DCIT, Chandigarh V. M/s Punjab Agro Food Grains Corpn. Ltd., Chandigarh

ITA 811/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68543 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: GURDEEP SINGH
• Keywords: Revenue expenditure; Capital expenditure
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 811/CHD/2013 ASSESSMENT YEAR:2010-11 THE DY.COMMISSIONER OF INCOME TAX, VS PUNJAB A GRO FOODGRAINS CIRCLE 4(1), CORPORATION LTD., CHANDIGARH. PLOT NO. 2A, SECTOR 28A, CHANDIGARH. PAN NO.AADCP-1290P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI J.S.NAGAR RESPONDENT BY : S/SHRI GURDEEP SINGH & NEERAJ JAIN DATE OF HEARING : 26.09.2013 DATE OF PRONOUNCEMENT : 25.10.2013 O R D E R PER SUSHMA CHOWLA, J.M. THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(APPEALS), PATIALA DATED 05.05.2013 RELATING TO ASSESSMENT YEAR 2005-06 AGAINST THE ORDER PASSED UNDER SECTION 143( 3) OF THE INCOME- TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. 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 RS. 81,21,000/- BY TAKING THE EXPENDITURE AS OF 'REVENUE NATURE' WHICH WAS TREATED BY THE ASSESSING OFFICER AS THAT OF 'CAPITAL NATURE '. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND 2 THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. THE LD. AR FOR THE ASSESSEE AT THE OUTSET POINTE D OUT THAT THE ISSUES RAISED IN THE PRESENT APPEAL AROSE FOR THE F IRST TIME IN ASSESSMENT YEAR 2005-06 AND THEREAFTER, THE ASSESSI NG OFFICER HAS BEEN FOLLOWING HIS EARLIER ORDER IN MAKING THE AFOR ESAID ADDITION. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSES SEE THAT THE CHANDIGARH BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ASSESSMENT YEAR 2005-06 AND ALSO IN ASSESSMENT YEAR 2009-10 HAD DELETED THE SAID ADDITION. 4. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDERS OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELAT ION TO LAND DEVELOPMENT EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED EXP ENDITURE OF RS. 90,21,638/- ON FARMING ACTIVITIES AT THE FARMS SITU ATED AT LADHOWAL. THE SAID EXPENDITURE WAS HELD TO BE CAPITAL IN NATU RE. THE ASSESSING OFFICER, IN VIEW OF THE DISALLOWANCE MADE IN THE EA RLIER YEARS HELD THAT THE EXPENSES BEING DONE TO MAKE THE BARREN LAN D FERTILE AND SUCH EXPENSES WERE OF CAPITAL IN NATURE. ACCORDINGLY, F OLLOWING THE PAST HISTORY OF THE ISSUE, THE ASSESSING OFFICER, OUT OF THE TOTAL EXPENDITURE OF RS. 90.12 LACS DISALLOWED EXPENDITUR E OF RS. 81.21 LACS. 6. THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESS EE IN VIEW OF THE RATIO LAID DOWN BY THE TRIBUNAL IN THE EARLIER YEARS. 3 7. WE FIND THAT THE SIMILAR ISSUE OF ALLOWABILITY O F THE LAND DEVELOPMENT EXPENDITURE ON LADHOWAL FARM AROSE BEFO RE THE TRIBUNAL IN ITA NO. 614/CHD/2008 RELATING TO ASSESSMENT YEAR 2005-06, WHEREIN THE TRIBUNAL VIDE ORDER DATED 30.09.2008 HE LD 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 T HAT, BENEFIT FROM INCURRING SUCH EXPENDITURE SHALL BE AVAILABLE TO THE APPELLANT IN SUCCEEDING ASSESSMENT YEAR, CANNOT BE A GROUND TO HOLD THAT SUCH EXPENDITURE IS CAPITAL EXPENDITUR E. THE DETAILS OF THE EXPENDITURE WOULD SHOW THAT THEY ARE TRACTOR HIRING CHARGES; JEEP VEHICLE EXPENDITURE; STAFF WEL FARE; HSD PREPARATION AND RENEWAL OF SEEDS; AND ELECTRICITY C HARGES. IN OUR CONSIDERED OPINION, NONE OF THE EXPENDITURE IS OF A NATURE OR PROVIDING AN ADVANTAGE IN THE CAPITAL FIELD AND HENCE, 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 THE LAND IN QUESTION HAS BEEN ACCOUNTED FOR BY THE APPELLANT IN ITS REVE NUE ACCOUNT. THE MERE FACT THAT IN THE INITIAL YEAR THE EXPENSES HAVE OUTWEIGHED THE RECEIPTS CANNOT BE THE DETERMINING F ACTOR TO HOLD THAT A PERCENTAGE OF EXPENSES ARE OF CAPITAL N ATURE. IN FACT, WE HAVE ALSO EXAMINED THE EXPENSES INCURRED B Y THE ASSESSEE FOR THE NEXT ASSESSMENT YEAR I.E. 2006-07 (PERTAINING TO YEAR 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 NATURE A S OF THOSE INCURRED DURING THE YEAR UNDER CONSIDERATION. OSTEN SIBLY, THE INCOME BY WAY OF PRODUCE IN THE NEXT YEAR STANDS ON AS MUCH HIGHER FOOTING. IT IS QUITE UNDERSTANDABLE, FOR TH E AGRICULTURE OPERATIONS INVOLVE A CERTAIN GESTATION PERIOD FOR I NCOMES TO ACCRUE IN THE HANDS OF AN ASSESSEE, BUT PRESENCE OF THE GESTATION PERIOD IS NO GROUND TO TREAT A PORTION OF THE EXPENSE AS CAPITAL IN NATURE. FROM THE AFORESAID, IT IS EV IDENT 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. 11. IN LIGHT OF THE ABOVE REASONS STATED, IT IS HELD TH AT EXPENDITURE SO INCURRED IS REVENUE EXPENDITURE AND THEREFORE, DISALLOWANCE SO MADE IS DELETED. 8. FURTHER, THE TRIBUNAL IN ASSESSEE'S OWN CASE RE LATING TO ASSESSMENT YEAR 2009-10 IN ITA NO. 800/CHD/2012, AS SESSMENT YEAR 2009-10 VIDE ORDER DATED 30.10.2012 AFTER FOLLOWING THE RATIO LAID 4 DOWN BY THE TRIBUNAL (SUPRA) IN ASSESSMENT YEAR 200 5-06 VIDE PARA 5 OBSERVED AS UNDER : 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 DIRE CTED 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 ASSESSMENT YEAR 2008-09 RS.52.50 LACS WAS DISALLOWED OUT OF RS.67.50 LACS. THE TRIBUNAL IN ITA NO.202/C HD/2010 RELATING TO ASSESSMENT YEAR 2006-07 IN THE APPEAL FILED BY T HE REVENUE VIDE ORDER DATED 9.7.2010 HAD ALLOWED THE CLAIM OF THE A SSESSEE IN ENTIRETY. SIMILARLY, IN ITA NO.754/CHD/2011 RELATI NG TO ASSESSMENT YEAR 2008-09 IN THE APPEAL FILED BY THE REVENUE, VI DE ORDER DATED 30.11.2011, THE TRIBUNAL HAD ALLOWED THE CLAIM OF T HE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENUE. THE ISSUE RAI SED IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL IN ASSESSMENT YEARS 2005-06, 2006-07 AND 2008-09 AND F OLLOWING THE SAME, WE UPHOLD THE ORDER OF THE CIT (APPEAL S) AND DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 9. IN VIEW OF THE PAST HISTORY OF THE CASE WHEREIN IDENTICAL ISSUE HAS BEEN ALLOWED AS REVENUE EXPENDITURE IN THE HAND S OF THE ASSESSEE AND FOLLOWING THE SAME PARITY OF REASONING, WE UPHO LD THE ORDER OF CIT(APPEALS) IN ALLOWING THE CLAIM OF THE ASSESSEE AND DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF OCTOBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 25 TH OCTOBER,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH