ACIT, Chandigarh V. M/s Pb. Agro Foodgrain Corporation Ltd., Chandigarh

ITA 800/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63990 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-10-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 06-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: GURDEEP SINGH; KRISHAN
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.800 /CHD/2012 (ASSESSMENT YEAR: 2009-10) THE A.C.I.T., VS. PB. AGRO FOODGRAIN CORPORATION LTD. CIRCLE 4(1), PLOT NO.2A, SECTOR 28A, CHANDIGARH. CHANDIGARH. PAN: AZWPS3453N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : S/SHRI GURDEEP SINGH & KRISHAN DATE OF HEARING : 17.10.2012 DATE OF PRONOUNCEMENT : 30.10.2012 O R D E R PER SUSHMA CHOWLA, J.M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DA TED 18.05.2012 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORD ER PASSED U/S 143(3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS80,90,000/- BEING LAND DEVELOPMENT EXPENDITURE IN CURRED BY THE ASSESSEE AND TREATED AS REVENUE EXPENDITURE. THE AO HELD THE EXPENDITURE TO BE CAPITAL IN NATURE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET STATED THAT THE ISSUE IN THE PRESENT APPEAL IS IDENTICAL TO THE ISS UE RAISED BY THE ASSESSEE 2 IN ASSESSMENT YEAR 2005-06 IN ASSESSEES OWN APPEA L AND IN ASSESSMENT YEARS 2006-07 AND 2008-09 IN THE APPEAL FILED BY TH E REVENUE. 4. THE ONLY ISSUE ARISING IN THE PRESENT CASE IS IN RESPECT OF LAND DEVELOPMENT EXPENDITURE INCURRED. THE ASSESSEE DUR ING THE YEAR HAD INCURRED AN EXPENDITURE OF RS.89,11,198/- TOWARDS L ADOWAL FARM AGAINST GROSS RECEIPTS OF RS.14,01,586/-. THE ASSESSING OF FICER FOLLOWING THE ADDITION MADE IN THE EARLIER ASSESSMENT YEARS I.E. 2005-06 AND 2006-07, DISALLOWED RS. 81.90 LACS AS CAPITAL EXPENSES INCUR RED FOR THE PURPOSE OF DEVELOPING THE LAND, OUT OF TOTAL EXPENDITURE OF RS .89.11 LACS. SIMILAR ISSUE OF ALLOWABILITY OF EXPENDITURE, WHICH WAS PAR TLY HELD TO BE CAPITAL, AND PARTLY REVENUE, AROSE BEFORE THE TRIBUNAL IN IT A NO.614/CHANDI/2008 RELATING TO ASSESSMENT YEAR 2005 -06, WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 30.9.2008 HAD HELD AS UNDER:- 9. APPLYING THE ABOVE PRINCIPLES TO THE DETAILS OF THE EXPENDITURE INCURRED, WE FIND THAT, NONE OF THEM IN ANY MANNER CAN BE HELD TO BE CAPITAL EXPENDITURE. MERE FACT THAT, BENEFIT FROM INCURRING SUCH EXPENDITURE SHALL BE AVAILABLE TO THE APPELLANT IN SUCCEEDING ASSESSMEN T YEAR, CANNOT BE A GROUND TO HOLD THAT SUCH EXPENDIT URE IS CAPITAL EXPENDITURE. THE DETAILS OF THE EXPENDITUR E WOULD SHOW THAT THEY ARE TRACTOR HIRING CHARGES; JEEP VEH ICLE EXPENDITURE; STAFF WELFARE; HSD PREPARATION AND REN EWAL OF SEEDS; AND ELECTRICITY CHARGES. IN OUR CONSIDERE D OPINION, NONE OF THE EXPENDITURE IS OF A NATURE OR PROVIDING AN ADVANTAGE IN THE CAPITAL FIELD AND HEN CE, IT CANNOT BE HELD THAT THE ARE CAPITAL EXPENDITURE. 10. THE IMPUGNED EXPENDITURE HAS BEEN INCURRED TOWARDS FURTHERANCE OF BUSINESS OBJECTIVES. CLEARL Y, THE MONIES RECOVERED BY SELLING THE PRODUCE RAISED ON T HE LAND IN QUESTION HAS BEEN ACCOUNTED FOR BY THE APPE LLANT IN ITS REVENUE ACCOUNT. THE MERE FACT THAT IN THE INITIAL YEAR THE EXPENSES HAVE OUTWEIGHED THE RECEIPTS CANN OT BE THE DETERMINING FACTOR TO HOLD THAT A PERCENTAGE OF EXPENSES ARE OF CAPITAL NATURE. IN FACT, WE HAVE A LSO EXAMINED THE EXPENSES INCURRED BY THE ASSESSEE FOR THE NEXT ASSESSMENT YEAR I.E. 2006-07 (PERTAINING TO Y EAR 3 11. ENDING 31.3.2006) WHICH HAVE BEEN ENCLOSED AS AN ANNEXURE TO THE ASSESSMENT ORDER. HERE AGAIN, WE N OTICE THAT THE EXPENSES ARE, BY AND LARGE, OF SIMILAR NAT URE AS OF THOSE INCURRED DURING THE YEAR UNDER CONSIDERATI ON. OSTENSIBLY, THE INCOME BY WAY OF PRODUCE IN THE NEX T YEAR STANDS ON AS MUCH HIGHER FOOTING. IT IS QUITE UNDERSTANDABLE, FOR THE AGRICULTURE OPERATIONS INVO LVE A CERTAIN GESTATION PERIOD FOR INCOMES TO ACCRUE IN T HE HANDS OF AN ASSESSEE, BUT PRESENCE OF THE GESTATION PERIOD IS NO GROUND TO TREAT A PORTION OF THE EXPENSE AS C APITAL IN NATURE. FROM THE AFORESAID, IT IS EVIDENT THAT THE EXPENSES UNDERTAKEN BY THE ASSESSEE ARE EXPENSES FO R CARRYING OUT NORMAL FAMING ACTIVITIES AND NO ADHOC BASIS CAN BE ADOPTED TO SEGREGATE THE EXPENDITURE BETWEEN CAPITAL NATURE AND REVENUE. 5. THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2005-06 HAD ALLOWED EXPENDITURE OF RS.33.74 LACS OU T OF TOTAL EXPENDITURE OF RS.38.17 LACS. THE CIT (APPEALS) FO LLOWING THE ORDER OF THE TRIBUNAL IN ASSESSMENT YEAR 2005-06 HAD DIRECTE D THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE OF RS.45.76 LACS, WHICH WAS DISALLOWED OUT OF RS.54.76 LACS IN ASSESSMENT YEAR 2006-07 AND SIMILARLY IN SSESSMENT YEAR 2008-09 RS.52.50 LACS WAS DISALLOWED OUT OF RS.67.50 LACS. THE TRIBUNAL IN ITA NO.202/CHD/2010 RELATING TO ASSESSMENT YEAR 2006-07 IN THE APPEAL FILED BY THE REVENUE VIDE ORD ER DATED 9.7.2010 HAD ALLOWED THE CLAIM OF THE ASSESSEE IN ENTIRETY. SIMILARLY, IN ITA NO.754/CHD/2011 RELATING TO ASSESSMENT YEAR 2008-09 IN THE APPEAL FILED BY THE REVENUE, VIDE ORDER DATED 30.11.2011, THE TR IBUNAL HAD ALLOWED THE CLAIM OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENUE. THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL IN ASSESSMENT YEARS 2005-06, 2006-07 A ND 2008-09 AND FOLLOWING THE SAME, WE UPHOLD THE ORDER OF T HE CIT (APPEALS) AND 4 DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2012. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 30 TH OCTOBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH