The DCIT, -1(1), Ujjain V. M/s Hind Syntex Ltd., Dewas

ITA 95/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2988 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 12-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: S S DESH
• Keywords: Depreciation
• Section: 43B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS. 95 TO 98/IND/2013 A.YS. 2005-06 TO 2009-10 DCIT, 1 (1) UJJAIN : APPELLANT VS HIND SYNTEX LTD, 1A & 8A INDUSTRIAL AREA, A.B. RAOD, DEWAS : RESPONDENT PANAAACH-6203P APPELLANT BY SHRI K,K.SINGH, SR. DR RESPONDENT BY SHRI S. S . DESHPANDE DATE OF HEARING 2 8 .05.2013 DATE OF PRONOUNCEMENT .05.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THESE FOUR APPEALS ARE BY THE REVENUE FOR A.Y. 2006 -07 TO 2009-10 CHALLENGING THE IMPUGNED ORDER DATED 23.11. 2012 OF THE LD. CIT (A), UJJAIN ON THE FOLLOWING COMMON GROUND. 2 THE ISSUE OF DISALLOWANCE AGAINST THE BIGROD UNIT IS SUBJUDICE BEFORE THE HONBLE HIGH COURT IN THE CASE OF THE SA ME ASSESSEE FOR A.Y. 2004-05 AND A.Y. 2005-06. FURTHER, ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE, THE FURTHER APPEAL IS TO BE MADE, AS THE SUBJECT MATTER IS SAME. 2. DURING HEARING WE HAVE HEARD SHRI K.K. SINGH, LD CIT DR AND SHRI S.S. DESHPANDE LD. COUNSEL FOR THE ASSESSEE. T HE CRUX OF ARGUMENT ON BEHALF OF THE REVENUE IS THAT THE LD. C IT (A) WRONGLY DELETED THE ADDITION BY FOLLOWING THE DECISION OF T HE TRIBUNAL AND FURTHER THE DEPARTMENT IS IN APPEAL BEFORE THE HON BLE HIGH COURT AGAINST THE DECISION OF THE TRIBUNAL. ON THE OTHER HAND THE LD COUNSEL OF THE ASSESSEE SHRI S.S. DESHPANDE DEFENDE D THE IMPUGNED ORDER ON THE GROUND THAT THE ISSUE IS COVE RED BY THE DECISION OF TRIBUNAL IN THE CASE OF ASSESSEE ITSELF ( ITA NO. 328 & 329/IND/2010) ORDER DATED 18.08.2011 . NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY EITHER SIDE AND MORE SPECI FICALLY THE REVENUE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD BEFORE COMING TO ANY C ONCLUSION WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE ORDER OF THE CIT (A). 3 THROUGH THIS GROUND THE APPELLANT HAS CHALLENGED TH E ADDITION BY THE ASSESSING OFFICER AT RS. 95,72,523 BY DISALLOWING T HE TOTAL EXPENSES OF BIRGOC1 UNIT ON THE GROUND THAT THE BUSINESS IS NOT CARRIED OUT. THE A.A. HAS NOT ! ALLOWED THE EXPENSES AS APPELLANT HAS NOT DONE ANY BUSINESS ACTIVITY DURING THE YEAR. DURING THE COURSE OF THE APPELLANT PROCEEDING APPEL LANT HAS FILED THE WRITTEN SUBMISSION WHICH IS REPRODUCED AS UNDER: 'THE LD. AO HAS MADE THE ADDITION OF RS.95,72,523/- BEING THE EXPENSES INCURRED IN BIRGOD UNIT. THE TOTAL EXPENDITURE HAS BEEN DISALLOWED ON THE GRO/LND THAT THIS UNIT DID NOT WORK DURING THE YEAR . THE BITGOD UNIT WAS CLOSED AS FUM I G.L O. 2003 DUE TO LABOUR STRIKE AND INDUSTRIAL RELATIONS. THE MATTER WENT TO THE COURTS. THE BIRGOD UNIT WAS TREATED AS A HEAD OFFICE AND AS SUCH THE SALARV PAYMENT TO ADMINISTRA TIVE STAFFAND ACCOUNTS DEPARTMENT TOGETHER WITH THE LIABILITY FOR PAYMENT OF INTEREST WAS INCURRED AND DEBITED IN P/L ALC THE ASSESSEE DID RUN THE PIL UKHEDA UNIT AND THE BUSINESS WAS NEVER DISCONTINUED. UNDER THESE CIRCUMSTANCES, THE EXPENSES INCURRED ON SALARY TO S((?FL' AND OTHER ADMINISTRATIVE EXPENSES ARE TOTALLY ALLOWABLE . THE INTEREST IS PAID ON THE BORROWINGS MADE FOR THE PULPOSE O] BUSINESS AND HENCE IS AN ALLOWABLE EXPENDITURE. THE ASSESSEE HAS ITSELF DISA LLOWED THE CLAIM OF DEPRECIATION AND INTEREST PAYABLE U/S 43B IN THE RE TURN. IT MAY BE NOTED THAT THE ASSESSEE HAS THE ORIGINAL UNIT IN BIRGOD A ND IT HAD PUT IN THE ADDITIONAL NEW UNITS AT PILUKHEDA. THE UNIT AT PILU KHEDA ARE STILL WORKING. THE BIRGOD UNIT WAS TREATED AS HEAD OFFICE AMI (/I! THE ADMINISTRATIVE EXPENSES AND SALARY TO OFFICE STAT] WAS DEBITED TO THIS UNIT. FROM THE INCOME AND EXPENDITURE ALE IT WOULD BE SEEN THAT TH E ASSESSEE HAS CLAIMED THE EXPENDITURE UNDER THE HEAD MANUFACTURIN G EXPENSE AND INTEREST. THESE INCLUDED THE SALARY AND ,'VAGES OF THE ADMINISTRATIVE STAT] AND OTHER ADMINISTRATIVE EXPENSES LIKE TRAVELLING, STATION AND PRINTING AND DIRECTORS' AND AUDITOR'S REMUNERATION. THE BANK COM MISSION AND OTHER 4 EXPENSES HAVE ALSO BEEN CHARGED WHICH WERE REQUIRED TO BE INCURRED FOR DAY TO DAY ACTIVITY. THE ID. AO HAS TOTALLY IGNORED THESE FACTS AND HAS MADE THE ADDITIONS ON THE BASIS THE ASSESSMENT YEAR 2005-06 SIMILAR ADDITIONS WERE MADE WHICH WERE DELETED BY THE LD CIT (A) THE REVENUES APPEAL BEFOR E THE HON TRIBUNAL WAS DISMISSED. IN VIEW OF THE ABOVE IT IS HUMBLY SU BMITTED THAT THE ADDITION OF RS. 95,72,523 DESERVES TO BE DELETED. 3.31 I HAVE CONSIDERED THE FINDINGS OF THE AOI AND THE WRITTEN SUBMISSION OF THE APPELLANT CAREFULLY. IT IS OBSERV ED THAT APPELLANT HAS ALREADY DISALLOWED THE DEPRECIATION ON BIROD UNIT O F RS. 1,38,10,915 AND INTREST PAYABLE TO ICICI AND OTHER BANKS OF U/S 43 B. HOWEVER, OTHER ADMINISTRATIVE EXPENSES AND INTEREST ON BOWWOWING W ERE DEFINITELY ALLOWABLE FOR BOTH THE UNITS OF THE APPELLANT. FOR THE A.Y 2005-06 SIMILAR ADDITION WERE MADE WHICH WERE DELETED BY THE CIT (A ), UJJAIN. THE REVENUE HAS FILED APPEAL BEFORE HONBLE ITAT, INDOR E BENCH INDORE WHICH WAS DISMISSED BY THE HONBLE TRIBUNAL VIDE ITA NO. 328 & 329/IND/2010 DATED 18.08.2011. CONSIDERING THE ABOV E FACTS THE ADDITION MADE BY THE ASSESSING OFFICER AT RS. 95,72 ,523 IS NOT SUSTAINABLE AND IT IS HEREBY DELETED THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 4. THE AFORESAID FACTUAL FINDING RECORDED BY THE LD . CIT (A) WAS NOT CONTROVERTED BY THE REVENUE .THE CLAIM OF T HE ASSESSEE IN RESPECT TO BIRGOD UNIT WAS THAT THE ASSESSING OF FICER MADE ADDITION OF RS. 95,72523, ( A.Y 2006-2007), RS. 89, 61,753/ ( A.Y. 2007-2008), RS. 140,08,629/ ( A.Y. 2008-2009 ) AND RS. 5 52,26,127/- ( A.Y. 2009-2010) AS NO BUSINESS WAS CA RRIED OUT FROM THIS UNIT DURING THE YEAR . THE BIRGOD UNIT WA S CLOSED W.E.F. 10.10.2003 DUE TO LABOUR STRIKE AND ULTIMATE LY THIS UNIT WAS TREATED AS HEAD OFFICE. THE CLAIM OF THE ASSESS EE IS THAT SALARY TO STAFF OTHER ADMINISTRATIVE EXPENSES ARE A LLOWABLE ALONGWITH THE INTEREST PAID ON BORROWING FOR THE PU RPOSE OF BUSINESS. EVEN THE ASSESSING OFFICER AT PAGE 3 OF T HE ASSESSMENT ORDER HAS MENTIONED THAT THE ASSESEEE HA S ALREADY ADJUSTED CERTAIN DISALLOWANCES U/S 43 B AND DEPRECI ATION, ETC. AMOUNTING TO RS. 2,39,29,717/- WHILE RETURNING THE LOSS OF BIGROD UNIT. EVEN OTHERWISE WE FIND THAT THE GROUND TAKEN BY THE REVENUE IS MISCONCEIVED AND NO SPECIFIC GRIEVAN CE HAS BEEN RAISED IN THE GROUND BY MERELY SAYING THAT THE ISSU E OF DISALLOWANCE OF THE BIGROD UNIT IS SUBJUDICE BEFORE THE HONBLE HIGH COURT. IT SEEMS THAT THE APPEALS BEFORE THIS T RIBUNAL HAVE MERELY BEEN FILED JUST FOR FILLING. IN THE IMPUGNED ORDER THERE IS A FINDING THAT THE ASSESSEE ITSELF HAS DISALLOWED D EPRECIATION ON BIRGOD UNIT AMOUNTING TO RS. 1,38,10,915/- AND INTE REST PAYABLE TO ICICI AND OTHER BANKS U/S 43 B . THE ADM INISTRATIVE EXPENSES AND INTEREST ON BORROWING ARE ALLOWABLE EX PENSES. IT IS 6 FURTHER NOTED THAT THE APPEAL OF THE ASSESSEE WAS A LLOWED BY THE LD. CIT (A) HIMSELF AND THE TRIBUNAL CONFIRMED HIS ORDER THOUGH ITA N. 328 AND 329/IND/2010, ORDER DATED 18.08.2011 AS NO INFIRMITY WAS FOUND IN HIS ORDER. THUS KEEPING IN V IEW THE TOTALITY OF FACTS AND THE GROUND RAISED BY THE REVE NUE WE FIND NO MERIT IN THESE APPEALS. ALL THE APPEALS OF THE REVE NUE ARE, THEREFORE, DISMISSED. 5. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN T HE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLU SION OF THE HEARING ON 28.05.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 28.5.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE