ITO, Kumbakonam V. A.Devidoss, Kumbakonam

ITA 720/CHNY/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90718 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Reasonable cause; Condonation of delay; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 720/MDS/2011 ( / ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER, WARD-I(1), KUMBAKONAM. VS MR. A.DEVIDOSS, 4, VIJENDRASWAMY MUTT STREET, KUMBAKONAM-612 001. PAN: AADPD7018E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A.V.SREEKANTH, JCIT /RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE /DATE OF HEARING : 4 TH JUNE, 2015 /DATE OF PRONOUNCEMENT : 29 TH JULY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS), TIRUCHIRAP ALLI DATED 10.01.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. THE APPEAL OF THE REVENUE IS BARRED BY FOUR DAY S. THE REVENUE FILED AN AFFIDAVIT EXPLAINING REASON THAT T HE ASSESSING OFFICER AND STAFF WERE ON ELECTION DUTY U PTO 14.04.2011 AND THUS THERE WAS A DELAY OF FOUR DAYS IN FILING OF APPEAL AND PRAYS FOR CONDONATION OF DELAY. WE H AVE 2 ITA NO.720 /MDS/2011 PERUSED THE REASONS AND ARE SATISFIED THAT THERE IS A REASONABLE CAUSE FOR THE DELAY IN FILING OF THE APP EAL. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY IN FILING OF THE APPEAL. THE PETITION FOR CONDONATION OF DELAY IS AL LOWED AND THE APPEAL IS ADMITTED. 3. IN THE GROUNDS OF APPEAL, REVENUE CONTENDS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING THE DISALLOWANCE OF ` 19,20,208/- HOLDING THAT IT IS A BUSINESS LOSS THAT CAN BE SET OFF AGAINST CURRENT YEAR BUSINESS I NCOME. IT IS ALSO CONTENDED BY THE REVENUE THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING FRESH EVIDEN CE WITHOUT FOLLOWING RULE 46A OF THE INCOME TAX RULES AND WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE FRESH EVIDENCE SUBMITTED BEFORE HIM WITH A PLEA THA T ` 19,20,208/- REPRESENTS REVENUE EXPENDITURE AS TAKEN UP BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE FIRST TIME. 4. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSM ENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 3 ITA NO.720 /MDS/2011 17.12.2008 DETERMINING THE INCOME OF THE ASSESSEE A T ` 17,60,150/- AS AGAINST LOSS OF ` 2,87,130/- DECLARED BY THE ASSESSEE. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT WHILE COMPLETING THE ASSESSMENT ASSESSING OFFICER DID NOT ALLOW SET OFF OF SHORT TERM CAPITAL LOSS OF ` 19,20,208/- TO BE CARRIED FORWARD AGAINST WHICH THE ASSESSEE FILED APPEAL BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS). DEPARTMENTAL REPRESENTATIVE SUBMITS THAT BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE CONTENDED THAT THE SA ID LOSS OF ` 19,20,208/- REPRESENTS EXPENDITURE INCURRED TOWARD S REVENUE EXPENDITURE BY WAY OF FALSE CEILING, INTERI OR DECORATION IN ITS SWEET SHOP DURING THE ASSESSMENT YEAR 2005-06 AND THIS IS A REVENUE EXPENDITURE OUT OF TO TAL EXPENSES OF ` 29.56 LAKHS. THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THAT ASSESSEE INCURRED CAPITAL EXPENDITURE OF ` 16.66 LAKHS AND ` 19.20 LAKHS TOWARDS REVENUE EXPENDITURE IN THE ASSESSMENT YEAR 2005-06 AND THE SAID REVENUE EXPENDITURE WAS SET OFF DURING THE ASSESSMENT YEAR 2006-07 AGAINST THE INCOME. DEPARTM ENTAL REPRESENTATIVE SUBMITS THAT IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ASSESSEE HIMSELF HAS QUANTI FIED 4 ITA NO.720 /MDS/2011 AND SHOWN THIS EXPENDITURE OF ` 19,20,208/- AS SHORT TERM LOSS AND SINCE THE ASSESSEE HIMSELF HAS SHOWN THIS AS SHORT TERM CAPITAL LOSS, THE QUESTION OF SETTING OFF THE SAME AGAINST CURRENT YEARS INCOME DOES NOT ARISE. DEPARTMENTAL REPRESENTATIVE THEREFORE SUBMITS THAT PLEA OF THE A SSESSEE THAT THE AMOUNT OF ` 19,20,208/- AS REVENUE EXPENDITURE WAS ENTERTAINED BY THE COMMISSIONER OF INCOME TAX (APPE ALS) FOR THE FIRST TIME WITH REFERENCE TO THE EVIDENCES FURN ISHED BEFORE HIM WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER. THEREFORE, HE SUBMITS THAT THERE IS VIOLATION UNDER RULE 46A . HE FURTHER SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO PASS A SPEAKING ORDER AND SIMPL Y RELIED ON SOME UNKNOWN DECISIONS WITHOUT MENTIONING NAME & CITATION OF THE DECISIONS HOLDING THAT THESE EXPENS ES ARE REVENUE EXPENSES AND THEREFORE CAN BE ALLOWED SET O FF DURING THIS ASSESSMENT YEAR AS BUSINESS LOSS. 5. COUNSEL FOR THE ASSESSEE STRONGLY RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 5 ITA NO.720 /MDS/2011 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT DENIED SET OFF OF CAPITAL LOSS OF ` 19,20,208/- AGAINST THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 -07 STATING THAT IN THE PROFIT AND LOSS ACCOUNT AS ON 3 1.03.2005 THE ASSESSEE HAS NOT CLAIMED THE COST OF THE FURNIT URE, COUNTERS, FANS ETC. AS REVENUE EXPENDITURE BUT LOSS ON SALE OF THALAVADAMS, FURNITURE AND SHOW CASE OF ` 19,20,208/- HAS BEEN DEBITED. ASSESSING OFFICER FURTHER OBSERVED TH AT ASSESSEE HIMSELF HAS QUANTIFIED ` 19,20,208/- AS SHORT TERM CAPITAL LOSS IN THE RETURN FILED FOR THE ASSESSMENT YEAR 2005- 06. THEREFORE, HE DID NOT ALLOW THE CLAIM OF THE AS SESSEE THAT IT IS A BUSINESS LOSS FOR THE ASSESSMENT YEAR 2005- 06 WHICH CAN BE SET OFF AGAINST INCOME OF THE ASSESSMENT YEA R 2006- 07. THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPT ING THE SUBMISSIONS OF THE ASSESSEE THAT IT IS BUSINESS LOSS FOR THE ASSESSMENT YEAR 2005-06 AND SUCH EXPENDITURE IS REVENUE EXPENDITURE ALLOWED SET OFF OF SUCH EXPEND ITURE AGAINST INCOME OF THE ASSESSMENT YEAR 2006-07 RESTR AINING THE ACTION OF THE ASSESSING OFFICER IN CARRYING FOR WARD THE SHORT TERM CAPITAL LOSS. ON GOING THROUGH THE SUBM ISSIONS OF 6 ITA NO.720 /MDS/2011 BOTH THE PARTIES AND CONTENTIONS BEFORE THE LOWER A UTHORITIES, WE FIND THAT THERE IS A CHANGE IN THE STAND OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), TA KING U- TURN FROM WHAT WAS DISCLOSED IN THE RETURN FOR THE ASSESSMENT YEAR 2005-06 AS CAPITAL LOSS AS REVENUE EXPENDITURE . IT WAS THE CONTENTION OF THE REVENUE THAT COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO PASS A SPEAKING ORDER AND R ELIED ON SOME DECISIONS IN CONCLUDING THAT EXPENDITURE WAS O NLY REVENUE EXPENDITURE WHICH WAS NEVER EXAMINED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCE EDINGS. THERE WAS NO SCRUTINY ASSESSMENT MADE FOR THE ASSES SMENT YEAR 2005-06. THEREFORE, TAKING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE INTO CONSIDERATION, WE AR E OF THE CONSIDERED VIEW THAT THIS ISSUE HAS TO BE EXAMINED AFRESH BY THE ASSESSING OFFICER WITH REFERENCE TO THE SUBMISS IONS MADE BY BOTH THE PARTIES AFTER AFFORDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. THUS, THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS) IS SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF ASSESSING OFFICER FOR DE NOVO CONSIDERATION. 7 ITA NO.720 /MDS/2011 7. THE APPEAL OF THE REVENUE IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 29 TH JULY, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .