M/s. Sabare International Ltd., Karur V. DCIT, Trichy

ITA 655/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64656 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA IRS
• Assessee Lawyers: T BANUSEKAR
• Keywords: Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NO.655(MDS)/2012 ASSESSMENT YEAR : 2007-08 M/S. SABARE INTERNATIONAL LTD., S F NO.6/1, NEDUNGUR, KARUDAIYAMPALAYAM (PO), K.PARAMATHI, KARUR-639111. PAN AAICS4261N. VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE I, TIRUCHIRAPALLI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.BANUSEKAR, FCA RESPONDENT BY : DR. S.MOHARANA, IRS, CIT DATE OF HEARING : 12 TH DECEMBER, 2012 DATE OF PRONOUNCEMENT : 12 TH DECEMBER, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2007-08. THE APPEAL IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) AT TIRUCHIRAPALLI, DATED 27-2-2012. THE APPEAL ARISES OUT OF THE - - ITA 655 OF 2012 2 ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE IN COME-TAX ACT, 1961. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT THE ASSESSEE SHOULD BE GRANTED DEDUCTION OF ` 1,43,04,932/-, BEING THE PROFIT DERIVED FROM THE WINDMILL, UNDER SECTION 80IA OF THE INCOME-TAX ACT, 1961. THIS ISSUE IS COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE HIGH COURT OF MADRAS RENDERED IN THE CASE OF VELAYUDHASWAMY SPINNING MIL LS (P) LTD. VS. ACIT, 340 ITR 477. THE HONBLE HIGH COURT HAS HELD THEREIN THAT THE WORDS INITIAL ASSESSMENT YEAR EMPLOYED I N SUB- SECTION(5) OF SECTION 80IA ARE DIFFERENT FROM THE W ORDS BEGINNING FROM THE YEAR REFERRED TO IN SUB-SECTION(2). IN V IEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO GRANT THE ASSESS EE THE BENEFIT OF DEDUCTION UNDER SECTION 80IA OF THE ACT TO THE E XTENT OF ` 1,43,04,932/-, AS CLAIMED BY THE ASSESSEE. THIS I SSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 3. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION OF ` 2,38,89,114/- AS REVENUE EXPENDITURE RELATING TO THE PREVIOUS YEAR R ELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. - - ITA 655 OF 2012 3 4. THE ASSESSEE HAS CLAIMED A SUM OF ` 2,38,89,114/- AS DEDUCTION BY WAY OF REVENUE EXPENDITURE INCURRED IN THE CONTEXT OF THE CAPACITY EXPANSION OF THE MANUFACTUR ING UNIT OF THE ASSESSEE. IN THE BOOKS OF ACCOUNT, THE ASSESSE E HAS CAPITALIZED THE EXPENDITURE. THE CLAIM WAS MADE ON LY IN THE COMPUTATION OF INCOME UNDER THE INCOME-TAX ACT. TH E ASSESSING OFFICER TREATED THE AMOUNT AS PRELIMINARY EXPENSES AND APPLIED SECTION 35D OF THE ACT. ACCORDINGLY, O NE-FIFTH OF THE EXPENSES HAS BEEN ALLOWED IN THE IMPUGNED ASSESSMEN T YEAR. THE CLAIM OF THE ASSESSEE IS THAT THE ENTIRE AMOUNT SHOULD BE TREATED AS REVENUE EXPENDITURE ENTITLED FOR DEDUCTI ON. 5. WE CONSIDERED THE MATTER. THE DETAILS OF THE CONCERNED EXPENSES ARE AVAILABLE AT PAGE 2 OF THE A SSESSMENT ORDER. ON A DETAILED CONSIDERATION, WE FIND THAT T HE FOLLOWING EXPENSES HAVE TO BE TREATED AS REVENUE EXPENDITURE INCURRED IN THE COURSE OF CARRYING ON OF THE BUSINESS OF THE AS SESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL:- (I) SALARY ` 18,10,590/- (II) PROVIDENT FUND ` 61,885/- (III) STAFF WELFARE EXPENSES ` 3,86,502/- (IV) ELECTRICITY CHARGES ` 15,94,306/- - - ITA 655 OF 2012 4 (V) TRAVELLING EXPENSES ` 5,75,519/- (VI) WATER CHARGES ` 5,94,535/- (VII) VEHICLE MAINTENANCE ` 6,04,836/- (VIII) OTHER MAINTENANCE ` 68,815/- ------------------- TOTAL ` 56,96,988/- ------------------ THE ABOVE EXPENSES, TOTALING TO ` 56,96,988/- SHALL BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE ASSESSE E. 6. THE FOLLOWING EXPENSES ARE CONFIRMED AS COMING UNDER SECTION 35D OF THE ACT:- (I) PROFESSIONAL AND CONSULTANCY CHARGES .. ` 83,44,186/- (II) FOREIGN TRAVEL .. ` 17,31,970/- (III) BUILDING PORTION OF STP .. ` 24,72,739/- (IV) LAB & QUALITY EXPENSES .. ` 12,62,700/- (V) LANDSCAPING .. ` 42,43,500/- (VI) OTHERS .. ` 1,37,031/- -------------------- TOTAL ` 1,81,92,126/- ---------------------- THE ABOVE EXPENSES TOTALING TO ` 1,81,92,126/- SHALL BE ADJUSTED BY THE ASSESSING OFFICER UNDER SECTION 35D OF THE A CT AFTER GIVING DEDUCTION OF ONE-FIFTH OF THE AMOUNT. - - ITA 655 OF 2012 5 7. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON WEDNESDAY, THE 12 TH OF DECEMBER, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 12 TH DECEMBER, 2012. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.