ASST CIT 4(3), MUMBAI V. RELIANCE SUPPLY CHAIN SOLUTIONS LTD, MUMBAI

ITA 6342/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9206 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHEELA CHITLANGIA
• Keywords: Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 6342/MUM/2013 ASSESSMENT YEAR: 2009-10 ASST CIT 4(3) 6 TH FLOOR, R. NO. 649 AAYAKAR BHAVAN MUMBAI VS. RELIANCE SUPPLY CHAIN SOLUTIONS LTD. 5 TH FLOOR, COURT HOUSE, LOKMANYA TILAK MARG DHOBI TALAO MUMBAI 400 002 PAN:-AAGCA 6369 K (APPELLANT) (RESPON DENT) ASSESSEE BY : MS. SHEELA CHITLANGIA REVENUE BY : S HRI SANTOSH KUMAR DATE OF HEARING : 18.03.2015 DATE OF ORDER : 25 . 03.2015 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 01.08.2013 PASSED BY LD. CIT(A)-14, MUMBAI FO R THE QUANTUM OF ASSESSMENT U/S 143(3), ON THE FOLLOWING GROUNDS:- 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE MADE BY THE AO OF RS.14,81 ,34,192/- INCURRED BY THE ASSESSEE O N PROJECT DEVELOPMENT EXPENDITURE IGNORING THE FACTS THAT THE EXPENDITURE INCURRED WAS CAPITAL IN NATURE, WAS TREATED BY THE ASSESSEE AS CAPITAL IN ITS ACCOUNTS BUT WAS CLAIMED AS REVENUE IN THE COMPUTATION OF INCOME.' ITA NO. 6342/MUM/2013 ASSESSMENT YEAR: 2009-10 2 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF RS.78,09,321/- MADE BY THE AO AND CLAIMED BY THE AS SESSEE ON THE BASIS OF ACTUAL PAYMENT OF UNPAID GRATUITY AND UNPAID LEAVE ENCASHMENT WHICH WAS INCLUDED IN THE TOTAL PROJECT DEVELOPMENT EXPENDITURE OF RS.7,69,22,617/- IGNORING THE FACT T HAT THE ENTIRE EXPENDITURE OF RS.7,69,22,617/- HAS BEEN DISALLOWED BY THE AO AND THAT AN APPEAL AGAINST THE DECISION OF THE CIT( A) DELETING THE DISALLOWANCE ON THIS A/C FOR AY 2008-09 HAS BEEN FI LED BEFORE THE HON'BLE ITAT AND WHICH IS PENDING.' 2. AT THE OUTSET, LEARNED COUNSEL SUBMITTED THAT TH E LD. CIT(A) HAS FOLLOWED THE EARLIER ORDER PASSED BY THE LD. CIT(A) FOR THE A.Y. 2008-09, WHICH HAS BEEN CONFIRMED BY THE TRIBUNAL VIDE ORDER DATED 27.11.2013. EVEN IN THE GROUNDS, THE REVENUE HAS STATED THAT TH E ORDER OF THE LD. CIT(A) FOR A.Y. 2008-09 HAS NOT BEEN ACCEPTED BY TH E DEPARTMENT AND MATTER IS SUBJUDICE BEFORE THE ITAT. HENCE THE REVE NUES APPEAL SHOULD BE DISMISSED. 3. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE AO. 4. AFTER CONSIDERING THE AFORESAID CONTENTION OF TH E PARTIES AND ALSO ON THE PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT THE ISSUE RELATES TO DISALLOWANCE OF CLAIM FOR DEDUCTION U/S 37(1) IN RE SPECT OF REVENUE EXPENDITURE, AGGREGATING TO RS.14,81,34,192/- WHICH HAS BEEN TREATED AS CAPITAL EXPENDITURE BY THE AO. THE ASSESSEE IS E NGAGED IN THE BUSINESS OF DISTRIBUTION AND LOGISTICS BUSINESS AND THIS WAS THE SECOND YEAR OF THE OPERATION OF THE COMPANY. THE ASSESSEE HAD SHOWN EXPENDITURE OF RS.14,81,34,192/- WHICH WAS REFLECTE D UNDER THE HEAD PROJECT DEVELOPMENT EXPENDITURE IN THE BOOKS OF A CCOUNT. HOWEVER, IN THE COMPUTATION OF THE INCOME THIS EXPENDITURE HAS BEEN CLAIMED AS ITA NO. 6342/MUM/2013 ASSESSMENT YEAR: 2009-10 3 REVENUE EXPENDITURE. FROM THE BREAKUP OF THE DETAIL S OF THE EXPENDITURE, IT IS SEEN THAT FOLLOWING EXPENSES HAV E BEEN DEBITED:- DETAILS OF REVENUE EXPENDITURE DEBITED TO CWIP AMOUNT (RS.) SALARIES & WAGES CONTRIBUTION TO PROVIDENT FUND, SUPERANNUATION FUND GRATUITY, LEAVE ENCASHMENT OTHERS RENT TRAVELLING EXPENSES PROFESSIONAL FEES HIRE CHARGES PAYMENT TO AUDITORS ELECTRIC POWER, FUEL AND WATER OTHERS 56,384,211 3,515,643 5,524,445 12,222,525 10,782,490 27,764,595 9,226 633,232 31,761,824 TOTAL 1,46,598,192 FROM THE SUBMISSIONS MADE BY THE BEFORE THE AO AS W ELL AS LD. CIT(A), IT IS SEEN THAT THIS WAS THE SECOND YEAR OF THE OPE RATION OF THE COMPANY AND BUSINESS HAD ALREADY STARTED. THE OPERATIONS FR OM THE REVENUE HAD BEEN SHOWN AT RS.14,178 LAKHS. LOOKING TO THE NATUR E OF EXPENSES IT CAN BE VERY WELL HELD THAT THESE ARE ROUTINE EXPENSES I NCURRED DURING THE COURSE OF OPERATION OF THE BUSINESS. THE SIMILAR FA CTS WAS THERE IN THE ITA NO. 6342/MUM/2013 ASSESSMENT YEAR: 2009-10 4 A.Y. 2008-09 ALSO, WHEREIN THE TRIBUNAL HAS HELD TH AT THESE EXPENSES CANNOT BE HELD AS CAPITAL EXPENDITURE BUT ARE REVEN UE IN NATURE AND ACCORDINGLY, THE SAME WERE ALLOWED. EVEN THE LD. CI T(A) HAS FOLLOWED THE EARLIER ORDER OF THE LD. CIT(A). THUS, FOLLOWIN G THE EARLIER YEARS PRECEDENCE WHICH ARE BASED ON SIMILAR SET OF FACTS, WE HOLD THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE ARE REVENUE IN NATURE AND ACCORDINGLY, GROUND RAISED BY THE REVENUE STANDS DI SMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH, 2015. SD/- SD/- (B.R. BASKARAN) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 25.03.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.