CHIKMAGLUR ENERGY PROJECTS LTD, MUMBAI V. ITO 4(1)(4), MUMBAI

ITA 6161/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8204 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 11-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SATHYA MURTHY
• Assessee Lawyers: LATA PARULEKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO. 6161/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. CHIKMAGLUR ENERGY PROJECTS LTD. 26, GOBIND MAHAL 86-B.N.S. ROAD, MARIN DRIVE MUMBAI-400 002. PAN NO. AACCM 6362 N INCOME TAX OFFICER WARD NO.4(1)(4) MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA & MS. LATA PARULEKAR RESPONDENT BY : SHRI N. SATHYA MURTHY DATE OF HEARING : 16.7.2012 DATE OF PRONOUNCEMENT : 01.08.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 29.6.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. T HE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING DISALLOWANC E OF LOSS OF RS.43,990/-. 2. THE FACTS IN BRIEF ARE THAT THE AO DURING THE ASSESSM ENT PROCEEDINGS NOTED THAT THE ASSESSEE WHO WAS SETTING UP A PO WER ITA NO.6161/M/10 A.Y.06-07 2 GENERATION PLANT HAD CLAIMED LOSS OF RS.43,990/-. THE A O OBSERVED THAT THE PROJECT WAS IN PROGRESS AND NOT COMPLETE. ACCORD INGLY HE DISALLOWED THE CLAIM OF LOSS. THE ASSESSEE DISPUTED THE DECI SION OF AO AND SUBMITTED BEFORE CIT(A) THAT BUSINESS HAS TO BE TAKE N AS COMMENCED THE MOMENT ANY ACTIVITY TO SET UP BUSINESS IS STAR TED BY ASSESSEE. IT WAS POINTED OUT THAT THE VERY FIRST ACTIVITY IN THIS REGARD WAS THE ALLOCATION OF THE PROJECT BY GOVERNMENT WHICH HAD BEEN RECEIVED AND, THEREFORE, EXPENSES WHICH WERE PURELY GEN ERAL REVENUE EXPENSES INCURRED FOR DAY TO DAY BUSINESS WERE ALLOWABLE. THESE EXPENSES WERE UNAVOIDABLE ONCE THE COMPANY WAS INCORPORAT ED. IT WAS ALSO SUBMITTED THAT THESE EXPENSES COULD NOT BE TREATE D AS PRELIMINARY EXPENSES OR CAPITAL EXPENSES. CIT(A) HOWEV ER DID NOT ACCEPT THE CONTENTION RAISED. IT WAS OBSERVED BY HIM THAT PROCESS OF SETTING UP OF THE PROJECT WAS UNDER WAY. HE, THEREFORE, CONFIRMED THE DISALLOWANCE AGGRIEVED BY WHICH ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL. 3. BEFORE US, LD. AR FOR THE ASSESSEE SUBMITTED THAT THE EXPENSES CLAIMED WERE ROUTINE EXPENSES NECESSARY FOR MAINTAINING T HE CORPORATE IDENTITY. THESE WERE OF THE NATURE OF AUDI T FEES, LEGAL AND PROFESSIONAL CHARGES ETC. IT WAS ALSO SUBMITTED THAT IN TH E EARLIER YEARS AS WELL AS IN SUBSEQUENT YEARS CLAIM HAD BEEN ACCEPTED BY T HE DEPARTMENT AND, THEREFORE, SAME SHOULD NOT BE DISALLOW ED THIS YEAR. ITA NO.6161/M/10 A.Y.06-07 3 THE LD. DR ON THE OTHER HAND SUPPORTED THE FINDINGS O F AUTHORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ALLOWAB ILITY OF CERTAIN EXPENSES INCURRED BY THE ASSESSEE FOR DAY TO DAY WORKING O F THE COMPANY. THE EXPENSES HAVE BEEN DISALLOWED ON THE GROU ND THAT THE PROJECT HAD NOT BEEN SET UP DURING THE YEAR. HOWEVER, WE NOTE THAT SIMILAR EXPENSES HAD BEEN CLAIMED BY THE ASSESSEE IN THE EA RLIER YEARS AS WELL AS IN SUBSEQUENT YEARS WHICH HAS BEEN ALLOWED BY T HE DEPARTMENT. THE DEPARTMENT HAS, THEREFORE, TO BE CONSI STENT IN ITS APPROACH. CONSIDERING THIS AND ALSO SMALLNESS OF AMOUNT INVOLVED, WE DO NOT SEE ANY JUSTIFICATION FOR DISALLOWANCE OF EXPENSE S IN THE INTERVENING YEAR. THEREFORE, WE SET ASIDE THE ORDER O F CIT(A) AND ALLOW THE CLAIM OF THE ASSESSEE. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1.08.2012. SD/- SD/- (D. MANMOHAN ) VICE PRESIDENT (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 1.08.2012. JV. ITA NO.6161/M/10 A.Y.06-07 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.