M/S M.P. STATE TOURISM DEVELOPMENT CORPORATION, Bhopal V. THE ACIT-2(1), Bhopal

ITA 685/IND/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5786 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 23-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S.S. MANTRI
• Assessee Lawyers: M.P. STATE TOURISM DEV.CO
• Keywords: Depreciation; Opportunity of being heard; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .../ I.T.A. NO. 685/IND/2016 / ASSESSMENT YEAR: 2011-12 M.P. STATE TOURISM DEVELOPMENT COMPANY BHOPAL PAN AABCM 0086A :: / APPELLANT VS ASSISTANT COMMISSIONER OF INCOME TAX 1(1), BHOPAL :: / RESPONDENT ! ' # $ / ASSESSEE BY SHRI S.S. DESHPANDE %& ' # $ / REVENUE BY SHRI S.S. MANTRI CIT, SR. DR ' ( ' !) DATE OF HEARING 8.2.2017 *+,- ' !) DATE OF PRONOUNCEMENT 28 .2.2017 / O R D E R PER SHRI C.M. GARG, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 23.3.2 016 IN FIRST APPEAL NO. CIT(A)-1/BHOPAL/IT-68/14-15 FOR THE ASSE SSMENT YEAR 2011-12. M.P. STATE TOURISM DEV.CO. ITA NO. 685/IND/2016 2 2. THE SOLE EFFECTIVE GROUND RAISED BY THE ASSESSEE APPELLANT READS AS FOLLOWS :- COMMISSIONER OF INCOME TAX APPEAL ERRED IN DISALLOW ING RS. 1,50,00,000/- OUT OF REPAIRS AND MAINTENANCE EXPENSES OF BUILDING, GARDEN AND OTHERS IN SPITE OF FACT THAT DETAILS REGARDING ABOVE HAVE ALREADY BEEN FURN ISHED ATG THE TIME OF ASSESSMENT AND BEFORE COMMISSIONER APPEAL. ALL THE EXPENSES ARE OF REVENUE NATURE FULL Y VOUCHED AND VERIFIABLE BY AUDITORS APPOINTED BY LEA RNED CIT(A)&AG. INSTANCES AS POINTED OUT BY HON'BLE CIT (A)-I, BHOPAL ARE OF REVENUE NATURE AND NO DISCREPANCIES H AVE BEEN POINTED OUT BY AUDITORS. ON THE FACTS AND CIRCUMSTANCES OF THE CASE ADHOC DISALLOWANCE IS ILLEGAL, UNJUSTIFIED AND LIABLE TO BE DELETED. 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD OF T HE TRIBUNAL, INTER-ALIA, IMPUGNED ASSESSMENT ORDER, FIRST APPELL ATE ORDER AND THE ORDER OF THE ITAT, INDORE BENCH, DATED 8.9. 2016 PASSED IN THE ASSESSEES OWN APPEAL FOR THE ASSESSM ENT YEAR 2009-10 IN ITA NO. 265/IND/2013. 4. AT THE VERY OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE OF DISALLOWANCE OUT OF REP AIRS AND MAINTENANCE EXPENSES OF BUILDING, GARDEN AND OTHERS HAS BEEN DECIDED BY THE LEARNED CIT(A) AGAINST THE ASSE SSEE BY M.P. STATE TOURISM DEV.CO. ITA NO. 685/IND/2016 3 UPHOLDING THE ORDER OF THE ASSESSING OFFICER DESPIT E THE FACT THAT ALL THE RELEVANT DETAILS PERTAINING TO THE CLA IM OF THE ASSESSEE HAVE ALREADY BEEN FURNISHED DURING THE ASS ESSMENT PROCEEDINGS AND FIRST APPELLATE PROCEEDINGS. THE LE ARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ALL THE EXPENSE ARE REVENUE IN NATURE WHICH WERE FULLY VOUCHED AND ALSO VERIFIABLE FROM THE REPORT OF THE AUDITORS APPOINTE D BY THE COMPTROLLER & AUDITOR GENERAL OF INDIA. THE LEARNE D COUNSEL FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE IN STANCES POINTED OUT BY THE FIRST APPELLATE AUTHORITY FOR UP HOLDING THE DISALLOWANCE HAVE NO BASIS AS NO DISCREPANCY HAS BE EN POINTED OUT BY THE AUDITORS IN THE AUDIT REPORT. 5. AFTER STATING THE ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS ORDER OF THE IT AT, INDORE BENCH, DATED 8.9.2016 AND SUBMITTED THAT THE ISSUE OF EXPENDITURE ON BUILDING REPAIRS, OTHER REPAIRS AND GARDEN MAINTENANCE HAS BEEN RESTORED TO THE FILE OF THE AS SESSING OFFICER TO DECIDE THE SAME AFRESH AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. HE FAIRLY ACCEPTED THAT IN THIS ORDER THE TRIBUNAL HAS OBSERVED THAT THE LEARNED CI T(A) M.P. STATE TOURISM DEV.CO. ITA NO. 685/IND/2016 4 FOLLOWING HIS EARLIER ORDER FOR THE ASSESSMENT YEAR 2007-08 HAS UPHELD PART DISALLOWANCE OF 48.12% OF EXPENDITU RE TREATING THE SAME AS CAPITAL IN NATURE AND ADDED TH E SAME BACK TO THE TOTAL INCOME OF THE ASSESSEE AND ON THE DISALLOWED PART, DEPRECIATION HAS BEEN ALLOWED TO THE ASSESSEE . 6. REPLYING TO THE ABOVE, THE LEARNED CIT DR STRONG LY SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHICH WAS CONFIRMED BY THE LEARNED CIT(A) BY PASSING THE IMPU GNED ORDER. HOWEVER, HE COULD NOT CONTROVERT THIS FACT UAL SITUATION THAT BY THE ORDER DATED 8.9.2016 OF ITAT, INDORE BE NCH, FOR THE ASSESSMENT YEAR 2009-10, THE ISSUE HAS BEEN RESTORE D TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DI RECTIONS :- 14. THE FIRST GROUND TAKEN BY THE ASSESSEE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER THAT THE SUM OF RS.1,31,81,008/- OUT OF TOTAL EXPENDITURE OF RS.2,36,51,306/- CLAIMED ON ACCOUNT OF BUILDING REPAIRS, OTHER REPAIRS & GARDEN MAINTENANCE ARE OF CAPITAL NATURE AND DISALLOWABLE. 15. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAD CLAIMED EXPENSES ON BUILDINGS REPAIR AND MAINTENANCE AMOUNTING TO RS.1,67,33,389/-.THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD INCLUDED EXPENSES OF CAPITAL NATUR E IN THE REPAIRS AND MAINTENANCE EXPENSES. THESE EXPENSES. HOWEVER, THE ASSESSING OFFICER MADE THE M.P. STATE TOURISM DEV.CO. ITA NO. 685/IND/2016 5 ADDITION. ON APPEAL, THE LEARNED CIT(A) FOLLOWING T HE DECISION OF THE CIT(A) FOR THE ASSESSMENT YEAR 2007 - 08 THE ASSESSING OFFICER DISALLOWED 48.12% OF THE EXPENDITURE TREATING THE SAME AS CAPITAL IN NATURE AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LEARNED CIT(A) CONSIDERING THE FACT THAT THE CIT(A) AND THE TRIBUNAL HAD CONFIRMED SIMILAR DISALLOWANCE IN THE EARLIER YEARS , CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS BEFORE US. 16. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THE TRIBUNAL HAS CONFIRMED THE SIMILAR DISALLOWANCE IN THE EARLIER YEARS IN THE CASE OF THE ASSESSEE ITSEL F. WE, THEREFORE, FIND NO FLAW IN THE ORDER OF THE LEA RNED CIT(A) AND CONFIRM THE SAME. THIS GROUND IS, THEREFORE, REJECTED. 17. THE NEXT GROUND RELATES TO CONFIRMATION OF DEPRECIATION BY THE LEARNED CIT(A) ON RS.1,13,81,008/- IN CASE THE SAID AMOUNT IS TREATED AS AN EXPENDITURE 18. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT WHEN THE LEARNED CIT(A) IS JUSTIFIED IN TREATING TH E EXPENDITURE OF RS.2,36,51,306/- AS BUILDING REPAIRS , OTHER REPAIRS AND GARDEN MAINTENANCE AS CAPITAL IN NATURE, THEREFORE, THE ASSESSEE IS ENTITLED TO DEPRECIATION AS PER LAW. WE, THEREFORE, SET ASIDE T HE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS IS SUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AS PER LAW AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 7. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT TH AT LEARNED CIT DR COULD NOT CONTROVERT THE FACTUAL SITUATION T HAT THE IMPUGNED DISALLOWANCE OF BUILDING REPAIRS, GARDEN A ND OTHERS HAS BEEN RESTRICTED TO 48.12% OF THE TOTAL EXPENDIT URE FOR THE M.P. STATE TOURISM DEV.CO. ITA NO. 685/IND/2016 6 ASSESSMENT YEAR 2007-08, 2009-10 AND 2010-11 AND FO R THE ASSESSMENT YEAR 2009-10 THE CROSS OBJECTION OF THE ASSESSEE CHALLENGING THE PART DISALLOWANCE OF 48.12% HAS BEE N REJECTED BY THE TRIBUNAL AND THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE, BY O BSERVING THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON THE AMO UNT OF PART DISALLOWANCE AS PER THE PROVISIONS OF THE ACT AND T HUS THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE ASSESSIN G OFFICER TO DECIDE THE SAME AFRESH AFTER AFFORDING DUE OPPORTUN ITY OF HEARING TO THE ASSESSEE. RESPECTFULLY FOLLOWING TH E ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL DATED 8.9.2016 (SU PRA) IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 , THE ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFI CER FOR THE LIMITED PURPOSE WITH THE DIRECTION THAT THE ASSESSE E IS ENTITLED TO DEPRECIATION AS PER LAW ON THE AMOUNT OF DISALLO WANCE AND THE ASSESSING OFFICER IS DIRECTED TO CALCULATE AND ALLOW THE SAME AS PER THE FACTS, CIRCUMSTANCES AND PROVISIONS OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY DISALLOWED BY UPHOLDING THE DISALLOWANCE OF 48.12% OF TOTAL M.P. STATE TOURISM DEV.CO. ITA NO. 685/IND/2016 7 IMPUGNED EXPENDITURE AND PARTLY ALLOWED FOR STATIST ICAL PURPOSES ON THE ISSUE OF ALLOWABILITY OF DEPRECIATI ON ON THE AMOUNT OF DISALLOWANCE. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 28 TH FEBRUARY, 2017. SD/- SD/- $) & & (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER J UDICIAL MEMBER FEBRUARY 28 TH , 2017. DN/