ACIT, Ludhiana V. M/s Sheyans Inds. Ltd., Ludhiana

MA 106/CHANDI/2007

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8932 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 5 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-08-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 12-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK KR GOYAL
• Keywords: Depreciation; Unabsorbed depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI T.R. SOOD, ACCOUNTANT MEMBER MA NO. 106/CHD/2007 (IN ITA NO. 406/CHANDI/2002) ASSESSMENT YEAR: 1997-98 THE ACIT, CIRCLE-1, VS M/S SHREYANS INDUSTRIES LT D., LUDHIANA LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA RESPONDENT BY : SHRI ASHOK KR.GOYAL DATE OF HEARING : 24.08.2012 DATE OF PRONOUNCEMENT : 28.08.2012 ORDER PER H.L.KARWA, VP THIS MISC. APPLICATION BY THE REVENUE ARISES OUT OF THE ORDER OF THE TRIBUNAL (CHANDIGARH B BENCH) DATED 30.1.2006 PAS SED IN ITA NO. 406/CHANDI/2002 RELATING TO ASSESSMENT YEAR 1997-98 . 2. IN THE ABOVE MISC. PETITION, THE REVENUE HAS STA TED AS UNDER:- 1. THAT THE HON'BLE TRIBUNAL VIDE ORDER PASSED IN APPE AL NO. ITA NO. 406/CHANDI/2002 DATED 30.01.2006 DISMISSED THE APPEAL FILED BY THE REVENUE BY FOLLOWING THE JUDGEMENT OF HON'BL E IT AT IN ITAS NO. 597 & 592/CHANDI/99 FOR A.Y. 1996-97 IN ASSESSE E'S OWN CASE. 2 2. THAT THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE (RESPONDENT) FILED ITS RETURN OF INCOME SHOWING TOTAL INCOME OF RS. 1, 43,97,360/- U/S 115JA ON 30.11.1997. THE AO COMPLETED ASSESSMENT AFTER MA KING ADDITION ON ACCOUNT OF EXPENDITURE INCURRED ON THE CONSTRUCT ION OF PIPE LINE FOR EFFLUENTS, DISALLOWANCE U/S 43B, DISALLO WANCE U/S 37(2), CHANGE IN DEPRECIATION ALLOWABLE TO ASSESSEE IN CA SE OF ROPAR AND AHMEDGARH UNIT AND DISALLOWANCE UNDER RULE 6B AND T HUS, RE- COMPUTED B/F UNABSORBED DEPRECIATION AT RS.7,10,28, 708/- INSTEAD OF RS. 10,51,66,630/- AS CLAIMED BY ASSESSEE. 3. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE T HE ID. COMMISSIONER OF INCOME TAX (APPEALS), LUDHIANA WHO VIDE ORDER PA SSED IN APPEAL NO. ROT/114-IT/2001-02 DATED 21.02.2002 ACCEPTED TH E CONTENTION OF THE APPELLANT ON THE ISSUE OF NATURE OF EXPENDITURE INCURRED ON THE CONSTRUCTION OF PIPELINE FOR EFFLUENTS AND C ONSIDERED IT AS REVENUE EXPENDITURE. 4. NOT SATISFIED, THE REVENUE FILED 2 N APPEAL BEFORE THE HON'BLE ITAT, CHANDIGARH RAISING GROUND NO. L(A) WHICH DE ALT WITH NATURE OF EXPENDITURE ON THE CONSTRUCTION OF PIPE LINE FOR EFFLUENTS. 5. THE HONBLE ITAT HAS DECIDED THIS ISSUE AGAINST REV ENUE BY FOLLOWING ITS OWN DECISION IN THE CASE OF THE ASSES SEE ITSELF FOR A.Y. 1996-97 IN ITAS NO.597 & 592 CHANDI /99. 6. HOWEVER, THIS ISSUE HAS RECENTLY BEEN DECIDED BY H ON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ASSESSEE ITSELF IN LTA NO. 277 OF 2004 DATED 08.11.2006 (IT REFERS TO THE ABOVE MENTI ONED JUDGEMENT OF THE HON'BLE ITAT FOR A.Y. 1996-97 IN I TAS NO. 597 & 592/CHANDI/99) IN WHICH THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT: 'FROM THE APPRECIATION OF DIFFERENT FACTS AS DISCUS SED ABOVE, IT IS EVIDENT THAT THE EXPENSE MADE BY THE A SSESSEE DURING THE 1 ST YEAR WHEN THE DRAIN WAS DUG OUT IS NOTHING 3 ELSE BUT CAPITAL IN NATURE AS THE SAME CREATED AN ADVANTAGE FOR ENDURING BENEFIT OF THE BUSINESS.' 7. IN VIEW OF THE ABOVE FACTS OF THE CASE, THE HON' BLE ITAT MAY KINDLY BE PLEASED TO RECTIFY THE ABOVE SAID ORDER TO SET R IGHT THE MISTAKE APPARENT FROM RECORDS AND TO DECIDE GROUND NO.L(A) RAISED BY DEPARTMENT IN APPEAL NO. 406/CHANDI/2002 ON MERIT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE, THE I SSUE IS WHETHER AN AMOUNT OF RS. 19,23,923/- INCURRED BY THE ASSESSEE ON CONSTRU CTION OF OPEN DRAIN FOR DISPOSAL OF EFFLUENTS IS REVENUE EXPENDITURE, AS CL AIMED BY THE ASSESSEE?. ON THE CONTRARY, THE STAND OF THE REVENUE WAS THAT THE EXPENDITURE WAS IN THE NATURE OF CAPITAL ACCOUNT. THE CIT(A) AS WELL AS T HE TRIBUNAL HELD THAT THE EXPENDITURE INCURRED WAS ON REVENUE ACCOUNT. WHILE DECIDING THE ISSUE IN ITA NO.406/CHANDI/2002 RELATING TO ASSESSMENT YEAR 1997-98, THE TRIBUNAL FOLLOWED ITS EARLIER ORDER PASSED IN ASSESSEES CAS E IN ITA NO. 597/CHANDI/1999 DATED 27.2.2004 RELATING TO ASSESSM ENT YEAR 1996-97 WHEREIN THE TRIBUNAL ALLOWED THE EXPENDITURE OF RS. 70,79,862/- INCURRED BY THE ASSESSEE FOR CONSTRUCTION OF DRAINAGE FOR DISPO SAL OF EFFLUENTS BY TREATING THE SAME AS REVENUE EXPENDITURE. HOWEVER, THE ORDE R OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1996-97 WAS CHALLENGED BY THE REVEN UE IN APPEAL BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AND THE HON'BLE HIGH COURT VIDE ITS ORDER AND JUDGMENT DATED 8.11.2006 REVERSED THE ORD ER OF THE TRIBUNAL ON THE ABOVE ISSUE. THE ABOVE JUDGMENT IS REPORTED IN (20 08) 303 ITR 393 (P&H). AGAINST THE ABOVE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, THE ASSESSEE FILED SLP NO. 5855 OF 2008 BEFORE THE HON' BLE SUPREME COURT OF INDIA AND THE HON'BLE SUPREME COURT VIDE ITS JUDGME NT AND ORDER DATED 4 23.9.2008 HAS SET ASIDE THE JUDGMENT OF THE HIGH CO URT AND REMANDED THE MATTER TO HONBLE PUNJAB & HARYANA HIGH COURT FOR F RESH CONSIDERATION. THE ABOVE JUDGMENT OF THE HON'BLE SUPREME COURT IS REPO RTED IN (2009) 314 ITR 302(SC). IN VIEW OF THE JUDGMENT OF THE HON'BLE SU PREME COURT RENDERED IN ASSESSEES OWN CASE REPORTED IN (2009) 314 ITR 302 (SC), THE JUDGMENT AND ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT RE PORTED IN (2008) 303 ITR 393 (P&H) IS NO LONGER STANDS. THEREFORE, THER E IS NO MERIT IN THE MISC. PETITION FILED BY THE REVENUE PARTICULARLY WHEN THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT REFERRED TO ABOVE HAS A LREADY BEEN SET ASIDE BY THE HON'BLE SUPREME COURT. THUS, THERE IS NO MIST AKE APPARENT FROM THE RECORDS WHICH NEEDS TO BE RECTIFIED. 4. IN THE RESULT, THE MISC. APPLICATION IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF AUGUST, 2012 SD/- SD/- (T.R.SOOD) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 28 TH AUGUST, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5 THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR