THE ACIT, Eluru V. M/s Andhra Sugars Ltd., Tanuku

ITA 91/VIZ/2015

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9768 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Assessee Lawyers: C V K PRASAD
• Keywords: Revenue expenditure; Capital expenditure
• Section: 154

Judgement Text

ITA NO.91/VIZAG/2015 M/S. THE ANDHRA SUGARS LTD., TANUKU 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.91/VIZAG/2015 ( / ASSESSMENT YEAR: 2010-11) THE ACIT, CIRCLE - 1, ELURU VS. M/S. THE ANDHRA SUGARS LTD., TANUKU [PAN: AAAC T6357Q ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI R. GOVINDARAJAN, DR / RESPONDENT BY : SHRI C.V.K. PRASAD, AR / DATE OF HEARING : 18.10.2016 / DATE OF PRONOUNCEMENT : 21.10.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY REVENUE IS DIRECTED AGAINST T HE ORDER OF CIT(A), RAJAHMUNDRY DATED 18.12.2014 FOR THE ASSESS MENT YEAR 2010-11. ITA NO.91/VIZAG/2015 M/S. THE ANDHRA SUGARS LTD., TANUKU 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A SUGAR FACTORY HAD FILED ITS RETURN OF INCOME WHEREIN IT HAS CLAIMED CERTAIN ITE MS I.E. MEMBRANE SHEET, MEMBRANE SHEET W BASE AND MEMBRANE WELDING SH EET AS REVENUE EXPENDITURE. HOWEVER, THE A.O. IS OF THE O PINION THAT IT IS A CAPITAL EXPENDITURE AND THE CLAIM OF THE ASSESSEE W AS REJECTED. ON APPEAL BEFORE THE CIT(A), INITIALLY CIT(A) CONFIRME D THE ORDER OF THE A.O. SUBSEQUENTLY, ASSESSEE FILED A RECTIFICATION PETITI ON U/S 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T'). THE CIT(A) BY CONSIDERING THE ASSESSEES OWN CASE FOR EARLIER ASS ESSMENT YEARS, HE HAS HELD THAT THERE IS A MISTAKE APPARENT ON THE RE CORD AND THE EXPENDITURE CLAIMED BY THE ASSESSEE IS A REVENUE NA TURE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: DURING THE COURSE OF RECTIFICATION PROCEEDINGS, THE AR SUBMITTED THAT AT PAGE 11 OF THE APPELLATE ORDER, ITEM NO.20 TO THE TABLE, THE ITEM NEFION MEMBRANE SHEET WAS HELD TO BE A CAPITAL ASSE T. THE AR SUBMITTED THAT THE SAID EXPENDITURE IS IN THE NATURE OF REVEN UE EXPENDITURE AND ALSO SUBMITTED THAT SIMILAR ITEMS VIZ., MEMBRANE SHEET, MEMBRANE SHEET W BASE AND MEMBRANE WELDING SHEET (SL.NOS.57, 58, 59, 60 OF TABLE AT PAGE 35 O ASSESSMENT ORDER) WERE HELD AS REVENUE EXPENDI TURE IN THE SAME APPELLATE ORDER. THEREFORE, IT WAS CONTENDED THAT T HIS IS A MISTAKE APPARENT FROM RECORD. BESIDES IT WAS ALSO POINTED T HAT FOR THE ASST. YR. 2006-07, THE CIT(APPEALS) VIDE HIS ORDER IN ITA NO. 189/ADDL.CIT.RJY/ CIT(A).RJY/08-09, DT. 31.3.2009 AT PAGE 20 OF THE O RDER HAS HELD REPLACEMENT OF NEFION MEMBRANES AS A REVENUE EXPEND ITURE. SIMILARLY FOR THE ASST. YR. 2007-08 IN THE ASSESSEE'S APPEAL, THE CIT(A) VIDE ORDER IN ITA NO.313/ADDL.CIT, RJY RANGE/RJY/09-10/11-12, DAT ED 28.3.2012 HAS HELD THAT REPLACEMENT OF NEFION MEMBRANE IS IN THE NATURE OF CONSUMABLES AND HAS ALLOWED THE SAME AS REVENUE EXP ENDITURE. ITA NO.91/VIZAG/2015 M/S. THE ANDHRA SUGARS LTD., TANUKU 3 I HAVE CONSIDERED THE SUBMISSIONS MADE AND I FIND TH AT THERE IS MERIT IN THE ARS SUBMISSIONS. I FIND THAT THE PREDE CESSOR CSIT(A) IN THEIR ORDER IN ITA NO. 189/ADDL. CIT. RJY/CIT(A).RJY/08-0 9 FOR THE ASST. YR. 2006-07 AND IN ITA NO. 313/ADDL.CIT, RJY RANGE/R3Y/ 09-10/11-12 FOR THE ASST. YR. 2007-08 HAS HELD NEFION MEMBRANE SHEET TO BE CONSUMABLES AND ARE REVENUE EXPENDITURE. I AGREE WITH THE REASON ING GIVEN BY THE CIT(APPEALS) IN THESE ORDERS. THIS WAS ALSO DISCUSS ED AT PARA 5.3.5 OF THE APPELLATE ORDER DATED 12.9.2014. ACCORDINGLY, THE A O IS DIRECTED TO ALLOW THE NEFION MEMBRANE SHEET AMOUNTING TO RS.3,42,133/ - AS REVENUE EXPENDITURE. 3. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBU NAL. THE LD. D.R. HAS RELIED ON THE ORDER OF THE A.O. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT THE VERY SAME ISSUE HAS CAME UP BEFORE THE CIT (A) FOR THE ASSESSMENT YEAR 2007-08 AND IT IS HELD THAT ITEM NE FION MEMBRANE SHEET AS A REVENUE EXPENDITURE AND HE STRONGLY SUPP ORTED THE ORDER PASSED BY THE CIT(A). 5. WE FIND THAT THE VERY SIMILAR ISSUE HAS BEEN CONS IDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN EARLIER YEARS AND THE TRIBUNAL HAS CONSIDERED THE EXPENDITU RE INCURRED BY THE ASSESSEE IS A REVENUE EXPENDITURE AND PASSED A COMM ON ORDER FOR ASSESSMENT YEARS 2007-08, 2008-09 & 2010-11 VIDE IT A NOS.244&245/VIZAG/2012, 246 & 247/VIZAG/2012, 598/V IZAG/2014 & 619/VIZAG/2014 DATED 20.5.2016. ITA NO.91/VIZAG/2015 M/S. THE ANDHRA SUGARS LTD., TANUKU 4 6. IN VIEW OF THE ORDER OF COORDINATE BENCH OF THE TRIBUNAL, THE LD. CIT(A) BY FOLLOWING THE EARLIER YEARS IN THE ASSESS EES OWN CASE, HE HAS HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS REVENUE IN NATURE. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21 ST OCT16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 21.10.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-1, ELURU 2. / THE RESPONDENT M/S. THE ANDHRA SUGARS LTD., VE NKATARAYAPURAM, TANUKU, WEST GODAVARI DIST. 3. ) / THE CIT, RAJAHMUNDRY 4. ) ( ) / THE CIT(A), RAJAHMUNDRY 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM