ACIT 6(1), MUMBAI V. ALBRIGHT & WILSON CHEMICALS INDIA LTD, MUMBAI

ITA 5762/MUM/2012

• Counselvise Citation: 576219914 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER KAUR
• Assessee Lawyers: RAHUL DOSHI
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH. . , ! '#$% , # &' BEFORE S/SH.D.MANMOHAN, VICE-PRESIDEN T & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.5762/MUM/2012, ( ( ( ( / ASSESSMENT YEAR-2008-09 DCIT CIR 6(1), R.NO.506, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS M/S ALBRIGHT & WILSON CHEMICALS INDIA LTD., PHENIX HOUSE, A WING, 4 TH FLOOR, 462, SENAPATI BAPAT MARG, LOWER PAREL (W), MUMBAI-400013 PAN: AAACA3841L ( )* / APPELLANT) ( +,)* / RESPONDENT) '' - . # / REVENUE BY : SMT. PARMINDER KAUR /0 /0 /0 /0 . . . . # ## # / ASSESSEE BY : SHRI RAHUL DOSHI - -- - 0 0 0 0 / DATE OF HEARING : 13-05-2014 1( - 0 / DATE OF PRONOUNCEMENT : 28-05-2014 , 1961 - -- - 254 )1( # ## # $020 $020 $020 $020     ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM # # # # &' &' &' &' '#$% '#$% '#$% '#$% # ## # : CHALLENGING THE ORDER DT.28.06.2012 OF THE CIT(A),M UMBAI, ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF THE EXPENDITURE ON REP AIR AND MAINTENANCE OF BUILDING AMOUNTING TO RS.37,54,911/- AND REPAIRS MAINTENANCE ON PLANT AND MACHINERY AMOUNTING TO RS. 53,93,019/- AS NOT CAPITAL IN NATURE. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON TH E ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY G ROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING AND TRADING OF CHEMICALS,FILED ITS RETURN OF INCOME ON 30.09.2008,DECLARING TOTAL INCO ME OF RS.(-)3,79,61,234/-.AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT,ON 02.12.2010,DETE RMINING THE TOTAL INCOME AT RS.(-)2,57,51, 740/-. 2.1. EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWANCE OF EXPENDITURE ON REPAIR AND MAINTENANCE OF BUILDING AMOUNTING TO RS.37.54 LAKHS AND REPAIRS AN D MAINTENANCE OF PLANT AND MACHINERY OF RS.53.93 LAKHS.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT ASSESSEE HAD INCURRED EXPENDI - TURE UNDER THE HEAD REPAIR OF BUILDING AND REPAIR O F PLANT AND MACHINERY AMOUNTING TO RS. 49.85 LAKHS AND RS. 1.07 CRORES RESPECTIVELY.AFTER EXAMIN ING THE DETAILS FILED BY THE ASSESSEE, AO HELD THAT MOST OF THE EXPENDITURE INCURRED BY IT WAS CAP ITAL IN NATURE AND THE ASSESSEE HAD NOT CAPITALISED IT.HE HELD THAT NATURE OF EXPENSES PROV ED THAT BENEFIT WOULD EXTEND TO MORE THAN ONE YEARS.HE HELD THAT CLAIM OF THE ASSESSEE THAT EXPEN DITURE WAS IN NATURE OF REVENUE WAS NOT BASED ON FACTS.ALLOWING DEPRECIATION @ 10%,HE DISALLOWED RS.53.93 LAKHS AND 37.54 LAKHS RESPECTIVELY OUT OF THE EXPENDITURES INCURRED UNDER THE HEADS RE PAIR AND MAINTENANCE OF BUILDING AND PLANT AND MACHINERY. 2 ITA NO. 5762/MUM/2012 M/S ALBRIGHT & WILSON CHEMICAL S INDIA LTD. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R,FIRST APPELLATE AUTHORITY(FAA) HELD THAT THE EXPENDITURE HAD NOT BROUGHT INTO EXISTENCE ANY NEW ASSETS, THAT ANY PERMANENT OR ENDURING BENEFIT HAD NOT ACCRUED TO THE ASSESSEE,THAT EXPEND ITURE COULD NOT BE TERMED CAPITAL EXPENDITURE, THAT EXPENDITURE WAS NECESSARY FOR THE PURPOSE OF P RESERVING AND MAINTAINING ALREADY EXISTING ASSETS,THAT SIMILAR DISALLOWANCES MADE IN THE AY-20 04-05 IN ASSESSEES OWN CASE HAD BEEN DELETED BY THE TRIBUNAL (ITA/55/M/2008),THAT HIS PR EDECESSOR HAD TREATED THE SIMILAR EXPENSES AS REVENUE EXPENDITURE,WHILE DECIDING THE APPEALS FOR THE AY 2006-07 AND 2007-08.FOLLOWING THE ORDER OF THE TRIBUNAL AND HIS PREDECESSOR,HE DELETE D THE DISALLOWANCE OF RS.79.65 LAKHS(RS.37, 54, 911/-+ RS. 53,93,019/-), MADE BY THE AO. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT TRIBUNAL,IN ITS ORDER FOR THE AY 2004-05,HAS HELD THAT EXPENDIT URE INCURRED BY THE ASSESSEE UNDER BOTH THE HEADS WERE REVENUE IN NATURE.RESPECTFULLY,FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPE AL FILED BY THE AO STANDS DISMISSED. 506 506 506 506 /0 /0 /0 /0 VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH 7 7 7 7 &8 &8 &8 &8 - -- - 2 22 2 V VV V '90 '90 '90 '90 - -- - '0 '0 '0 '0 : :: : . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY, 2014 .     - -- - 1( 1( 1( 1( # # # # $ $ $ $ ; ;; ; <& <& <& <& 28 EBZ EBZEBZ EBZ 201 4 - -- - 2 22 2 = == = SD/- SD/- ( . / D.MANMOHAN) ( '#$% '#$% '#$% '#$% / RAJENDRA) ! / VICE PRESIDENT # # # # &' &' &' &' /ACCOUNTANT MEMBER / MUMBAI, <& /DATE: 28.05.2014. SK     - -- - +0> +0> +0> +0> ?#>(0 ?#>(0 ?#>(0 ?#>(0 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / +,)* 3. THE CONCERNED CIT(A)/ @ A , 4. THE CONCERNED CIT / @ A 5. DR A BENCH, ITAT, MUMBAI / >B2 +0 , . . $ . 6. GUARD FILE/ 2 5 ,>0 ,>0 ,>0 ,>0 +0 +0+0 +0 //TRUE COPY//  / BY ORDER, / ' DY./ASST. REGISTRAR , /ITAT, MUMBAI