The Nakodar Co-Op.Sugar Mills Ltd, Nakodar V. Joint Commissioner of Income tax, Phagwara

ITA 75/ASR/2013

• Counselvise Citation: 7520914 RSA 2013
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y K SUD
• Keywords: Condonation of delay; Capital expenditure
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NOS. 75 (ASR)/2013 ASSESSMENT YEAR: 2009-10 PAN: AAATT2855J THE NAKODAR CO-OP. SUGAR VS. JCIT, PHAGWARA, MILLS LTD., MEHATPUR, NAKODAR CIRCLE, PHAGWARA (APPELLANT) (RESPONDENT) APPELLANT BY: SH. Y.K. SUD, CA RESPONDENT BY: SH. TARSEM LAL, DR DATE OF HEARING: 10.10.2013 DATE OF PRONOUNCEMENT: 28.10.2013 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINS T THE IMPUGNED ORDER DATED 25.10.2012 PASSED BY LEARNED CIT(A), JA LANDHAR, FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS: I. THAT THE CIT(A), HAS WRONGLY SUSTAINED THE DISALLOW ANCE OF RS. 279238/- MADE BY THE A.O. INCURRED ON INAUGURATION OF CO- GENERATION PLANT AND CLAIMED AS INAUGURAL EXPENSES. II. THAT BOTH THE A.O. AND CIT(A) FAILED TO APPRECIATE THAT THESE EXPENSES WERE GENUINE FULLY VOUCHED AND INCURRED FO R THE BUSINESS OF THE ASSESSEE. 2 I.T.A. NOS. 75 (ASR)/2013 ASSESSMENT YEAR: 2009-10 III. THAT THE ORDER OF THE A.O. AND CIT(A) IS AGAINST TH E LAW AND FACTS OF THE CASE. 2. THIS APPEAL HAS BEEN FILED BEYOND THE PERIOD OF 21 DAYS. THE ASSESSEE HAS FILED THE APPLICATION FOR CONDONATION OF DELAY STATING THEREIN THAT THE ASSESSEE IS A CO-OP. SOCIETY, RUNS BY THE GOVERNMENT OF PUNJAB, CARRYING OUT THE BUSINESS OF MANUFACTURE OF SUGAR A T MEHATPUR NAKODAR AND IT WAS BUSY IN PURCHASING THE CANES, WHICH IS T HE RAW MATERIAL FOR SUGAR MILLS, FROM CANE GROWERS DURING THIS PEAK SEA SON. THE ENTIRE STAFF WAS BUSY IN THE PROCUREMENT OF THE CANE FROM THE FA RMERS AS PER THE INSTRUCTIONS OF GOVT. OF PUNJAB., THEREFORE, THE AS SESSEE COULD NOT FILE THE APPEAL BEFORE THE I.T.A.T. ON TIME. ASSESSEE FURTHE R STATED THAT THE DELAY OF 21 DAYS CAUSED IN FILING THE APPEAL IS UNINTENTI ONAL, THEREFORE, HE REQUESTED THAT THE DELAY IN FILLING THE APPEAL MAY BE CONDONED, WHICH THE LEARNED DR HAS NO OBJECTION. 3. KEEPING IN VIEW THE CONTENTION RAISED BY THE ASS ESSEE IN THE APPLICATION FOR CONDONATION OF DELAY, WE ARE OF THE VIEW THAT THE REASONS MENTIONED IN THE APPLICATION ARE SUFFICIENT TO COND ONE THE DELAY. ACCORDINGLY, THE DELAY OF 21 DAYS IN FILING THE APP EAL IS CONDONED. 4. THE ONLY DISPUTE IN THE PRESENT APPEAL IS REGARD ING THE DISALLOWANCE OF INAUGURATION EXPENSES OF CO-GENERAT ION PLANT AMOUNTING 3 I.T.A. NOS. 75 (ASR)/2013 ASSESSMENT YEAR: 2009-10 TO RS. 2,79,238/-. THE ASSESSING OFFICER MADE THE A DDITION OF THE SAID EXPENSES BY HOLDING THAT THE ASSESSEE HAS NOT DENIE D THAT IT HAS MADE THE PAYMENT OF INAUGURATION EXPENSES OF RS. 2,79,238/- ON BEHALF OF M/S A TO Z INFRASTRUCTURE PVT. LTD. INSPITE OF THE FACT T HAT THE SAID COMPANY HAS NOT YET STARTED ITS WORKING IN THE MILL. ACCORDINGL Y, THIS EXPENSE HAS NOT BEEN LAID OUT WHOLLY AND EXCLUSIVELY FOR ITS BUSINE SS AND ACCORDINGLY THIS IS NOT ADMISSIBLE UNDER SECTION 37 OF THE INCOME-TA X ACT, 1961 (IN SHORT THE ACT). CONSEQUENTLY, THE ASSESSING OFFICER VID E HIS ORDER DATED 10.12.2011, DISALLOWED THE EXPENSE OF RS. 2,79,238/ -. 5. AGGRIEVED BY THE ASSESSMENT ORDER DATED 10.12.20 11, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED FIRST A PPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 25.10.2012, UPHELD THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER BY HOLDING THAT IT IS IMMATER IAL WHETHER ALL THE BILLS AND VOUCHERS ARE AVAILABLE WHEN THESE EXPENSES ITSE LF ARE NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THE ASSESSE E HAS ALSO FAILED TO ESTABLISH THAT THESE EXPENSES WERE RELATED TO THE A SSESSEES BUSINESS. NOW, AGGRIEVED BY THE ORDER OF LEARNED FIRST APPELL ATE AUTHORITY, THE ASSESSEE FILED THE PRESENT APPEAL. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RELEVANT RECORDS AVAILABLE WITH US, WE ARE OF THE CONSIDERED VIEW TH AT IT IS AN ADMITTED FACT 4 I.T.A. NOS. 75 (ASR)/2013 ASSESSMENT YEAR: 2009-10 THAT THE ASSESSEE HAS CLAIMED THE EXPENSES OF RS. 2 ,79,238/- INCURRED FOR THE INAUGURATION OF CO-GENERATION PLANT OF M/S A TO Z INFRASTRUCTURE PVT. LTD.. IN VIEW OF SECTION 37(1) OF THE ACT, ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPEN SES OF THE ASSESSEE), LAID OUT OF EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTIN G THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION 7. IN THE PRESENT CASE, THE REVENUE AUTHORITIES HAVE F AILED TO APPRECIATE THE FACT THAT THE EXPENDITURE IN DISPUTE HAS BEEN INCURRED BY THE ASSESSEE ON BEHALF OF M/S A TO Z INFRASTRUCTURE PVT. LTD. FOR THE INAUGURATION OF CO-GENERATION PLANT, WHICH ARE TOTA LLY SUPPORTED BY BILLS & VOUCHERS. HENCE, THIS EXPENSE COULD NOT HAVE BEEN DISALLOWED BY THE REVENUE AUTHORITIES. IT IS PERTINENT TO MENTION HER E THAT BOTH THE AUTHORITIES BELOW HAVE NOT POINTED OUT ANY DEFICIEN CY IN THE EVIDENCE PRODUCED BY THE ASSESSEE AND THEY HAVE IGNORED THAT ALL THESE EXPENSES ARE INCURRED FOR BUSINESS PURPOSES I.E. FOR INAUGUR ATION OF CO-GENERATION PLANT MEANT FOR GENERATION OF POWER FROM THE BY-PRO DUCTS OF SUGAR MILL, WHICH ARE FULLY SUPPORTED BY THE BILLS AND VOUCHERS . 5 I.T.A. NOS. 75 (ASR)/2013 ASSESSMENT YEAR: 2009-10 8. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES EXPL AINED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE AUTH ORITY HAS WRONGLY MADE THE ADDITION OF RS. 2,79,238/- ON ACCOUNT OF E XPENSES INCURRED FOR INAUGURATION OF THE CO-GENERATION PLANT OF M/S A TO Z INFRASTRUCTURE PVT. LTD. ACCORDINGLY, WE ALLOW THE APPEAL FILED BY THE ASSESSEE AND DELETE THE ADDITION OF RS. 2,79,238/- BY CANCELLING THE IMPUGN ED ORDER DATED 25.10.2012 PASSED BY LEARNED CIT(A), JALANDHAR. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH OCTOBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: THE NAKODAR CO-OP. SUGAR MILLS LTD., MEHATPUR, NAKODAR 2. JCIT, PHAGWARA, CIRCLE, PHAGWARA 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR 5. THE SR DR, I.T.A.T., ASR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.