Navdurga Specific Family Trust, Ahmedabad V. The ACIT, Circle-6, Ahmedabad

ITA 725/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2915 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: HIMNSHU SHAH
• Keywords: Capital asset; Capital expenditure
• Section: 143(3)

Judgement Text

ITA NO.: 725/AHD/15 ASSESSMENT YEAR: 2006-07 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT AND PRAMOD KUM AR VICE PRESIDENT] ITA NO.: 725/AHD/15 ASSESSMENT YEAR: 2006-07 NAVDURGA SPECIFIC FAMILY TRUST .....APPE LLANT NATRAJ INDUSTRIAL ESTATE, SANAND AHMEDABAD 382 110 [PAN: AAATN0704A] VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 6, AHMEDABAD ..........RESPONDE NT APPEARANCES BY HIMNSHU SHAH, FOR THE APPELLANT LALIT P JAIN FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 5, 2018 DATE OF PRONOUNCEMENT : MARCH 4, 2019 O R D E R PER PRAMOD KUMAR, VP: 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST THE ORDER DATED 25 TH FEBRUARY 2016 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSME NT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2006-07. 2. GROUND NO. 1 IS GENERAL IN NATURE AND DOE S NOT CALL FOR ANY SPECIFIC ADJUDICATION AS SUCH. 3. IN GROUND NO. 1, THE ASSESSEE HAS RAISED G RIEVANCE AGAINST LEARNED CIT(A)S UPHOLDING THE DISALLOWANCE OF RS 1,16,048 ON ACCOUNT OF KASAR EXPENSES. 4. THIS EXPENSE OF RS 1,16,048 WAS DECLINED AS THE COMPLETE DETAILS OF THE EXPENSES WERE NOT AVAILABLE. ALL THAT THE DETAILS SAID WAS DEBIT BALANCE WRITTEN OFF DUE TO TUBE WELL FAILED DURING THE YEAR. THE POSITION IS THE SAME E VEN BEFORE US. BARRING FOR A BLAND STATEMENT THAT THESE EXPENSES PERTAINED TO REPAIRS OF TUBE WE LL, NO SPECIFIC DETAILS ARE PLACED ON RECORD. THERE IS THUS NO OCCASION TO REVISIT THE CONCLUSION S ARRIVED AT BY THE AUTHORITIES BELOW. WE CONFIRM THEIR ACTION AND DECLINE TO INTERFERE IN TH E MATTER. 5. GROUND NO. 1 IS THUS DISMISSED. 6. IN GROUND NO. 2, THE ASSESSEE IS AGGRIEV ED THAT THE CIT(A) ERRED IN CONFIRMING ADDITION MADE FOR REPAIRING EXPENSES OF RS 91,800 TREATING A S CAPITAL EXPENSES. ITA NO.: 725/AHD/15 ASSESSMENT YEAR: 2006-07 PAGE 2 OF 2 7. THIS DISALLOWANCE WAS MADE BY THE ASSESSI NG OFFICER ON THE GROUND THAT THE EXPENSE WAS CAPITAL IN NATURE AS IT WAS FOR PURCHASE OF A P ART OF THE MACHINERY. IN APPEAL, CIT(A) CONFIRMED THE DISALLOWANCE BY OBSERVING THAT THE BI LL FOR PURCHASE JUST MENTIONS ABOUT CORRUGATED FLAT ROLL, AND THAT DOES NOT ESTABLISH T HAT IT IS A REVENUE EXPENSE. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 8. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE ARE INCLINED TO UPHOLD THE PLEA OF THE ASSESSEE INASMUC H AS THE BILL DOES INDEED SHOW THAT IT IS FOR REPLACEMENT OF A PART WHICH IS THUS CLEARLY A REVEN UE EXPENSE. THE EXPENSE WAS NECESSARY TO KEEP THE MACHINERY IN A WORKING CONDITION. THE DISA LLOWANCE WAS THUS INDEED UNWARRANTED AND WE DELETE THE SAME. 9. GROUND NO. 2 IS THUS ALLOWED. 10. IN GROUND NO. 3, THE ASSESSEE IS AGGRIEV ED THAT THE EXPENSE OF R 16,350 FOR PURCHASE OF A MOBILE PHONE WAS TREATED AS CAPITAL EXPENDITUR E. 11. THE AUTHORITIES BELOW HAVE HELD THAT TH E EXPENSE ON PURCHASE OF A MOBILE PHONE CANNOT BUT BE A CAPITAL EXPENDITURE AS A MOBILE PHO NE, BY ANY STRETCH OF LOGIC, IS TO BE TREATED AS CAPITAL ASSET. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 12. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE ARE INCLINED TO UPHOLD THE PLEA OF THE ASSESSEE AS THE EXPENDITURE ON MOBILE PHONE IS A VERY MODEST AMOUNT WHICH CAN BUY A BASIC PHONE WITH VERY LIMITED USEFUL LIFE AND IS ESSENTIALLY SUBJECT TO VERY RAPID OBSOLESCENCE. THE DISALLOWANC E IS DELETED. 13. GROUND NO. 3 IS THUS ALLOWED. 14. NO OTHER GROUND WAS PRESSED BEFORE US. 15. IN THE RESULT, THE APPEAL IS PARTLY AL LOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 4 TH DAY OF MARCH, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KUMAR (PRESIDENT) (VI CE PRESIDENT) AHMEDABAD, DATED THE 4 TH DAY OF MARCH, 2019 + COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD