RELIANCE FOOTPRINT LTD, MUMBAI V. ASST CIT CIR 10(3), MUMBAI

ITA 6750/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4039 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 07-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-11-2013
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: REEMA ASHAR
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Revenue expenditure
• Section: 37(1)

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER I.T.A. NO. 6750/M/2013 (ASSESSMENT YEAR: 2009 - 2010 ) RELIANCE FOOTPRINT LTD, (NOW MERGED WITH RELIANCE RETAIL LTD), 3 RD FLOOR, COURT HOUSE, LOKMANYA TILAK MARG, DHOBI TALAO, MUMBAI 400 002. / VS. ACIT - CIRCLE 10(3), MUMBAI 400 020. ./ PAN : AAFCM0947E ( / APPELLANT) .. ( / RESPONDENT ) I.T.A. NO. 6751/M/2013 (ASSESSMENT YEAR: 2009 - 2010 ) RELIANCE HOME STORE LTD, 3 RD FLOOR, COURT HOUSE, LOKMANYA TILAK MARG, DHOBI TALAO, MUMBAI 400 002. / VS. ACIT - CIRCLE 10(3), MUMBAI 400 020. ./ PAN : AABCF 1502 G ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : MS. REEMA ASHAR / REVENUE BY : MS. KUSUM BANSAL, DR / DATE OF HEARING : 04 .04.2016 / DATE OF PRONOUNCEMENT : 20 .04.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH THESE APPEALS ARE FILED BY THE ASSESSEES FOR THE AY 2009 - 2010 AGAINST THE DIFFERENT ORDERS OF THE CIT (A) - 22, MUMBAI COMMONLY DATED 3.10.2013 . SINCE, THE ISSUES RAISED IN THESE APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. SINCE, THE GROUNDS RAISED IN BOTH THE APPEALS ARE IDENTICAL, THE ONLY DIFFERENCE IS IN FIGURES, THEREFORE, FOR THE SAKE OF REFERENCE AND ADJUDICATION PURPOSE, THE 2 GROUNDS RAIS ED BY THE ASSESSEE IN APPEAL ITA NO.6750/M/2013 FOR THE AY 2009 - 2010 ARE EXTRACTED AS UNDER: - 1. (I) THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF CLAIM FOR DEDUCTION U/S 37(1) IN RESPECT OF REVENUE EXPENDITURE INCURRED DURING THE YEAR AMOUNTING TO RS. 8,36,57,373/ - . (II) HE FURTHER ERRED IN OBSERVING THAT SINCE, THE APPELLANT ITSELF HAD CAPITALIZED THE AFORESAID EXPENDITURE IN ITS BOOKS OF ACCOUNTS AT A LATER DATE, THE SAME CANNOT BE ALLOWED AS REVENUE EXPENDITURE IN THE CURRENT YEAR. (III) HE F AILED TO APPRECIATE THAT ACCOUNTING ENTRIES IN THE BOOKS OF ACCOUNTS OF THE APPELLANT WERE NOT MATERIAL FOR DETERMINING THE DEDUCTIBILITY OF SUCH EXPENDITURE DURING THE YEAR. HE FURTHER ERRED IN OVERLOOKING THE APPELLANTS SUBMISSION THAT THOUGH THE AFORE SAID EXPENDITURE WAS CAPITALIZED IN THE BOOKS OF ACCOUNTS AT A LATER DATE, THE APPELLANT HAD NEVER CLAIMED DEPRECIATION ON SUCH CAPITALIZED AMOUNT. (IV) THE LD CIT (A) FAILED TO APPRECIATE THAT THE EXPENDITURE BEING INCURRED FOR CARRYING ON THE BUSINESS AN D BEING OF REVENUE NATURE IS ELIGIBLE FOR DEDUCTION U/S 37(1). (V) THE APPELLANT PRAYS THAT THE DEDUCTION OF RS. 8,28,53,227/ - (RS. 8,36,57,373/ - BEING REVENUE EXPENDITURE INCURRED RS. 8,04,146/ - BEING DISALLOWANCE U/S 40A(7) / 40A(9) / 43B) AS CLAIMED BY IT BE ALLOWED. 3. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE M ENTIONED THAT THE ISSUES RAISED IN THESE TWO APPEALS STAND COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE / SISTER CONCERN FOR THE AY 2009 - 2010. REGARDING THE ISSUE CORE ISSUE RAISED IN THESE APPEALS , LD COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THIS IS THE CASE, WHEREIN ASSESSEE CAPITALISED CERTAIN EXPENDITURE IE OVERHEADS, EMPLOYEES SALARIES ETC IN THE BOOKS OF ACCOUNT AND CLAIMED AN ALLOWABLE REVENUE EXPENDITURE IN THE COMPUTATION OF INCOME AND THUS MADE A CLAI M IN THE RETURN OF INCOME. AO DISALLOWED THE SAME IN THE SCRUTINY ASSESSMENT, WHICH IS CONFIRMED BY THE CIT (A) DURING THE FIRST APPELLATE PROCEEDINGS. BRINGING OUR ATTENTION TO PAGE 31 OF THE PAPER BOOK, LD COUNSEL FOR THE ASSESSEE NARRATED THE LIST OF A CCOUNTS CONSTITUTING THE DISALLOWABLE EXPENDITURE. HE COMPARED THE SAME WITH THE LIST OF ITEMS, WHICH IS THE SUBJECT MATTER OF APPEAL BEFORE US. THE DETAILS OF THE EXPENSES, WHICH ARE UNDER CONSIDERATION, ARE DISCUSSED IN THE ORDERS OF THE AO AND THE CIT (A). 4. BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE ISSUES MAY BE REMANDED TO THE FILE OF THE AO, THOUGH THE LD DR PREFERS TO THE FILE OF THE CIT (A), TO DECIDE THE ISSUE S AFRESH IN THE LIGHT OF THE SAID TRIBUNALS ORDER (SUPRA) DATED 23 .10.2013. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO 3 PAGE 36 OF THE PAPER BOOK, WHERE IN THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. RELIANCE FOOTPRINT LTD VIDE ITA NO. 5997/M/2011, DATED 23.10.2013 FOR THE AY 2008 - 2009 IS PLAC ED. HE FURTHER BROUGHT OUR ATTENTION TO THE PAGE 53 OF THE PAPER BOOK, WHEREIN ANOTHER ORDER OF THE TRIBUNAL IN THE CASE OF DCIT VS. M/S. RELIANCE SUPPLY CHAIN SOLUTIONS LTD, WHICH IS A SISTER CONCERN OF M/S. RELIANCE HOME STORES LTD, VIDE ITA NO.5759/M/2 012 (AY 2008 - 2009), DATED 27.11.2013 AND MENTIONED THAT THE SAID TWO ORDERS OF THE ITAT WERE NOT AVAILABLE AT THE RELEVANT POINT OF TIME. 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE / SISTE R CONCERN S CASE, WE FIND, THE SAID TRIBUNALS ORDERS (SUPRA) WERE NOT AVAILABLE TO THE AO / CIT (A) AT THE RELEVANT POINT OF TIME. HOWEVER, IN OUR OPINION, THE ISSUES RAISED IN ALL THESE APPEALS , DECIDED BY THE TRIBUNAL (SUPRA) AS WELL AS THE PRESENT ONE S , ARE MORE OR LESS ONE AND THE SAME AND THEREFORE, THE SAID ORDERS OF THE TRIBUNAL (SUPRA) WOULD HELP IN ADJUDICATING THE ISSUES INVOLVED IN THE PRESENT APPEALS IN THE RIGHT PERSPECTIVE IF A CHANCE IS GRANTED TO THE LOWER AUTHORITIES. WE ORDER ACCORDINGL Y. AO IS DIRECTED TO GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEES AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. THUS, ALL THE GROUNDS RAISED BY THE ASSESSEES IN BOTH OF THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, BOTH APPEALS OF THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONO UNCED IN THE OPEN COURT ON 2 0 T H APRIL, 2016. S D / - S D / - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 0 .4.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI