Pranav Omprakash Khake Distilleries Private Limited, Aurangabad V. The Income Tax Officer, Ward-4(5), Pune

ITA 836/PUN/2023

AI Insights

The case involves Pranav Omprakash Khake Distilleries Pvt. Ltd., which appealed against the decision of the National Faceless Appeal Centre (NFAC), Delhi, concerning the disallowance of transportation charges amounting to Rs.64,45,828. These charges were incurred for transporting water to irrigate bamboo trees on 14 acres of land, which the assessee argued were necessary for maintaining the land from which they received lease rent for a liquor license. The Income Tax Officer (ITO) and the CIT(A) had both disallowed these expenses, leading to the appeal before the Tribunal. The Tribunal found no direct linkage between these expenses and the lease rental income, thus upholding the disallowance.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124092 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-10-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 18-07-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUMAR ARVIND BHARDWAJ

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपीऱ सं. /ITA No.836/PUN/2023 निर्धारण वषा / Assessment Year : 2020-21 Pranav Omprakash Khake Distilleries Private Limited, 1 st Floor, Agrawal Paza Road, Aurangabad 431 005 PAN : AAFCP2102A Vs. ITO, Ward-4(5), Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 01-03-2023 passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2020-21. 2. This appeal is time barred by 80 days. The assessee has filed an affidavit stating the reasons, which led to the late filing. I am satisfied with the reasons so stated. Therefore, the delay is condoned and the instant appeal is admitted for disposal on merits. Assessee by Shri M.K. Kulkarni Revenue by Shri Kumar Arvind Bhardwaj Date of hearing 05-10-2023 Date of pronouncement 06-10-2023 ITA No. 836/PUN/2023 Pranav Omprakash Khake Distilleries Pvt. Ltd. 2 3. The only issue raised in this appeal is against the confirmation of disallowance of Rs.64,45,828/- towards transportation charges of water to 14 acres of land consisting of 8 gardens of bomboo trees. 4. Briefly stated, the facts of the case are that the assessee filed the return declaring loss of Rs.34,50,836/-, which was determined after reducing transportation expenses amounting to Rs.64,45,828/- from lease rent of liquor license received from M/s. Deccan Sugar Pvt. Ltd. amounting to Rs.43,60,788/-. The AO did not allow deduction of Rs.64,45,828/- on the ground that there was no linkage between the incurring of such transportation cost with the assessee’s business of receipt of lease rent. The ld. CIT(A) affirmed it, against which the assessee has approached the Tribunal. 5. I have heard the rival submissions and gone through the relevant material on record. It is seen that the assessee showed only lease rental income of Rs.43,60,788/-, which was received from M/s. Deccan Sugar Pvt. Ltd. towards lease of its liquor license. The ld. AR has brought on record certain transportation bills to show that the ITA No. 836/PUN/2023 Pranav Omprakash Khake Distilleries Pvt. Ltd. 3 expenses of Rs.64,45,828/- were incurred for the transportation of water for growing bamboo trees. However, no linkage has been established between the incurring of such expenses and earning of income from leasing of liquor license. As such, the expenses cannot be allowed as deduction against the lease rental income. 6. This establishes that the growing of bamboo trees is not related with the leasing activity. If the assessee’s contention is correct that the transportation charges for water were incurred for growing bamboo trees, then it would be considered as a separate activity unrelated with the lease of liquor license. In case income from bamboo trees, when realized, gets charged to tax, the assessee will be entitled to get deduction of such expenses subject to the relevant provisions, which for the time being should be carried forward as such. In case the income from bamboo trees turns out to be exempt, then there can be no question of allowing any deduction towards such expenses against the income chargeable to tax. In either case, the assessee cannot get deduction of Rs.64.45 lakh during the year under consideration against the income from lease of liquor license. I, ITA No. 836/PUN/2023 Pranav Omprakash Khake Distilleries Pvt. Ltd. 4 therefore, uphold the impugned order to this extent subject to the observations made hereinabove. 7. In the result, the appeal is dismissed. Order pronounced in the Open Court on 06 th October, 2023. Sd/- (R.S.SYAL) VICE PRESIDENT प ु णे Pune; ददिधंक Dated : 06 th October, 2023 Satish आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: 1. अपीऱधर्थी / The Appellant; 2. प्रत्यर्थी / The Respondent; 3. The Pr.CIT concerned 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, SMC, Pune / DR, ITAT, Pune 5. गार्ड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune ITA No. 836/PUN/2023 Pranav Omprakash Khake Distilleries Pvt. Ltd. 5 Date 1. Draft dictated on 05-10-2023 Sr.PS 2. Draft placed before author 06-10-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *