Washbarie Tea CO. (P) Ltd., , Kolkata V. ACIT, Circle - 4, Kolkata , Kolkata

ITA 795/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2454 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 24-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P MAJUMDER CITSRDR
• Assessee Lawyers: I BAN ERJEE
• Keywords: Capital expenditure
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.795/KOL/2018 ASSESSMENT YEAR: 2006-07 WASHABARIE TEA CO. (P) LTD., FARADAY HOUSE, P-17, G.C. AVENUE, KOLKATA-13 [ PAN NO.AAACW 3071A ] / V/S . ACIT, CIRCLE-4 P-7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI I BANERJEE, FCA /BY RESPONDENT SHRI P. MAJUMDER, ADDL. CIT-SR-DR /DATE OF HEARING 25-10-2018 /DATE OF PRONOUNCEMENT 14-11-2018 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006-07 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, KOLKATAS O RDER DATED 01.02.2018 PASSED IN CASE NO.02/CIT(A)-2/14-15 INVOLVING PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE ASSESSEES FORMER TWO IDENTICAL SUBSTANTIVE GROUNDS CHALLENGE CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWING I TS CLAIMS OF REPAIRS TO PLANT AND MACHINERY AMOUNTING TO 41,33,389/- AND THAT REGARDING ITS BUILDING OF 16,89,068/-; RESPECTIVELY FURTHERANCE THAT THE SAME IS IN THE NA TURE OF CAPITAL EXPENDITURE. LEARNED REPRESENTATIVES STRONGLY REITERATE THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF THEIR RESPECTIVE STANDS. I FIND THAT MAIN REASON AD OPTED BY THE ASSESSING OFFICER AS WELL AS CIT(A) FOR REJECTING ASSESSEES REVENUE EXP ENDITURE CLAIM UNDER THE TWO HEAD(S) IS THAT THE SAME EXCEED THE CORRESPONDING W RITTEN DOWN VALUE OF THE ASSETS IN ITA NO.795/KOL/2018 A.Y. 2006- 07 WASHABARIE TEA CO. (P) LTD. VS. ACIT CIR-4, KOL. PAGE 2 ISSUE. I FIND NO REASON TO CONCUR WITH THE SAME SIN CE THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE FAILED TO PIN-POINT AS TO HOW THE A SSESSEES IMPUGNED REPAIRS ARE IN ANY WAY HIT U/S. 31 EXPLANATION OF THE ACT. IT IS N OTICED THAT THE ASSESSEE HAS PLACED ON RECORD ALL THE RELEVANT DETAILS OF ITS REPAIR WORK ON PLANT, MACHINERY AND BUILDING WHICH HAS GONE UNREBUTTED RIGHT FORM SCRUTINY TILL DATE SUFFICIENTLY INDICATING NO NEW ASSETS GIVING ENDURING ADVANTAGE OR EXPANSION IN CA PACITY HAVE BEEN NOTICED TILL DATE. I THEREFORE ACCEPT ASSESSEES FIRST TWO SUBSTANTIVE GROUNDS ON THIS COUNT ALONE SINCE THE LOWER AUTHORITIES HAVE GIVEN NO OTHER REASON EX CEPT GOING BY WRITTEN DOWN VALUE OF THE CORRESPONDING ASSETS. THE ASSESSEE SUCCEEDS IN ITS FORMER TWO SUBSTANTIVE GROUNDS ACCORINGLY. 3. THE ASSESSEES THIRD SUBSTANTIVE GROUND SEEKS TO DELETE EXCESSIVE BONUS DISALLOWANCE OF 1,23,198/- MADE BY BOTH THE LOWER AUTHORITIES FOR T HE REASON THAT IT IS IN EXCESS OF CORRESPONDING PROVISION MADE TO THE TU NE OF 17,93,614/- AS AGAINST ACTUAL PAYMENT OF 19,16,847/- PAID FROM 13.09 TO 21.09.2007. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THE CLINCHING FACT THAT PAYMENT OF BONUS IS ALLOWABLE U/S. 43B QUA THE AMOUNTS AS COVERED U/S 36(1)(II) O F THE ACT. THE HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN ASSOCIATED PIGMENTS LTD. VS. CIT 234 ITR 589 (CAL) HOLDS THAT ANY CLAIM OF EXPENDITURE U/S 43B O F THE ACT IS ALLOWABLE OF ACTUAL PAYMENT REGARDLESS OF THE RELEVANT ACCOUNTING SYSTE M FOLLOWED BY CONCERNED ASSESSEE. I MADE IT CLEAR THAT THERE IS NO DISPUTE BETWEEN TH E PARTIES ABOUT CORRECTNESS OF THE BONUS AMOUNT IN PRINCIPLE. I ACCORDINGLY DELETE THE IMPUGNED DISALLOWANCE OF 1,23,198/- BEING IN THE RELEVANT PREVIOUS YEAR OF T HE ACTUAL PAYMENT U/S 43B OF THE ACT. 4. THE ASSESSEES LAST SUBSTANTIVE GROUND PLEADS TH AT CIT(A) OUGHT TO HAVE APPRECIATED ITS PLEA SEEKING TO APPLY RULE 8 OF THE INCOME TAX RULES, 1962 APPLICABLE IN CASE OF A TEA COMPANY REQUIRING ALLOCATION ONLY OF 40% OF SUCH INCOME TO BE ASSESSABLE TO TAX. BOTH THE PARTIES ARE AD IDEM DURING THE COURSE OF HEARING THAT THE NEITHER OF THE LOWER AUTHORITIES HAS ADJUDICATED TH E INSTANT ISSUE ON MERITS. I THEREFORE RESTORE THIS LAST ISSUE BOTH TO THE ASSESSING OFFIC ER FOR COMPUTING ASSESSEES INCOME ITA NO.795/KOL/2018 A.Y. 2006- 07 WASHABARIE TEA CO. (P) LTD. VS. ACIT CIR-4, KOL. PAGE 3 AS PER RULE 8 OF INCOME TAX RULES AS PER LAW. THIS LAST SUBSTANTIVE GROUND IS ACCEPTED FOR STATISTICAL PURPOSE. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN OPEN COURT ON 14/11/2018 SD/- (S.S. GODARA) JUDICIAL MEMBE R KOLKATA, *DKP/SR.PS - 14/11/2018 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-WASHABARIE TEA CO.(P) LTD. FARADAY HOUSE , P-17, G.C. AVENUE, KOL KATA-13 2. /RESPONDENT-ACIT CIRCLE-4, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ',