ASSESSEE GETS AN END URING BENEFIT FOR CARRYING ON THE BUSINESS. THEREFORE, THE EXPENDITURE INCURRED BY THE ASSESSEE IN GETTING THE ELECTRICITY CONNECTION HAS TO BE TREATED AS CAPITAL EXPENDITURE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE PAID SERVICE CONNECTION CHARGES TO THE EXTENT OF RS. 3,22,802 TO KERALA STATE ELECTRICITY BOARD FOR GETTING THE ELECTRICITY SERVICE CONNECTION. TH E ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT IT IS A CA PITAL EXPENDITURE. WE FIND THAT THE VERY SAME ISSUE CAME UP BEFORE THIS TRIBUNAL FO R THE ASSESSMENT YEAR 2005- 06 IN ASSESSEES OWN CASE IN ITA NO.294/COCH/2010 A ND THIS TRIBUNAL VIDE, ORDER DATED 30-11-2011 BY FOLLOWING THE GUJARAT HIGH COURT J UDGMENT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS KARAMCHAND PREMCHAND PV T LTD (1993) 200 ITR 281 (GUJ) FOUND THAT THE EXPENDITURE INCURRED BY THE ASSESSEE FOR GETTING THE ELECTRICITY CONNECTION IS REVENUE EXPENDITURE. SIN CE IDENTICAL ISSUE WAS DECIDED 3 ITA NO.556/COCH/2010 BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSE ES OWN CASE FOR THE ASSESSMENT YEAR 2005-06, IN OUR OPINION, THIS DECISI ON OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2005-06 IS APPL ICABLE TO THE FACTS OF THE CASE. THEREFORE, BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 AND FOR THE REASONS STATED T HEREIN WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND DIRECT THE ASSES SING OFFICER TO ALLOW THE EXPENDITURE INCURRED BY THE ASSESSEE FOR GETTING TH E ELECTRICITY CONNECTION AS REVENUE EXPENDITURE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 03 RD DAY OF APRIL, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 03 RD APRIL, 2012 PK/- COPY TO: 1. PRINCE ALLOYS (P) LTD, 9/78, ANAPPURAMKADU, KINASSER Y PO, PALAKKAD 2. ADDL COMMISSIONER OF INCOME-TAX, PALAKKAD RANGE, PALAKKA D 3. THE C.I.T.(A)-V, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH