ACIT, New Delhi V. M/s. Indian Farm Forestry Development Cooperative Ltd., New Delhi

ITA 573/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5690 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Keywords: Business expenditure; Charitable institution; Revenue expenditure; Capital expenditure
• Section: 143(3); 37(1); 80G; 37; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER, ITA NO. 573/DEL/2016 [ASSESSMENT YEAR: 2011-12] ACIT, CIRCLE-30(1), ROOM NO.1302, 13 TH FLOOR, E-2 BLOCK, SPM CIVIC CENTRE, J L NEHRU MARG, NEW DELHI-110002 M/S INDIA FARM FORESTRY DEVELOPMENT COOPERATIVE LTD. IFFCO HOUSE, 34, NEHRU PLACE, NEW DELHI-110019 PAN - AAAAI0323F APPELLANT RESPONDENT REVENUE BY SMT. NAINA SOIN KAPIL ASSESSEE BY SHRI ASHWINI KUMAR & SHRI AMOL SINHA DATE OF HEARING 07 /08 /2019 DATE OF PRONOUNCEMENT 08 /08 /2019 ORDER PER T. S. KAPOOR, ACCOUNTANT MEMBER, THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-10, DATED 30/11/2015. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE REPRODUCED BELOW:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6,66,30,684/- ON ACCOUN T OF PROJECT EXPENSES MERELY ON THE SUBMISSIONS OF THE ASSESSEE AND NOT APPRECIA TING THAT BUSINESS EXPENSES IS ONLY ALLOWABLE AS PER INCOME TAX ACT WHEN IT IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. EXPENSES I NCURRED FOR THE CHARITABLE PURPOSES CAN BE TERMED AS NOBLE NUT THEY CANNOT BE ALLOWED TO BE DEDUCTED WHILE COMPUTING TAXABLE INCOME. 2 ITA NO.5 73/DEL/2016 2. AT THE OUTSET, THE LD. AR INVITED OUT ATTENTION TO THE FACT THAT THE HONBLE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF DUR ING AY 2008-09 AND 2009-10 HAD ALLOWED RELIEF TO THE ASSESSEE AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO COPY OF THE TRIBUNAL O RDER DATED 26/07/2016 PLACED AT PAPER BOOK PAGE 17 TO 32. IT W AS FURTHER SUBMITTED THAT THE APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF THE HONBLE TRIBUNAL HAS BEEN DISMISSED BY HONBLE DELHI HIGH COURT AND OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 5 TO 16 WHERE COPY OF ORDER OF THE HONBLE DELHI HIGH COURT WAS PLACED . THE LD. AR FURTHER INVITED OUR ATTENTION TO PAPER BOOK PAGE 33 TO 36 WHERE THE ORDER OF THE TRIBUNAL FOR AY 2010-11 IN THE CASE OF ASSESSEE WAS PLACED AND WHEREIN, THE HONBLE TRIBUNAL FOLLOWING THE EARLIER ORDERS IN THE CASE OF ASSESSEE HAD DISMISSED THE APPEAL OF THE REVENUE. 3. THE LD. DR FAIRLY AGREED THAT THE ISSUE WAS COVE RED IN FAVOUR OF THE ASSESSEE BUT SHE PLACED RELIANCE ON THE ORDERS OF THE ASSESSING OFFICER. 4. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT THE GROUND OF APPEAL TAKEN BY THE REVENUE IN AY 2010-11 IS SIMILAR TO THE GROUND OF A PPEAL TAKEN IN THE PRESENT CASE. FOR THE SAKE OF COMPLETENESS, GROUNDS OF APPEAL TAKEN 3 ITA NO.5 73/DEL/2016 BY THE REVENUE IN AY 2010-11 AS REPRODUCED BY THE H ONBLE TRIBUNAL IN ITS ORDER DATED 06/09/2017 IS REPRODUCED BELOW:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,28,22,48 1/- ON ACCOUNT OF PROJECT EXPENSES MERELY ON THE SUBMISSIO N OF THE ASSESSEE WITHOUT APPRECIATING THAT BUSINESS EXPENSE S IS ONLY ALLOWABLE AS PER INCOME TAX ACT WHEN IT IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. EXPENSES I NCURRED FOR THE CHARITABLE PURPOSES CAN BE TERMED AS NOBLE BUT THEY CANNOT BE ALLOWED TO BE DEDUCTED WHILE COMPUTING TA XABLE INCOME. 5. THE HONBLE TRIBUNAL HAS FOLLOWED THE EARLIER OR DER OF THE TRIBUNAL FOR AY 2008-09 AND 2009-10 WHICH HAD DISMI SSED THE APPEALS OF THE REVENUE BY HOLDING AS UNDER:- 2. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE PAR TIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW AND MAT ERIALS AVAILABLE ON RECORD. IN THE CAPTIONED APPEAL, THERE IS ONLY ONE ISSUE REGARDING ADMISSIBILITY OF PROJECT EXPENSES WHETHER CAPITAL OR REVENUE IN NATURE. THE LD. ASSESSING OFF ICER DISALLOWED THE EXPENDITURE OBSERVING AS UNDER : THE CASE OF ASSESSEE CAN BE EXAMINED ON THESE LINE S. THERE IS NO BUSINESS EXPEDIENCY IN THE EXPENDITURE. THE ASSESSE E HAS INCURRED THE PROJECT EXPENSES IN IMPLEMENTING VARIOUS SCHEME S FOR SOCIAL UPLIFTMENT OF FARMERS AND WEAKER SECTION OF SOCIETY . THE EXPENDITURE IS INTACT IN THE NATURE OF DONATION BUT NOT COVERED U/S 80G OF THE INCOMETAX ACT, 1961. ACCORDINGLY, IT IS AN ITEM TO BE CONSIDERED BELOW THE LINE AND IS NOT AN ADMISSIBLE DEDUCTION SINCE NOT LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THE EARLIER YEARS I.E. A.Y. 2008-09 & 2009-10, THIS ISSUE WAS EXAMINED IN DETAILS AND AFTER DETAILED DISCUSSION I N BOTH A.Y.S, THE CLAIM OF ASSESSEE IN RESPECT OF PROJECT EXPENSES WA S NOT TREATED AS REVENUE EXPENDITURE AND SAME WAS DISALLOWED U/S 37( 1) OF THE INCOME TAX ACT, 1961. THE LD. CIT APPEAL HAS DELETE D THE ADDITION MADE ON ACCOUNT OF TREATING PROJECT EXPENSES AS CAP ITAL EXPENSES IN A. Y.2008-09 & 2009-10. THE DEPARTMENT HAS ALREADY FILED APPEAL BEFORE THE HON'BLE ITAT IN BOTH THE A. YS., AND DEC ISION ON THE APPEALS FILED ARE STILL PENDING. 4 ITA NO.5 73/DEL/2016 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, I HOL D THAT THE PROJECT EXPENSES OF RS. 4,28,22,481/- DOES NOT FULFILL THE CONDITION OF SECTION 37(1) AND CANNOT BE TREATED AS REVENUE EXPENDITURE. THE EXPENSES SHOULD BE CLAIMED BY ASSESSEE BELOW THE LINE AND SH OULD NOT BE CHARGED TO P&L A/C. ACCORDINGLY, THE EXPENSES OF RS . 4,28,22,481/- IS DISALLOWED AND WILL BE ADDED IN THE INCOME OF AS SESSEE U/S 37(1) OF THE INCOME-TAX ACT, 1961. IT IS, HOWEVER, SEEN THAT IN THE APPEALS OF THE REV ENUE FILED BEFORE THE ITAT FOR A. YRS. 2008-09 AND 2009-10, TH E TRIBUNAL IN ITA NOS. 1700 & 4796/DEL./2012 HAS DECIDED THE I SSUE IN THE IDENTICAL FACTS AND CIRCUMSTANCES, AS UNDER : 7. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT FOLLOWING NOTE (ASSESSMENT YEAR 2008-09) WAS F ILED BEFORE THE AUTHORITIES BELOW ON THE OBJECTIVES AND PROJECT OF THE SOCIETY TO ESTABLISH ITS CONTENTION BY THE ASSESSEE THAT THE P URPOSE WAS NOT TO EARN PROFIT BUT TO HELP THE RULER POOR: 'NATURE OF' PROJECT EXPENSES DEBITED IN PROFIT & LO SS ACCOUNT : IFFDC HAS DEBITED PROJECT EXPENSES OF RS.3 ,18,74,4 70.70 (RUPEES THREE CRORE EIGHTEEN LAKHS SEVENTY FOUR THOUSANDS F OUR HUNDRED SEVENTY AND SEVENTY PAISE ONLY) WHICH ARE PURELY OF REVENUE NATURE. DURING 2007-08 IFFDS HAS IMPLEMENTED SEVERAL PROJEC TS IN DIFFERENT STATES WITH THE FINANCIAL SUPPORT FROM IFFCO, STATE GOVTS. ICAR, RUDA, ETC. THE MAJOR ACTIVITIES INCLUDES FARMING SY STEM DEVELOPMENT - DISTRIBUTION OF SEED, AGRICULTURE IMP LEMENTS, VEGETABLE CULTIVATION SEED DISTRIBUTION, SAPLING DI STRIBUTION, GREEN SHED NET ETC., TRAINING ON DIFFERENT CRAFTS LIKE HA NDICRAFT BAMBOO CRAFT STITCHING, MEENAKARI, POTTERY ETC., WATERSHED DEVELOPMENT - SOIL AND WATER CONSERVATION ACTIVITIES POND DEEPENING, C ONSTRUCTION OF STOP-DAM ETC., LIVER STOCK DEVELOPMENT DISTRIBUTION OF IMPROVED BREED OF GOAT AND POULTRY, VACCINATION CAMPS ETC. T RAINING AND CAPACITY BUILDING OF COMMUNITY, SELF HELP GROUP DEV ELOPMENT, MICRO- ENTERPRISES DEVELOPMENT ETC. ALL THESE ACTIVITIES W ERE CONDUCTED TO IMPROVE THE LIVELIHOODS OF THE RURAL COMMUNITY, UPL IFTMENT OF BACKWARD/POOR PEOPLE IN TRIBAL/RURAL AREAS AT DIFFE RENT LOCATIONS IN VARIOUS STATES. THESE ACTIVITIES WERE IMPLEMENTED I N CONSULTATION WITH COMMUNITY AND COMMUNITY IS USING THESE FOR FUR THER USE AND UP- SCALING. THE IFFDC HAS BEEN RECEIVING GRANTS/REIMBU RSEMENT OF EXPENSES FROM VARIOUS INSTITUTIONS INCLUDING GOVERN MENT ORGANIZATIONS TO IMPLEMENT THEIR PROGRAMS. THE ASSE SSEE SOCIETY (IFFDC) IS ALSO FINISHED. THE BENEFICIARIES IN LARG E NUMBERS ENJOY THE FRUITS OF PROJECTS/PROGRAMMES OF THE FUNDING AGENCY . THE ASSESSEE SOCIETY (IFFDC) IS NEITHER THE PROJECT FUNDING AGEN CY NOR THE BENEFICIARY OF PROJECT'S BENEFITS 'EXECUTED BY THEM . TO PROJECT EXPENSES REPRESENTS THE AMOUNT SPENT BY THE ASSESSE E SOCIETY AGAINST THE GRANT RECEIVED FROM VARIOUS INSTITUTION S OR REIMBURSEMENT OF EXPENSES MADE ON BEHALF OF THE FUNDING AGENCIES. THE GRANT RECEIVED BY IFFDC AGAINST THE PROJECT EXPENSES IS A LSO CREDITED AS 5 ITA NO.5 73/DEL/2016 INCOME. THUS, THE ASSESSEE SOCIETY (IFFDC) HAS NO B ASIS TO CAPITALIZE THE PROJECT EXPENSES OF REVENUE NATURE IN THEIR HOO KS. 7.1 CONSIDERING THE ABOVE SUBMISSIONS, THE LEARNED CIT(APPEALS) HAS GIVEN FOLLOWING FINDINGS IN THE ASSESSMENT YEAR 200 8-09: '5. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIO NS AND HAVE GONE THROUGH THE ANNUAL REPORT AND DETAILS OF VARIOUS PR OJECTS UNDERTAKEN BY IFFDC LTD. TO STATE A FEW EXAMPLES, THE SOCIETY HAS CARRIED OUT AFFORESTATION OF WASTE LANDS IN UTTAR PRADESH, RAJA STHAN AND MADHYA PRADESH, CONSTRUCTED ANICUTS, CHECK DAMS AND IRRIGA TION PONDS FOR RECHARGING GROUND WATER AND ENABLING AGRICULTURE IN SEVEN STATES, PROVIDED TECHNOLOGY INTERVENTION FOR AGRICULTURE AN D CAPITAL HUSBANDRY, ESTABLISHED PRIMARY LIVELIHOOD COOPERATI VES, AND REHABILITATED MARGINALIZED AND OSTRACIZED COMMUNITI ES SUCH AS THE KANJAR TRIBE. THE SOCIETY RECEIVED THE TIMES OF IND IA SOCIAL IMPACT AWARDS FOR THE REASONS THAT, ''THROUGH WATERSHED DE VELOPMENT, CROP IMPROVEMENT METHODS, AFFORESTATION ETC, IFFDC HAS H AD A SUBSTANTIAL IMPACT ON LIVELIHOODS IN RAJASTHAN, UP AND MP. ITS EQUITABLE AND GENERAL FOCUS PARTICIPATED APPROACHES ARE ESTIMATED TO HAVE BENEFITED 3.8 LAC PEOPLE . LT IS EVIDENT THAT THE APPELLANT, WHICH REPRESENTS FERTILIZER COMPANY IFFCO'S CORPORATE SOC IAL RESPONSIBILITY WING, HAS ITS PRIMARY PURPOSE OF WORKING WITH RURAL COMMUNITIES AND ENABLING THEM TO MANAGE THEIR LAND AND RESOURCES TH ROUGH SELF HELP GROUPS. THE ASSESSING OFFICER HAS MISTAKENLY CONSID ERED THE PURPOSE OF THE BUSINESS TO BE THE TRADING OF FERTILIZERS, T O WHICH ALL EXPENDITURE MUST BE DIRECTED. MOREOVER, I AM IN AGR EEMENT WITH THE APPELLANT'S CONTENTION THAT THE ASSETS CREATED, NAM ELY FORESTS ON WASTE LAND, CHECK DAMS, PONDS, ETC. BECOME THE PROP ERTY OF THE VILLAGES, MANAGED THROUGH VILLAGE COMMUNITIES, AND THE APPELLANT SOCIETY ONLY PROVIDES EXPERTISE AND FUNDING. HENCE, I AM UNABLE TO UPHOLD THE FINDINGS OF THE ASSESSING OFFICER THAT T HE EXPENDITURE HAD NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF THE BUSINESS, AND THAT ALTERNATIVELY IT WAS CAPITAL IN NATURE. THE NET PROJECT EXPENDITURE OF RS.3,18,74,074 IS HELD TO HA VE BEEN INCURRED SOLELY FOR THE FURTHERANCE OF THE ENTERPRISE. THE A PPELLANT, THEREFORE, SUCCEEDS AT GROUND OF APPEAL NO.2. 7.2 ON ABOVE CONSIDERATION, WE FIND THAT THE ASSESS ING OFFICER HAS TREATED THE CLAIMED EXPENDITURE AS CAPITAL IN NATUR E KEEPING IN MIND THAT THE PURPOSE OF BUSINESS OF THE ASSESSEE SOCIET Y IS TRADING OF FERTILIZERS, WHICH IS NOT CORRECT RATHER THE ASSETS CREATED NAMELY FOREST ON WASTE LAND, CHECK DAMS PONDS ETC. BECAME THE PRO PERTY OF THE VILLAGES MANAGED THROUGH VILLAGE COMMUNITY AND THE ASSESSEE SOCIETY ONLY PROVIDED EXPERTISE AND FUNDING TO THEM . CONSIDERING MATERIAL ASPECTS OF THE CASE, WE ARE OF THE VIEW TH AT THE LD. CIT(APPEALS) HAS RIGHTLY HOLD THAT THE ASSESSING OF FICER WAS NOT CORRECT IN HOLDING THAT EXPENDITURE WERE NOT INCURR ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS AND THA T ALTERNATIVELY IT WAS CAPITAL IN NATURE. WE THUS DO NOT FIND INFIRMIT Y IN THE FIRST APPELLATE ORDER ON THE ISSUE ALSO BECAUSE IN EARLIE R ASSESSMENT YEARS 2004-05 TO 2007-08 WHEN ASSESSMENTS WERE FRAMED UND ER SEC. 6 ITA NO.5 73/DEL/2016 143(3) OF THE ACT SIMILAR EXPENDITURE HAVE BEEN ACC EPTED. SIMILAR ARE THE FACTS OF THE CASE IN THE ASSESSMENT YEAR 2009-1 0. THE FINDING OF THE LD. CIT( APPEALS) IS THUS UPHELD. THE GROUND NO . 1 OF THE APPEALS IS ACCORDINGLY REJECTED. 3. IN VIEW OF THE ABOVE, WE FIND THAT THE ISSUE UND ER CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION OF ITAT AS REPRODUCED ABOVE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE B ENCH, WE FIND NO MERITS IN THE APPEAL OF THE REVENUE AND ACC ORDINGLY, THE SAME IS LIABLE TO BE DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6. WE FURTHER FIND THAT FOR AY 2008-09 AND 2009-10, THE HONBLE DELHI HIGH COURT HAS DISMISSED THE APPEALS FILED BY THE REVENUE VIDE ORDER DATED 31/10/2018. THE RELEVANT FINDINGS OF THE HONBLE COURT ARE REPRODUCED BELOW:- 13 IN THE FACTS OF THE PRESENT CASE, THE OBJECT AND PU RPOSE OF THE RESPONDENT-ASSESSEE IS TO ENGAGE AND WORK' F OR SOCIAL AND ECONOMIC UPLIFTMENT OF THE RURAL POOR, CONSTRUC T WATER RESERVOIRS ETC. IT IS ESTABLISHED FOR THIS PURPOSE AND RECEIVES GRANTS AND DONATIONS FROM THIRD PARTIES WITH THE SA ID OBJECTIVE AND PURPOSE. M/S INDIAN FARMERS FERTILIZE R COOPERATIVE LTD. HAD SOLD AND SUPPLIED FERTILIZER T HAT WAS MARKETED/SOLD BY THE RESPONDENT- ASSESSEE TO EARN PROFIT/INCOME, BECAUSE THE RESPONDENT-ASSESSEE WAS ENGAGED IN SOCIAL AND ECONOMIC DEVELOPMENT ACTIVITI ES. ASSOCIATION AND BUSINESS RELATIONSHIP WITH M/S INDI AN FARMERS FERTILIZER COOPERATIVE LTD. WAS PREDICATED AND CONNECTED ON THE RESPONDENT-ASSESSEE PERFORMING AND UNDERTAKING THE SOCIAL-WELFARE ECONOMIC ACTIVITIES. GRANTS RECEIVED FROM GOVERNMENT AND FOREIGN AGENCIES WERE TO BE UTILIZED FOR THE SPECIFIC PURPOSE I.E. THE OBJECT A ND PURPOSE OF SOCIAL AND ECONOMIC UPLIFTMENT ETC. IF THE RESPONDE NT ASSESSEE WAS NOT ENGAGED IN AND HAD NOT UNDERTAKEN THE AFORESAID ACTIVITIES, IT WOULD NOT HAVE RECEIVED TH E GRANTS AND WOULD NOT HAVE UNDERTAKEN SALE AND MARKETING OF 7 ITA NO.5 73/DEL/2016 FERTILIZERS. THE RESPONDENT-ASSESSEE WAS THEREFORE REQUIRED TO INCUR THE SAID EXPENDITURE, IN ORDER TO RUN, OPE RATE AND CONTINUE ITS BUSINESS. 14. WE PERCEIVE THAT THERE IS A DEGREE OF CONTRADIC TION IN THE PLEA RAISED BY THE REVENUE, WHEN THEY CLAIM THAT TH E RESPONDENT-ASSESSEE WAS NOT ENGAGED IN BUSINESS O R THE EXPENDITURE INCURRED WAS NOT ON ACCOUNT OF BUSINESS EXPEDIENCY. INCOME EARNED BY THE RESPONDENT-ASSESSE E HAS BEEN TREATED AND TAXED UNDER THE HEAD PROFITS AND G AINS OF BUSINESS AND PROFESSION. IN THE GIVEN FACTS, IT WOU LD BE INCONGRUOUS FOR THE REVENUE TO URGE THAT THE PURPOS E AND GOAL BEHIND THE ACTIVITIES UNDERTAKEN BY THE RESPON DENT- ASSESSEE WAS NOT COMMERCIAL BUT CHARITY AS THE INTE NT AND MOTIVE BEHIND THEM WAS NOT TO EARN PROFIT. THE EXPE NDITURE INCURRED TO CARRY OUT SOCIAL AND ECONOMIC DEVELOPME NT WOULD IN THIS BACKGROUND CONSTITUTE A 'BUSINESS' OR 'COMMERCIAL' ACTIVITY UNDERTAKEN BY THE RESPONDENT- ASSESSEE. IT WOULD BE A CONTRADICTION IN TERMS, IF WE HOLD THAT THE EXPENDITURE WOULD BE NON-DEDUCTIBLE EXPENDITURE OR EXPENDITURE WITHOUT BUSINESS EXPEDIENCY. UNDER SECT ION 37 OF THE ACT IT DOES NOT MATTER WHETHER OR NOT THE EX PENDITURE WAS IN THE NATURE OF DONATION OR SECTION 80G OF THE ACT WAS NOT ATTRACTED. THE CONDITIONS STATED IN SECTION 37 OF THE ACT MATTER AND CONSTITUTE THE TEST. EXPENDITURE INCURRE D IN FURTHERANCE OF AND CONNECTED WITH THE BUSINESS AND COMMERCIAL ACTIVITIES FOR WHICH THE RESPONDENT- ASS ESSEE WAS ESTABLISHED CANNOT BE DISALLOWED AS EXPENDITURE NOT RELATABLE AND INCURRED FOR 'BUSINESS' PURPOSES. 15. ON THE QUESTION OF CAPITAL EXPENDITURE, THE ASS ESSING OFFICER DID NOT REFER TO OR EXAMINE WHETHER THE CAP ITAL ASSETS CREATED WERE FOR THIRD PARTY VILLAGERS. THE RESPOND ENT- ASSESSEE WAS NOT THE OWNER OF THE ASSETS CREATED AN D DEVELOPED. THE ASSETS CREATED WERE NOT CAPITAL ASSE TS IN THE HANDS OF THE RESPONDENT-ASSESSEE. THE RESPONDENT-AS SESSEE HAD CONTRIBUTED, DEVELOPED, FINANCED AID CREATED AS SETS WHICH BELONGED TO THIRD PERSONS. THE EXPENDITURE IN CURRED THEREFORE WOULD NOT BE CAPITAL IN NATURE IN THE H ANDS OF THE RESPONDENT ASSESSEE. 8 ITA NO.5 73/DEL/2016 16. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE HA S NO MERIT AND IS DISMISSED, WITHOUT ANY ORDER AS TO COSTS. 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE JUDICIAL PRECEDENTS, THE APPEAL FILED BY THE REVENU E IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08/08/ 2019. SD/- SD/- [BHAVNESH SAINI] [T.S. KAPOOR] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 08/08/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI