The ACIT, Cochin V. M/s.Joy Alukkas(India) P.Ltd, Cochin

ITA 92/COCH/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5511 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 23-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI P. K. BANSAL, VICE PRESIDENT AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO .92/COCH/2016 ASSESSMENT YEAR:2011- 12 M/S JOY ALUKHAS (INDIA) PVT. LTD., DOOR NO.40/2096, A&B PEEVES TRITON, MARINE DRIVE, SHANMUGHAM ROAD, ERNAKULAM. PAN:AABCJ 1087 G VS A.C.I.T., CORPORATE CIRCLE-1(2), KOCHI. (RESPONDENT) (APPELLANT) SHRI A. DHANARAJ, SR. D. R. APPELLANT BY NONE RESPONDENT BY 26/09/2017 DATE OF HEARING 26/09/2017 DATE OF PRONOUNCEMENT ORDER PER P. K. BANSAL, V.P. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 28/12/2015 BY TAKING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE HON'BLE DISPUTE RESOLUTION PAN EL, BANGALORE IN DRP NO: 330/DRP-2-BNG 2015-16 DATED 09/12/2015 IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, FACTS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LEARNED DISPUTE RESOLUTION PANEL, BANGALORE WAS RIG HT IN HOLDING THAT THE EXPENDITURE INCURRED BY THE ASS ESSEE FOR RENOVATION OF THE LEASE HOLD PREMISES FOR SETTI NG UP A NEW SHOW ROOM IS REVENUE EXPENDITURE WHICH IS 2 OTHERWISE A CAPITAL EXPENDITURE, BASED ON THE DECIS ION OF JURISDICTIONAL HIGH COURT IN ASSESSEE'S OWN CASE FOR THE ASST. YEAR 2007-08, AS THE DECISION OF JURISDIC TIONAL HIGH COURT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND THE REVENUE HAS FILED FURTHER APPEAL BEFORE THE HON'BLE SUPREME COURT OF INDIA AGAINST THE JUDGMENT OF HIGH COURT OF KERALA FOR THE ASST. YEAR 2007-08. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING, IT IS REQUESTED THAT THE O RDER OF THE LEARNED DISPUTE RESOLUTION PANEL, BANGALORE MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RES TORED. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE, EVEN TH OUGH THE NOTICE WAS DULY SENT THEREFORE, WE DECIDED TO DISPO SE OF THE APPEAL OF THE REVENUE AFTER HEARING LEARNED D. R. AND CONSIDE RING THE MATERIAL AVAILABLE ON RECORD. 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O THE TREATMENT OF EXPENDITURE RELATING TO IMPROVEMENT OF LEASE HOLD P REMISES AS TO WHETHER THESE EXPENSES HAVE TO BE TREATED AS REVENU E EXPENDITURE OR CAPITAL EXPENDITURE. 4. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSING OFFICER NOTED THAT THE ASSESSEE IN COMPUTATION OF HIS INCOM E FOR THE IMPUGNED ASSESSMENT YEAR HAS REDUCED A SUM OF RS.13,47,75,16 4/- TOWARDS THE LEASE HOLD IMPROVEMENT FROM THIS TOTAL INCOME. IT WAS NOTED THAT THE ASSESSEE HAS CAPITALIZED THE SAID EXPENDITURE IN HI S BOOKS OF ACCOUNT AND CLAIMED THE DEPRECIATION AS PER THE COMPANIES A CT. WHEN INQUIRED OF, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OP ENED VARIOUS SHOW ROOMS TO SELL JEWELLERY DURING THE YEAR IN LEASEHOL D PREMISES AND IN THIS REGARD EXPENDITURE HAS BEEN INCURRED FOR PROVIDING FALSE CEILING, PARTITION WORK, PUTTING UP SALES COUNTER, SHOW WALK FOR JEWELLERY DISPLAY, ELECTRICAL WORK ETC. AND THE EXPENDITURE D OES NOT INCLUDE ANY 3 EXPENDITURE UNDERTAKEN FOR CIVIL CONSTRUCTION. SIN CE THE EXPENDITURE WERE THE REVENUE EXPENDITURE THEREFORE, HE CLAIMED IT WHILE COMPUTING THE INCOME AS REVENUE EXPENDITURE. THE ASSESSEE HA S PLACED RELIANCE ON THE DECISION OF HON'BLE KERALA HIGH COURT IN HIS OWN CASE FOR ASSESSMENT YEAR 2007-08 AS REPORTED IN 49 TAXMAN.CO M 437 WHEREIN IT WAS HELD THAT THE SAID EXPENDITURE SHOULD BE ALLOWE D AS REVENUE EXPENDITURE. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AS THE REVENUE HAS PREFERRED SLP AGAINST T HE DECISION OF HON'BLE HIGH COURT IN THE EARLIER YEAR BUT ALLOWED THE DEPRECIATION TO THE ASSESSEE @10% ON THE SAID AMOUNT. THE ASSESSEE CONTESTED THE AFORESAID FINDING OF THE ASSESSING OFFICER BEFORE T HE DRP. THE DRP DECIDED THE SAID ISSUE FOLLOWING THE DECISION OF HO N'BLE KERALA HIGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 07-08 IN ASSESSEES FAVOUR. THE ASSESSEE WENT IN APPEAL BEF ORE THE CIT(A) AGAINST THE ORDER OF THE ASSESSING OFFICER WHO ALLO WED THE GROUND TAKEN BY THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS OF LEARNED D.R., C AREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TA X AUTHORITIES BELOW. WE NOTED THAT THE SAID ISSUE IS DULY COVERED IN FAV OUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 -08 BY THE ORDER OF HON'BLE KERALA HIGH COURT AS REPORTED IN 49 TAXMAN .COM 437. LEARNED D. R. EVEN THOUGH RELIED ON THE ORDER OF TH E ASSESSING OFFICER BUT DID NOT DISAGREE THAT THE ISSUE IS NOT COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. THE ONLY SUBMISSION OF LEARNED D. R. WAS THAT THE APPEAL HAS BEEN FILED AS THE REVENUE HAS GONE IN APPEAL BY WAY OF SLP BEFORE HON 'BLE SUPREME COURT AGAINST THE DECISION OF HON'BLE HIGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08. IN OUR VIEW, MERELY B ECAUSE THE 4 REVENUE HAS GONE IN APPEAL AGAINST THE DECISION OF HON'BLE HIGH COURT IN ASSESSEES OWN CASE BY WHICH THE ISSUE IS DULY C OVERED IN THE EARLIER YEAR, WE CANNOT TAKE THE VIEW THAT THE ISSUE IS NOT COVERED BY THE DECISION OF HON'BLE HIGH COURT. AS ON DATE THE DEC ISION OF HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2007-08 IS CLEARLY APPLICABLE. THIS FACT HAS NOT B EEN DISPUTED THAT THE DECISION OF HON'BLE HIGH COURT HAS NOT BEEN REVERSE D BY HON'BLE SUPREME COURT. MERELY SLP IS PENDING BEFORE THE HO N'BLE SUPREME COURT DOES NOT MEAN THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE. THE DECISION OF HON'BLE HIGH COURT IN TH E ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 IS IN OPERATION. WE, THEREFORE, DISMISS THE GROUND TAKEN BY THE REVENUE. CONSEQUEN TLY, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. 6. IN THE RESULT, THE APPEALS OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/09/2017) SD/. SD/. (GEORGE GEORGE K.) (P. K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT DATED:26/09/2017 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5. D.R., I.T.A.T., COCHIN ASS TT. REGISTRAR