ACIT, Jaipur V. RAJASTHAN STATE INDUSTRIAL DEVELOPMENT & INVESTMENT CORPORATION LTD., Jaipur

ITA 589/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5576 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Commercial expediency
• Section: 143(3); 37(1); 147

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO.589/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2006-07 . ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMENT & INVESTMENT CORPN. LTD., UDHYOG BHAWAN, TILAK MARG, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCR 4695 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI P.C. PARWAL (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17.11.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 01/01/2016. VKNS'K@ ORDER PER SHRI T.R. MEENA, A.M. THE APPEAL FILED BY REVENUE IS EMANATING FROM THE ORDER DATED 21.03.2013 PASSED BY THE LEARNED CIT (A)-II, JAIPUR FOR THE A. Y. 2006-07. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEALS) HAS ERRED IN DELETING ADDITION OF RS. 51, 81,860/- MADE BY DISALLOWING EXPENDITURE ON INDUSTRIAL AREAS TRANSFE RRED FROM STATE GOVERNMENT. 2 ITA NO. 589/JP/2013 A.Y 2006-07 ACIT VS. RAJASTHAN STATE INDUSTRIAL DEV. & INVESTME NT CORPN.LTD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN STATE GOVERNMENT UNDERTAKING ENGAGED IN INDUSTRIAL DEVELOPMENT AND FINANCING COM PANIES. IT HAS FILED ITS RETURN ON 27.10.2006 DECLARING TOTAL INCOME OF RS. 43,73,82,6 00/-. THE CASE WAS ASSESSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE IT ACT. THE AO OBSERVED THAT ASSESSEE HAD INCURRED EXPENDITURE OF RS. 51,81,864/- FOR MAINTEN ANCE OF TRANSFERRED INDUSTRIAL AREA. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE SAID EXPENSES WAS ALLOWABLE UNDER SECTION 36(1)(XII) AS WELL AS U/S 37(1) OF THE ACT. THE ASSESSEE HAD INCURRED THE ABOVE EXPENSES AS PER THE OBJECT FOR WHICH ASSESSEE CORPO RATION WAS CONSTITUTED. THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY FOR THE PURP OSE OF BUSINESS OF THE ASSESSEE. THE ASSESSEE ALSO CLAIMED BEFORE THE AO THAT ISSUE HAS BEEN RESOLVED BY THE CORPORATION AND THE STATE GOVERNMENT IN A.Y. 2010-1 1 AND THE AMOUNT RECEIVED FROM THE STATE GOVERNMENT HAD BEEN SHOWN AS INCOME IN A. Y. 2010-11. HE FURTHER OBSERVED THAT SIMILAR ISSUE HAD COME BEFORE THE ITAT WHILE D ECIDING THE APPEAL FOR THE ASSESSMENT YEAR 2005-06 WHEREIN THE ITAT HAD DECIDE D THAT THE CLAIM OF SAID EXPENDITURE IS ALLOWABLE. CONSIDERING THE VIEW OF ITAT, JAIPUR BENCH, JAIPUR IN A.Y. 2005-06 THE CLAIM OF EXPENDITURE OF RS. 51,81,860/- HAS BEEN ACCEPTED AFTER CONSIDERING THE ASSESSEES REPLY. THE AO HELD THAT THE ASSESSEE HAD NOT SHOWN RECEIPTS IN RESPECT OF THIS INDUSTRIAL AREA ON THE PRETEXT T HAT THE SAID LAND PERTAINED TO THE STATE GOVERNMENT. THE ORDER OF ITAT FOR A.Y. 2005-06 IS SUB-JUDICE AND HAD NOT ATTAINED FINALITY, THEREFORE, HE MADE THE ADDITION OF RS. 51 ,81,860/-. 3 ITA NO. 589/JP/2013 A.Y 2006-07 ACIT VS. RAJASTHAN STATE INDUSTRIAL DEV. & INVESTME NT CORPN.LTD. 3. BEING AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD. CIT (A), WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER :- 7. IT IS SEEN THAT IN AY 2010-11 RS. 14,71,29,012 /- HAS BEEN SHOWN IN SCHEDULE-8 OF THE INCOME & EXPENDITURE ACCOUNT UNDER THE DESCRIPTION INCOME FROM TRANSFERRED AREAS. PAGE 49 OF THE PAP ER BOOK SUBMITTED BY THE APPELLANT WHICH IS SCHEDULE-8 IS ENCLOSED AS AN NEXURE-1 OF THIS ORDER. IT WAS EXPLAINED BY THE LD. AR THAT AS PER GOVERNME NT ORDER THE AMOUNT RECOVERED FROM ALLOTTEES OF INDUSTRIAL AREA LAND TO WARDS DEVELOPMENT CHARGES/LEASE RENT WAS ALLOWED BY THE GOVERNMENT TO BE APPROPRIATED BY RIICO AS ITS INCOME. AS INCOME OF RS. 1479.29 LACS WHICH CONSISTS OF SUCH INCOME OF AY 2006-07 AS WELL, (AS CLEAR FROM THE TA BLE GIVEN IN THE REPLY OF THE APPELLANT REPRODUCED ABOVE) HAS BEEN SHOWN O N THE INCOME SIDE THE EXPENDITURE ON MAINTENANCE OF SUCH LAND CLAIMED IN AY 2006-07 OF RS. 51,81,860/- SHOULD BE ALLOWED. IN THE APPELLATE ORDER OF AY 2008-09 CIT (A)-II, JAIPUR HAS ALSO MENTIONED THIS FACT. TH US, RESPECTFULLY FOLLOWING HONBLE ITAT ORDER IN THE CASE OF APPELLANT IN AY 2 005-06 AND APPELLATE ORDER OF CIT (A)-II, JAIPUR IN AY 2008-09 THE EXPEN DITURE OF MAINTENANCE CHARGES OF RS. 51,81,860/- INCURRED ON UPKEEP OF TR ANSFERRED INDUSTRIAL AREA INCURRED FOR BUSINESS PURPOSES IS DIRECTED TO BE ALLOWED. THE ADDITION OF RS. 51,81,860/- IS DELETED. 4. NOW THE REVENUE IS BEFORE US. THE LD. D/R FOR TH E REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 4.1. AT THE OUTSET, THE LD. A/R SUBMITTED THAT THIS ISSUE IS COVERED BY THE HONBLE ITAT DECISION FOR A.Y. 2005-06 AND NOW THIS ISSUE H AS BEEN SETTLED BY THE ASSESSEE WITH STATE GOVERNMENT AND TOTAL RECEIPTS HAS BEEN D ISCLOSED IN A.Y. 2010-11 BY THE 4 ITA NO. 589/JP/2013 A.Y 2006-07 ACIT VS. RAJASTHAN STATE INDUSTRIAL DEV. & INVESTME NT CORPN.LTD. ASSESSEE. HOWEVER, THE EXPENSES CLAIMED WERE WHOLLY AND EXCLUSIVELY INCURRED FOR THE BUSINESS PURPOSES. THEREFORE, THE SAME IS ALLOWABL E. 4.2. THE LD. A/R ALSO SUBMITTED THAT EXPENDITURE OF RS. 51.81 LACS CANNOT BE DISALLOWED ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT SHOWN INCOME FROM THE TRANSFERRED INDUSTRIAL AREA PARTICULARLY WHEN AS PE R THE GOVT. ORDER THE AMOUNT RECOVERED FROM ALLOTTES TOWARDS DEVELOPMENT CHARGES /LEASE RENT WAS PAYABLE TO GOVT. AND ASSESSEE HAS NO RIGHT TO APPROPRIATE IT IN ITS INCOME. IT CAN BE NOTED THAT IN AY 2005-06 ON SAME FACT, EXPENDITURE HAS BEEN ALLOWED BY THE AO. ONLY ON 9/10/2009, ASSESSEE GOT RIGHT TO APPROPRIATE THIS AMOUNT IN IT S INCOME AFTER GOVT. ORDER AND SAME IS OFFERED IN INCOME IN AY 2010-11 AT RS. 1471.29 L ACS (12.10.06 LACS + 261.23 LACS) WHICH INCLUDES RECOVERY OF RS. 140.54 LACS PERTAINI NG TO THE YEAR UNDER CONSIDERATION. IN THESE CIRCUMSTANCES, WHEN AS PER THE OBJECT OF A SSESSEE AND IN COMMERCIAL EXPEDIENCY ASSESSEE HAS INCURRED EXPENDITURE ON MAI NTENANCE OF TRANSFERRED INDUSTRIAL AREA FROM STATE GOVT., IT HAS NO RIGHT TO APPROPRIA TE RECOVERY OF DEVELOPMENT CHARGES/LEASE RENT TO ITS INCOME IN THE YEAR UNDER CONSIDERATION AND WHEN SUCH RIGHT ACCRUED TO THE ASSESSEE IN AY 2010-11, AN AMOUNT OF RS. 140.54 LACS (BEING PART OF RS. 1471.29 LACS) IS TAKEN TO INCOME AGAINST THE EXPEND ITURE OF RS. 51.81 LACS, THE DISALLOWANCE OF EXPENDITURE MADE BY THE AO IS UNJUS TIFIED AND BE DELETED. 4.3. SIMILAR DISALLOWANCE MADE BY AO IN A.Y. 08-09 WAS DELETED BY CIT (A) VIDE ITS ORDER DATED 21.03.12 IN APPEAL NO. 506/10-11 BY GIV ING THE FOLLOWING FINDINGS : SINCE THE ORDER OF THE STATE GOVERNMENT PERMITTING ADJUSTMENT OF LIABILITY WITH MAINTENANCE EXPENSES WAS RECEIVED IN AY 10-11, THE 5 ITA NO. 589/JP/2013 A.Y 2006-07 ACIT VS. RAJASTHAN STATE INDUSTRIAL DEV. & INVESTME NT CORPN.LTD. APPELLANT HAD RIGHTLY CREDITED THE INCOME ON CESSAT ION OF LIABILITY TO ITS P & L A/C. HOWEVER, IN THE CURRENT YEAR, IT IS NOT IN DISPUTE THAT THE APPELLANT HAD INCURRED MAINTENANCE EXPENSES OF RS. 2,68,12,000/- ON UPKEEP OF TRANSFERRED INDUSTRIAL A REAS AND IT WAS INCURRED FOR THE PURPOSE OF THE BUSINESS. IN VIEW O F ABOVE FACTS, THE APPELLANT HAD RIGHTLY CLAIMED THE EXPENDITURE O F RS. 2,68,12,000/-. ON THE OTHER HAND, THE DEVELOPMENT C HARGES AND ECONOMIC RENT RECEIVED FROM THE ALLOTTES OF LAND WE RE PAYABLE TO THE STATE GOVERNMENT. IN THESE CIRCUMSTANCES, IF TH E EXPENDITURE WAS DISALLOWED, IT WOULD AMOUNT TO DOUBLE TAXATION IN AS MUCH AS THE RECOVERY HAD BEEN OFFERED BY THE ASSESSEE FOR T AX IN AY 2010- 11. AGAINST THE ABOVE ORDER, THE DEPARTMENT FILED AN AP PEAL BEFORE THE HONBLE ITAT WHO VIDE ORDER DT. 27.03.2015 IN ITA NO. 580/JP/12 UPHE LD THE ORDER OF CIT (A) BY GIVING THE FOLLOWING FINDINGS :- THERE IS NO DISPUTE THAT MAINTENANCE OF 37 INDUST RIAL AREA ASSIGNED TO THE ASSESSEE BY STATE GOVERNMENT WAS AS SESSEES OBLIGATION. THE STATE GOVERNMENT DID NOT ALLOW THE ASSESSEE TO COLLECT THE MAINTENANCE OF THE REVENUE FOR THESE YE ARS WHICH WAS SUBSEQUENTLY ALLOWED, A STATEMENT AT BAR IS MADE TH AT SUCH INCOME IS SUBSEQUENTLY OFFERED. THE EXPENDITURE WAS ASSESS EES LIABILITY INCURRED DURING THE COURSE OF ITS BUSINESS. LD. CIT (A) HAS RELIED ON CATENA OF CASE LAWS AND ITAT JUDGMENT IN ASSESSEES OWN CASE FOR AY 05-06 TO SUPPORT HIS FINDINGS. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIALS ON RECORD. IN OUR CONSIDERED VIEW, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT (A) WHICH IS UPHELD. IN VIEW OF THE ABOVE, DISALLOWANCE OF RS. 51.81 LAC S MADE BY AO IS RIGHTLY DELETED BY THE CIT (A) AND THUS THE GROUND OF THE DEPARTMENT B E DISMISSED. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IS ALREADY DECIDED BY THE COORDINATE BENCH OF THE TRIB UNAL AND THE RECEIPTS HAS BEEN 6 ITA NO. 589/JP/2013 A.Y 2006-07 ACIT VS. RAJASTHAN STATE INDUSTRIAL DEV. & INVESTME NT CORPN.LTD. OFFERED AND TAXED IN A.Y. 2010-11 WHEREAS THE EXPEN SES CLAIMED BY THE ASSESSEE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS. THEREFORE, BY RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH, WE UPHO LD THE ORDER OF LD. CIT (A). 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/01/2016 . SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01/01/2016 DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-M/S. RAJASTHAN STATE INDUSTRIAL DEVE LOPMENT & INVESTMENT CORPORATION LTD., JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 589/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 7 ITA NO. 589/JP/2013 A.Y 2006-07 ACIT VS. RAJASTHAN STATE INDUSTRIAL DEV. & INVESTME NT CORPN.LTD.