ACIT Corporate Circle 2, Coimbatore V. Jahnvi Motors Pvt Ltd., Coimbatore

ITA 733/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9523 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N GOPI KRISHNA
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Revenue expenditure; Capital expenditure; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ I.T.A.NO.733/CHNY/2018 ( [ [ / ASSESSMENT YEAR: 2013-14) THE ACIT, CORPORATE CIRCLE 2, COIMBATORE. VS M/S. JAHNVI MOTORS PVT LTD., NO.5, AKS NAGAR, THADAGAM ROAD, COIMBATORE 641 001. PAN: AACCJ6624Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI N. GOPIKRISHNA, JCIT / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE /DATE OF HEARING : 26.06.2019 /DATE OF PRONOUNCEMENT : 27.06.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, COIMBATORE DATED 11.12.2017 AND PERTAINS TO THE ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE OF RS.79,03,960/- OUT OF RS.1,37,10,578/- SAID TO BE RECEIVED AS REIMBURSEMENT. 2 I.T.A. NO. 733/CHNY/2018 3. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT A SUM OF RS.1,37,10,578/- WAS AGREED TO BE REIMBURSED BY THEIR PRINCIPAL M/S. VOLKSWAGAN GROUP SALES INDIA (P) LTD. THE ASSESSEE APPEARS TO HAVE CREDITED THE RESPECTIVE AMOUNT IN THE INTERIOR DECORATIVE EXPENSES AND THE BALANCE EXPENSES WAS CLAIMED AS REVENUE EXPENDITURE U/S.37 OF THE ACT. THE ASSESSING OFFICER FOUND THAT OUT OF RS.1,37,10,578/-, A SUM OF RS.71,13,564/- WAS UTILIZED FOR PURCHASE OF FURNITURE. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT IT WAS REIMBURSEMENT BY THE PRINCIPAL, DISALLOWED A SUM OF RS.79,03,960/-, THE CONTENTION OF THE REVENUE BEFORE THIS TRIBUNAL IS THAT REIMBURSEMENT GIVEN BY THE PRINCIPAL IS DIFFERENT AND THE EXPENDITURE INCURRED BY THE ASSESSEE IS DIFFERENT. THEREFORE IT IS A CAPITAL EXPENDITURE WHICH GIVES ENDURING BENEFIT TO THE ASSESSEE. THE REVENUE HAS ALSO RAISED GROUNDS WITH REGARD TO THE NATURE OF EXPENDITURE LIKE COFFEE MAKING MACHINE, TELEVISION, MOBILE PHONE, ETC., WHICH ARE ALL CAPITAL ASSET IN THE NATURE OF ENDURING BENEFIT TO THE BUSINESS OF THE ASSESSEE. 4. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF BOTH THE AUTHORITIES BELOW. THE ASSESSING OFFICER FOUND THAT THE EXPENDITURE TO THE EXTENT OF RS.79,03,960/- WAS IN THE NATURE OF CAPITAL EXPENDITURE. MAJOR EXPENDITURE WAS INCURRED IN CIVIL WORK, PURCHASING NEW MACHINERY SUCH AS COFFEE MAKING MACHINE, FURNITURE, TELEVISION, MOBILE PHONE, ETC. 3 I.T.A. NO. 733/CHNY/2018 THEREFORE THERE IS NO CLARITY WITH REGARD TO THE NATURE OF EXPENDITURE SAID TO BE INCURRED BY THE ASSESSEE AND THE SO CALLED REIMBURSEMENT OF EXPENDITURE BY THE PRINCIPAL. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE RAISED BY THE REVENUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRESH AND FIND OUT WHAT IS THE EXPENDITURE ACTUALLY REIMBURSED BY THE PRINCIPAL AND WHAT ARE THE EXPENDITURES ACTUALLY INCURRED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 27 TH JUNE, 2019 AT CHENNAI. SD/- SD/- ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, /DATED, THE 27 TH JUNE, 2019. RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF